Transportation Law Cases

TRANSPORTATION LAW Day 1
CONCEPT OF COMMON CARRIERS

Definition (Art. 1732
Art. 1732. Co!!on "arrier# are $er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e )*#ine## of "arryin& or
tran#$ortin& $a##en&er# or &oo'# or )ot(% )y +an'% ,ater% or air% for "o!$en#ation% offerin& t(eir #er-i"e# to t(e $*)+i".
De .*/!an -. Co*rt of A$$ea+#% ..R. No. L017222% De"e!)er 22% 1322% 142 SCRA 412 (1322
Re#$on'ent Erne#to Cen'ana% a 5*n6 'ea+er% ,a# en&a&e' in )*yin& *$ *#e' )ott+e# an' #"ra$ !eta+ in Pan&a#inan. 7$on
&at(erin& #*ffi"ient 8*antitie# of #*"( #"ra$ !ateria+% re#$on'ent ,o*+' )rin& #*"( !ateria+ to Mani+a for re#a+e. 9e *ti+i/e'
t,o (2 #i:0,(ee+er tr*"6# ,(i"( (e o,ne' for (a*+in& t(e !ateria+ to Mani+a.
So!eti!e in No-e!)er 137;% $etitioner Pe'ro 'e .*/!an a !er"(ant an' a*t(ori/e' 'ea+er of .enera+ Mi+6 Co!$any
(P(i+i$$ine#% In". in 7r'aneta% Pan&a#inan% "ontra"te' ,it( re#$on'ent for t(e (a*+in& of 7<; "arton# of Li)erty fi++e' !i+6 fro!
a ,are(o*#e of .enera+ Mi+6 in Ma6ati% Ri/a+% to $etitioner=# e#ta)+i#(!ent in 7r'aneta on or )efore 1 De"e!)er 137;.
On+y 1<; )o:e# of Li)erty fi++e' !i+6 ,ere 'e+i-ere' to $etitioner. T(e ot(er 4;; )o:e# ne-er rea"(e' $etitioner% #in"e t(e tr*"6
,(i"( "arrie' t(e#e )o:e# ,a# (i5a"6e' #o!e,(ere a+on& t(e Ma"Art(*r 9i&(,ay in Pani8*i% Tar+a"% )y ar!e' !en ,(o too6
,it( t(e! t(e tr*"6% it# 'ri-er% (i# (e+$er an' t(e "ar&o.
On 4 >an*ary 1371% $etitioner "o!!en"e' a"tion a&ain#t $ri-ate re#$on'ent in t(e Co*rt of Fir#t In#tan"e of Pan&a#inan%
'e!an'in& $ay!ent of P 22%1<;.;;% t(e "+ai!e' -a+*e of t(e +o#t !er"(an'i#e% $+*# 'a!a&e# an' attorney=# fee#.
In (i# An#,er% $ri-ate re#$on'ent 'enie' t(at (e ,a# a "o!!on "arrier an' ar&*e' t(at (e "o*+' not )e (e+' re#$on#i)+e for
t(e -a+*e of t(e +o#t &oo'#% #*"( +o## (a-in& )een '*e to force majeure.
On 1; De"e!)er 137<% t(e tria+ "o*rt ren'ere' a De"i#ion
1
fin'in& $ri-ate re#$on'ent to )e a "o!!on "arrier an' (o+'in& (i!
+ia)+e for t(e -a+*e of t(e *n'e+i-ere' &oo'# (P 22%1<;.;; a# ,e++ a# for P 1%;;;.;; a# 'a!a&e# an' P 2%;;;.;; a# attorney=#
fee#.
T(e Co*rt of A$$ea+# re-er#e' t(e 5*'&!ent of t(e tria+ "o*rt an' (e+' t(at re#$on'ent (a' )een en&a&e' in tran#$ortin&
ret*rn +oa'# of frei&(t ?a# a "a#*a+
o""*$ation @ a #i'e+ine to (i# #"ra$ iron )*#ine##? an' not a# a "o!!on "arrier. Petitioner "a!e to t(i# Co*rt )y ,ay of a
Petition for Re-ie, a##i&nin& a# error# t(e fo++o,in& "on"+*#ion# of t(e Co*rt of A$$ea+#A
t(at $ri-ate re#$on'ent ,a# not a "o!!on "arrierB
t(at t(e (i5a"6in& of re#$on'ent=# tr*"6 ,a# force majeureB an'
t(at re#$on'ent ,a# not +ia)+e for t(e -a+*e of t(e *n'e+i-ere' "ar&o. (Ro++o% $. 111
T(e Ci-i+ Co'e 'efine# ?"o!!on "arrier#? in t(e fo++o,in& ter!#A
Arti"+e 1732. Co!!on "arrier# are $er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e )*#ine## of "arryin& or
tran#$ortin& $a##en&er# or &oo'# or )ot(% )y +an'% ,ater% or air for "o!$en#ation% offerin& t(eir #er-i"e# to t(e $*)+i".
T(e a)o-e arti"+e !a6e# no 'i#tin"tion )et,een one ,(o#e principal )*#ine## a"ti-ity i# t(e "arryin& of $er#on# or &oo'# or
)ot(% an' one ,(o 'oe# #*"( "arryin& on+y a# an ancillary a"ti-ity (in +o"a+ I'io! a# ?a #i'e+ine?. Arti"+e 1732 a+#o "aref*++y
a-oi'# !a6in& any 'i#tin"tion )et,een a $er#on or enter$ri#e offerin& tran#$ortation #er-i"e on a regular or scheduled
basis an' one offerin& #*"( #er-i"e on an occasional, episodic or unscheduled basis. Neit(er 'oe# Arti"+e 1732 'i#tin&*i#(
)et,een a "arrier offerin& it# #er-i"e# to t(e ?general public%? i.e.% t(e &enera+ "o!!*nity or $o$*+ation% an' one ,(o offer#
#er-i"e# or #o+i"it# )*#ine## on+y fro! a narro, #e&!ent of t(e &enera+ $o$*+ation. We t(in6 t(at Arti"+e 1733 'e+i)erao!
!a6in& #*"( 'i#tin"tion#.
So *n'er#too'% t(e "on"e$t of ?"o!!on "arrier? *n'er Arti"+e 1732 !ay )e #een to "oin"i'e neat+y ,it( t(e notion of ?$*)+i"
#er-i"e%? *n'er t(e P*)+i" Ser-i"e A"t (Co!!on,ea+t( A"t No. 1114% a# a!en'e' ,(i"( at +ea#t $artia++y #*$$+e!ent# t(e
+a, on "o!!on "arrier# #et fort( in t(e Ci-i+ Co'e. 7n'er Se"tion 13% $ara&ra$( () of t(e P*)+i" Ser-i"e A"t% ?$*)+i" #er-i"e?
in"+*'e#A
We t*rn t(en to t(e +ia)i+ity of $ri-ate re#$on'ent a# a "o!!on "arrier.
Arti"+e 1731 e#ta)+i#(e# t(e &enera+ r*+e t(at "o!!on "arrier# are re#$on#i)+e for t(e +o##% 'e#tr*"tion or 'eterioration of t(e
&oo'# ,(i"( t(ey "arry% ?unless t(e #a!e i# '*e to any of the following causes onlyA
F+oo'% #tor!% eart(8*a6e% +i&(tnin& or ot(er nat*ra+ 'i#a#ter or "a+a!ityB
A"t of t(e $*)+i" ene!y in ,ar% ,(et(er internationa+ or "i-i+B
A"t or o!i##ion of t(e #(i$$er or o,ner of t(e &oo'#B
T(e "(ara"ter0of t(e &oo'# or 'efe"t# in t(e $a"6in& or0in t(e "ontainer#B an'
Or'er or a"t of "o!$etent $*)+i" a*t(ority.
It i# i!$ortant to $oint o*t t(at t(e a)o-e +i#t of "a*#e# of +o##% 'e#tr*"tion or 'eterioration ,(i"( e:e!$t t(e "o!!on "arrier
for re#$on#i)i+ity t(erefor% i# a "+o#e' +i#t. Ca*#e# fa++in& o*t#i'e t(e fore&oin& +i#t% e-en if t(ey a$$ear to "on#tit*te a #$e"ie#
of for"e !a5e*re fa++ ,it(in t(e #"o$e of Arti"+e 173<% ,(i"( $ro-i'e# a# fo++o,#A
Any of t(e fo++o,in& or #i!i+ar #ti$*+ation# #(a++ )e "on#i'ere' *nrea#ona)+e% *n5*#t an' "ontrary to $*)+i" $o+i"yA
::: ::: :::
(< t(at t(e "o!!on "arrier #(a++ not )e re#$on#i)+e for t(e a"t# or o!i##ion# of (i# or it# e!$+oyee#B
(4 t(at t(e "o!!on "arrier=# +ia)i+ity for a"t# "o!!itte' )y t(ie-e#% or of robbers ,(o 'onot a"t ,it( grave or irresistible threat,
violence or force% i# 'i#$en#e' ,it( or 'i!ini#(e'B an'
(7 t(at t(e "o!!on "arrier #(a++ not re#$on#i)+e for t(e +o##% 'e#tr*"tion or 'eterioration of &oo'# on a""o*nt of t(e 'efe"ti-e
"on'ition of t(e "ar -e(i"+e% #(i$% air$+ane or ot(er e8*i$!ent *#e' in t(e "ontra"t of "arria&e. (E!$(a#i# #*$$+ie'
7n'er Arti"+e 171< (4 a)o-e% a "o!!on "arrier i# (e+' re#$on#i)+e @ an' ,i++ not )e a++o,e' to 'i-e#t or to 'i!ini#( #*"(
re#$on#i)i+ity @ e-en for a"t# of #tran&er# +i6e t(ie-e# or ro))er#% except ,(ere #*"( t(ie-e# or ro))er# in fa"t a"te' ?,it(
&ra-e or irre#i#ti)+e t(reat% -io+en"e or for"e.? We )e+ie-e an' #o (o+' t(at t(e +i!it# of t(e '*ty of e:traor'inary 'i+i&en"e in t(e
-i&i+an"e o-er t(e &oo'# "arrie' are rea"(e' ,(ere t(e &oo'# are +o#t a# a re#*+t of a ro))ery ,(i"( i# atten'e' )y ?&ra-e or
irre#i#ti)+e t(reat% -io+en"e or for"e.?
We% t(erefore% a&ree ,it( t(e re#*+t rea"(e' )y t(e Co*rt of A$$ea+# t(at $ri-ate re#$on'ent Cen'ana i# not +ia)+e for t(e
-a+*e of t(e *n'e+i-ere' !er"(an'i#e ,(i"( ,a# +o#t )e"a*#e of an e-ent entire+y )eyon' $ri-ate re#$on'ent=# "ontro+.
ACCORDIN.LC% t(e Petition for Re-ie, on "ertiorari i# (ere)y DENIED an' t(e De"i#ion of t(e Co*rt of A$$ea+# 'ate' 3
A*&*#t 1377 i# AFFIRMED. No $rono*n"e!ent a# to "o#t#.
P+anter# Pro'*"t# In". -. Co*rt of A$$ea+#% 224 SCRA 74 (1333
Doe# a "(arter0$arty
1
)et,een a #(i$o,ner an' a "(arterer tran#for! a "o!!on "arrier into a $ri-ate one a# to ne&ate t(e
"i-i+ +a, $re#*!$tion of ne&+i&en"e in "a#e of +o## or 'a!a&e to it# "ar&oD
P+anter# Pro'*"t#% In". (PPI% $*r"(a#e' fro! Mit#*)i#(i Internationa+ Cor$oration (MITS7EIS9I of Ne, Cor6% 7.S.A.%
3%323.7;43 !etri" ton# (MFT of 7rea 14G ferti+i/er ,(i"( t(e +atter #(i$$e' in )*+6 on 14 >*ne 1371 a)oar' t(e "ar&o -e##e+
1
MFH ?S*n P+*!? o,ne' )y $ri-ate re#$on'ent Iyo#ei Ii#en Ia)*#(i6i Iai#(a (IIII fro! Ienai% A+a#6a% 7.S.A.% to Poro
Point% San Fernan'o% La 7nion% P(i+i$$ine#% a# e-i'en"e' )y Ei++ of La'in& No. IP01 #i&ne' )y t(e !a#ter of t(e -e##e+ an'
i##*e' on t(e 'ate of 'e$art*re.
On 17 May 1371% or $rior to it# -oya&e% a ti!e "(arter0$arty on t(e -e##e+ MFH ?S*n P+*!? $*r#*ant to t(e 7nifor! .enera+
C(arter
2
,a# entere' into )et,een Mit#*)i#(i a# #(i$$erF"(arterer an' IIII a# #(i$o,ner% in To6yo% >a$an.
3
Ri'er# to t(e
afore#ai' "(arter0$arty #tartin& fro! $ar. 14 to 1; ,ere atta"(e' to t(e $re0$rinte' a&ree!ent. A''en'a No#. 1% 2% 3 an' 1 to
t(e "(arter0$arty ,ere a+#o #*)#e8*ent+y entere' into on t(e 12t(% 2;t(% 21#t an' 27t( of May 1371% re#$e"ti-e+y.
Eefore +oa'in& t(e ferti+i/er a)oar' t(e -e##e+% fo*r (1 of (er (o+'#
4
,ere a++ $re#*!a)+y in#$e"te' )y t(e "(arterer=#
re$re#entati-e an' fo*n' fit to ta6e a +oa' of *rea in )*+6 $*r#*ant to $ar. 14 of t(e "(arter0$arty ,(i"( rea'#A
14. . . . At +oa'in& $ort% noti"e of rea'ine## to )e a""o!$+i#(e' )y "ertifi"ate fro! Nationa+ Car&o E*rea* in#$e"tor or
#*)#tit*te a$$ointe' )y "(arterer# for (i# a""o*nt "ertifyin& t(e -e##e+=# rea'ine## to re"ei-e "ar&o #$a"e#. The vessel's hold
to be properly swept, cleaned and dried at the vessel's expense and the vessel to be presented clean for use in bulk to the
satisfaction of the inspector before daytime commences. (e!$(a#i# #*$$+ie'
After t(e 7rea ferti+i/er ,a# +oa'e' in )*+6 )y #te-e'ore# (ire' )y an' *n'er t(e #*$er-i#ion of t(e #(i$$er% t(e #tee+ (at"(e#
,ere "+o#e' ,it( (ea-y iron +i'#% "o-ere' ,it( t(ree (3 +ayer# of tar$a*+in% t(en tie' ,it( #tee+ )on'#. T(e (at"(e# re!aine'
"+o#e' an' ti&(t+y #ea+e' t(ro*&(o*t t(e entire -oya&e.
5
7$on arri-a+ of t(e -e##e+ at (er $ort of "a++ on 3 >*+y 1371% t(e #tee+ $ontoon (at"(e# ,ere o$ene' ,it( t(e *#e of t(e
-e##e+=# )oo!. Petitioner *n+oa'e' t(e "ar&o fro! t(e (o+'# into it# #tee+)o'ie' '*!$ tr*"6# ,(i"( ,ere $ar6e' a+on&#i'e t(e
)ert(% *#in& !eta+ #"oo$# atta"(e' to t(e #(i$% $*r#*ant to t(e ter!# an' "on'ition# of t(e "(arter0$art+y (,(i"( $ro-i'e' for
an F.I.O.S. "+a*#e.
6
T(e (at"(e# re!aine' o$en t(ro*&(o*t t(e '*ration of t(e 'i#"(ar&e.
7
Ea"( ti!e a '*!$ tr*"6 ,a# fi++e' *$% it# +oa' of 7rea ,a# "o-ere' ,it( tar$a*+in )efore it ,a# tran#$orte' to t(e "on#i&nee=#
,are(o*#e +o"ate' #o!e fifty (<; !eter# fro! t(e ,(arf. Mi',ay to t(e ,are(o*#e% t(e tr*"6# ,ere !a'e to $a## t(ro*&( a
,ei&(in& #"a+e ,(ere t(ey ,ere in'i-i'*a++y ,ei&(e' for t(e $*r$o#e of a#"ertainin& t(e net ,ei&(t of t(e "ar&o. T(e $ort area
,a# ,in'y% "ertain $ortion# of t(e ro*te to t(e ,are(o*#e ,ere #an'y an' t(e ,eat(er ,a# -aria)+e% rainin& o""a#iona++y ,(i+e
t(e 'i#"(ar&e ,a# in $ro&re##.
8
T(e $etitioner=# ,are(o*#e ,a# !a'e of "orr*&ate' &a+-ani/e' iron (.I #(eet#% ,it( an
o$enin& at t(e front ,(ere t(e '*!$ tr*"6# entere' an' *n+oa'e' t(e ferti+i/er on t(e ,are(o*#e f+oor. Tar$a*+in# an' .I
#(eet# ,ere $+a"e' in0)et,een an' a+on&#i'e t(e tr*"6# to "ontain #$i++a&e# of t(e feri+i/er.
9
It too6 e+e-en (11 'ay# for PPI to *n+oa' t(e "ar&o% fro! < >*+y to 12 >*+y 1371 (e:"e$t >*+y 12t(% 11t( an' 12t(.
10
A $ri-ate
!arine an' "ar&o #*r-eyor% Car&o S*$erinten'ent# Co!$any In". (CSCI% ,a# (ire' )y PPI to 'eter!ine t(e ?o*tt*rn? of t(e
"ar&o #(i$$e'% )y ta6in& 'raft rea'in&# of t(e -e##e+ $rior to an' after 'i#"(ar&e.
11
T(e #*r-ey re$ort #*)!itte' )y CSCI to
t(e "on#i&nee (PPI 'ate' 13 >*+y 1371 re-ea+e' a #(orta&e in t(e "ar&o of 1;4.724 MFT an' t(at a $ortion of t(e 7rea
ferti+i/er a$$ro:i!atin& 12 MFT ,a# "onta!inate' ,it( 'irt. T(e #a!e re#*+t# ,ere "ontaine' in a Certifi"ate of
S(orta&eFDa!a&e' Car&o 'ate' 12 >*+y 1371 $re$are' )y PPI ,(i"( #(o,e' t(at t(e "ar&o 'e+i-ere' ,a# in'ee' #(ort of
31.233 MFT an' a)o*t 23 MFT ,ere ren'ere' *nfit for "o!!er"e% (a-in& )een $o++*te' ,it( #an'% r*#t an'
'irt.
12
Con#e8*ent+y% PPI #ent a "+ai! +etter 'ate' 12 De"e!)er 1371 to Soria!ont Stea!#(i$ A&en"ie# (SSA% t(e re#i'ent a&ent of
t(e "arrier% IIII% for P21<%343.31 re$re#entin& t(e "o#t of t(e a++e&e' #(orta&e in t(e &oo'# #(i$$e' an' t(e 'i!in*tion in
-a+*e of t(at $ortion #ai' to (a-e )een "onta!inate' ,it( 'irt.
13
Re#$on'ent SSA e:$+aine' t(at t(ey ,ere not a)+e to re#$on' to t(e "on#i&nee=# "+ai! for $ay!ent )e"a*#e% a""or'in& to
t(e!% ,(at t(ey re"ei-e' ,a# 5*#t a re8*e#t for #(ort+an'e' "ertifi"ate an' not a for!a+ "+ai!% an' t(at t(i# ?re8*e#t? ,a#
'enie' )y t(e! )e"a*#e t(ey ?(a' not(in& to 'o ,it( t(e 'i#"(ar&e of t(e #(i$!ent.?
14
9en"e% on 12 >*+y 137<% PPI fi+e' an
a"tion for 'a!a&e# ,it( t(e Co*rt of Fir#t In#tan"e of Mani+a. T(e 'efen'ant "arrier ar&*e' t(at t(e #tri"t $*)+i" $o+i"y
&o-ernin& "o!!on "arrier# 'oe# not a$$+y to t(e! )e"a*#e t(ey (a-e )e"o!e $ri-ate "arrier# )y rea#on of t(e $ro-i#ion# of
t(e "(arter0$arty. T(e "o*rt a quo (o,e-er #*#taine' t(e "+ai! of t(e $+aintiff a&ain#t t(e 'efen'ant "arrier for t(e -a+*e of t(e
&oo'# +o#t or 'a!a&e' ,(en it r*+e' t(*#A
15
. . . Pre#"in'in& fro! t(e $ro-i#ion of t(e +a, t(at a "o!!on "arrier i# $re#*!e' ne&+i&ent in "a#e of +o## or 'a!a&e of t(e
&oo'# it "ontra"t# to tran#$ort% all that a shipper has to do in a suit to recover for loss or damage is to show receipt by the
carrier of the goods and to delivery by it of less than what it received. After that, the burden of proving that the loss or damage
was due to any of the causes which exempt him from liability is shipted to the carrier, common or private he may be. E-en if
t(e $ro-i#ion# of t(e "(arter0$arty afore8*ote' are 'ee!e' -a+i'% an' t(e 'efen'ant# "on#i'ere' $ri-ate "arrier#% it was still
incumbent upon them to prove that the shortage or contamination sustained by the cargo is attributable to the fault or
negligence on the part of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo. T(i# t(ey
fai+e' to 'o. Ey t(i# o!i##ion% "o*$+e' ,it( t(eir fai+*re to 'e#troy t(e $re#*!$tion of ne&+i&en"e a&ain#t t(e!% t(e 'efen'ant#
are +ia)+e (e!$(a#i# #*$$+ie'.
On a$$ea+% re#$on'ent Co*rt of A$$ea+# re-er#e' t(e +o,er "o*rt an' a)#o+-e' t(e "arrier fro! +ia)i+ity for t(e -a+*e of t(e
"ar&o t(at ,a# +o#t or 'a!a&e'.
16
Re+yin& on t(e 1342 "a#e of Home nsurance !o. v. American "teamship Agencies,
nc.%
17
t(e a$$e++ate "o*rt r*+e' t(at t(e "ar&o -e##e+ MFH ?S*n P+*!? o,ne' )y $ri-ate re#$on'ent IIII ,a# a $ri-ate "arrier
an' not a "o!!on "arrier )y rea#on of t(e ti!e "(arterer0$arty. A""or'in&+y% t(e Ci-i+ Co'e $ro-i#ion# on "o!!on "arrier#
,(i"( #et fort( a $re#*!$tion of ne&+i&en"e 'o not fin' a$$+i"ation in t(e "a#e at )ar. T(*# @
. . . In t(e a)#en"e of #*"( $re#*!$tion% it was incumbent upon the plaintiff#appellee to adduce sufficient evidence to prove
the negligence of the defendant carrier a# a++e&e' in it# "o!$+aint. It i# an o+' an' ,e++ #ett+e' r*+e t(at if t(e $+aintiff% *$on
,(o! re#t# t(e )*r'en of $ro-in& (i# "a*#e of a"tion% fai+# to #(o, in a #ati#fa"tory !anner t(e fa"t# *$on ,(i"( (e )a#e# (i#
"+ai!% t(e 'efen'ant i# *n'er no o)+i&ation to $ro-e (i# e:"e$tion or 'efen#e ($oran% !ommentaries on the %ules of !ourt%
Ho+*!e 4% $. 2% "itin& Ee+en -. Ee+en% 13 P(i+. 2;2.
E*t% the record shows that the plaintiff#appellee dismally failed to prove the basis of its cause of action, i .e. the alleged
negligence of defendant carrier. It a$$ear# t(at t(e $+aintiff ,a# *n'er t(e i!$re##ion t(at it 'i' not (a-e to e#ta)+i#(
'efen'ant=# ne&+i&en"e. Ee t(at a# it !ay% "ontrary to t(e tria+ "o*rt=# fin'in&% t(e re"or' of t(e in#tant "a#e 'i#"+o#e# a!$+e
e-i'en"e #(o,in& t(at 'efen'ant "arrier ,a# not ne&+i&ent in $erfor!in& it# o)+i&ation . . .
18
(e!$(a#i# #*$$+ie'.
Petitioner PPI a$$ea+# to *# )y ,ay of a $etition for re-ie, a##ai+in& t(e 'e"i#ion of t(e Co*rt of A$$ea+#. Petitioner t(eori/e#
t(at t(e Home nsurance "a#e (a# no )earin& on t(e $re#ent "ontro-er#y )e"a*#e t(e i##*e rai#e' t(erein i# t(e -a+i'ity of a
#ti$*+ation in t(e "(arter0$arty 'e+i!itin& t(e +ia)i+ity of t(e #(i$o,ner for +o## or 'a!a&e to &oo'# "a*#e )y ,ant of '*e
'e+i&en"e on it# $art or t(at of it# !ana&er to !a6e t(e -e##e+ #ea,ort(y in a++ re#$e"t#% an' not ,(et(er t(e $re#*!$tion of
ne&+i&en"e $ro-i'e' *n'er t(e Ci-i+ Co'e a$$+ie# on+y to "o!!on "arrier# an' not to $ri-ate "arrier#.
19
Petitioner f*rt(er
ar&*e# t(at #in"e t(e $o##e##ion an' "ontro+ of t(e -e##e+ re!ain ,it( t(e #(i$o,ner% a)#ent any #ti$*+ation to t(e "ontrary%
#*"( #(i$o,ner #(o*+' !a'e +ia)+e for t(e ne&+i&en"e of t(e "a$tain an' "re,. In fine% PPI fa*+t# t(e a$$e++ate "o*rt in not
a$$+yin& t(e $re#*!$tion of ne&+i&en"e a&ain#t re#$on'ent "arrier% an' in#tea' #(iftin& t(e onus probandi on t(e #(i$$er to
2
#(o, ,ant of '*e 'e+i&en"e on t(e $art of t(e "arrier% ,(en (e ,a# not e-en at (an' to ,itne## ,(at tran#$ire' '*rin& t(e
entire -oya&e.
A# ear+ier #tate'% t(e $ri!or'ia+ i##*e (ere i# ,(et(er a "o!!on "arrier )e"o!e# a $ri-ate "arrier )y rea#on of a "(arter0
$artyB in t(e ne&ati-e% ,(et(er t(e #(i$o,ner in t(e in#tant "a#e ,a# a)+e to $ro-e t(at (e (a' e:er"i#e' t(at 'e&ree of
'i+i&en"e re8*ire' of (i! *n'er t(e +a,.
It i# #ai' t(at ety!o+o&y i# t(e )a#i# of re+ia)+e 5*'i"ia+ 'e"i#ion# in "o!!er"ia+ "a#e#. T(i# )ein& #o% ,e fin' it fittin& to fir#t
'efine i!$ortant ter!# ,(i"( are re+e-ant to o*r 'i#"*##ion.
A ?"(arter0$arty? i# 'efine' a# a "ontra"t )y ,(i"( an entire #(i$% or #o!e $rin"i$a+ $art t(ereof% i# +et )y t(e o,ner to anot(er
$er#on for a #$e"ifie' ti!e or *#eB
20
a "ontra"t of affrei&(t!ent )y ,(i"( t(e o,ner of a #(i$ or ot(er -e##e+ +et# t(e ,(o+e or
a $art of (er to a !er"(ant or ot(er $er#on for t(e "on-eyan"e of &oo'#% on a $arti"*+ar -oya&e% in "on#i'eration of t(e
$ay!ent of frei&(tB
21
C(arter $artie# are of t,o ty$e#A (a "ontra"t of affrei&(t!ent ,(i"( in-o+-e# t(e *#e of #(i$$in& #$a"e
on -e##e+# +ea#e' )y t(e o,ner in $art or a# a ,(o+e% to "arry &oo'# for ot(er#B an'% () "(arter )y 'e!i#e or )are)oat "(arter%
)y t(e ter!# of ,(i"( t(e ,(o+e -e##e+ i# +et to t(e "(arterer ,it( a tran#fer to (i! of it# entire "o!!an' an' $o##e##ion an'
"on#e8*ent "ontro+ o-er it# na-i&ation% in"+*'in& t(e !a#ter an' t(e "re,% ,(o are (i# #er-ant#. Contra"t of affrei&(t!ent !ay
eit(er )e ti!e "(arter% ,(erein t(e -e##e+ i# +ea#e' to t(e "(arterer for a fi:e' $erio' of ti!e% or -oya&e "(arter% ,(erein t(e
#(i$ i# +ea#e' for a #in&+e -oya&e.
22
In )ot( "a#e#% t(e "(arter0$arty $ro-i'e# for t(e (ire of -e##e+ on+y% eit(er for a
'eter!inate $erio' of ti!e or for a #in&+e or "on#e"*ti-e -oya&e% t(e #(i$o,ner to #*$$+y t(e #(i$=# #tore#% $ay for t(e ,a&e#
of t(e !a#ter an' t(e "re,% an' 'efray t(e e:$en#e# for t(e !aintenan"e of t(e #(i$.
7$on t(e ot(er (an'% t(e ter! ?"o!!on or $*)+i" "arrier? i# 'efine' in Art. 1732 of t(e Ci-i+ Co'e.
23
T(e 'efinition e:ten'# to
"arrier# eit(er )y +an'% air or ,ater ,(i"( (o+' t(e!#e+-e# o*t a# rea'y to en&a&e in "arryin& &oo'# or tran#$ortin&
$a##en&er# or )ot( for "o!$en#ation a# a $*)+i" e!$+oy!ent an' not a# a "a#*a+ o""*$ation. T(e 'i#tin"tion )et,een a
?"o!!on or $*)+i" "arrier? an' a ?$ri-ate or #$e"ia+ "arrier? +ie# in t(e "(ara"ter of t(e )*#ine##% #*"( t(at if t(e *n'erta6in& i#
a #in&+e tran#a"tion% not a $art of t(e &enera+ )*#ine## or o""*$ation% a+t(o*&( in-o+-in& t(e "arria&e of &oo'# for a fee% t(e
$er#on or "or$oration offerin& #*"( #er-i"e i# a $ri-ate "arrier.
24
Arti"+e 1733 of t(e Ne, Ci-i+ Co'e !an'ate# t(at "o!!on "arrier#% )y rea#on of t(e nat*re of t(eir )*#ine##% #(o*+' o)#er-e
e:traor'inary 'i+i&en"e in t(e -i&i+an"e o-er t(e &oo'# t(ey "arry.
25
In t(e "a#e of $ri-ate "arrier#% (o,e-er% t(e e:er"i#e of
or'inary 'i+i&en"e in t(e "arria&e of &oo'# ,i++ #*ffi"e. Moreo-er% in t(e "a#e of +o##% 'e#tr*"tion or 'eterioration of t(e &oo'#%
"o!!on "arrier# are $re#*!e' to (a-e )een at fa*+t or to (a-e a"te' ne&+i&ent+y% an' t(e )*r'en of $ro-in& ot(er,i#e re#t#
on t(e!.
26
On t(e "ontrary% no #*"( $re#*!$tion a$$+ie# to $ri-ate "arrier#% for ,(o#oe-er a++e&e# 'a!a&e to or 'eterioration
of t(e &oo'# "arrie' (a# t(e on*# of $ro-in& t(at t(e "a*#e ,a# t(e ne&+i&en"e of t(e "arrier.
It i# not 'i#$*te' t(at re#$on'ent "arrier% in t(e or'inary "o*r#e of )*#ine##% o$erate# a# a "o!!on "arrier% tran#$ortin& &oo'#
in'i#"ri!inate+y for a++ $er#on#. W(en $etitioner "(artere' t(e -e##e+ MFH ?S*n P+*!?% t(e #(i$ "a$tain% it# offi"er# an'
"o!$+i!ent ,ere *n'er t(e e!$+oy of t(e #(i$o,ner an' t(erefore "ontin*e' to )e *n'er it# 'ire"t #*$er-i#ion an' "ontro+.
9ar'+y t(en "an ,e "(ar&e t(e "(arterer% a #tran&er to t(e "re, an' to t(e #(i$% ,it( t(e '*ty of "arin& for (i# "ar&o ,(en t(e
"(arterer 'i' not (a-e any "ontro+ of t(e !ean# in 'oin& #o. T(i# i# e-i'ent in t(e $re#ent "a#e "on#i'erin& t(at t(e #teerin& of
t(e #(i$% t(e !annin& of t(e 'e"6#% t(e 'eter!ination of t(e "o*r#e of t(e -oya&e an' ot(er te"(ni"a+ in"i'ent# of !ariti!e
na-i&ation ,ere a++ "on#i&ne' to t(e offi"er# an' "re, ,(o ,ere #"reene'% "(o#en an' (ire' )y t(e #(i$o,ner.
27
It i# t(erefore i!$erati-e t(at a $*)+i" "arrier #(a++ re!ain a# #*"(% not,it(#tan'in& t(e "(arter of t(e ,(o+e or $ortion of a
-e##e+ )y one or !ore $er#on#% $ro-i'e' t(e "(arter i# +i!ite' to t(e #(i$ on+y% a# in t(e "a#e of a ti!e0"(arter or -oya&e0
"(arter. It i# on+y ,(en t(e "(arter in"+*'e# )ot( t(e -e##e+ an' it# "re,% a# in a )are)oat or 'e!i#e t(at a "o!!on "arrier
)e"o!e# $ri-ate% at +ea#t in#ofar a# t(e $arti"*+ar -oya&e "o-erin& t(e "(arter0$arty i# "on"erne'. In'*)ita)+y% a #(i$o,ner in
a ti!e or -oya&e "(arter retain# $o##e##ion an' "ontro+ of t(e #(i$% a+t(o*&( (er (o+'# !ay% for t(e !o!ent% )e t(e $ro$erty
of t(e "(arterer.
28
Re#$on'ent "arrier=# (ea-y re+ian"e on t(e "a#e of Home nsurance !o. v. American "teamship Agencies, supra% i#
!i#$+a"e' for t(e rea#on t(at t(e !eat of t(e "ontro-er#y t(erein ,a# t(e -a+i'ity of a #ti$*+ation in t(e "(arter0$arty e:e!$tin&
t(e #(i$o,ner# fro! +ia)i+ity for +o## '*e to t(e ne&+i&en"e of it# a&ent% an' not t(e effe"t# of a #$e"ia+ "(arter on "o!!on
"arrier#. At any rate% t(e r*+e in t(e 7nite' State# t(at a #(i$ "(artere' )y a #in&+e #(i$$er to "arry #$e"ia+ "ar&o i# not a
"o!!on "arrier%
29
'oe# not fin' a$$+i"ation in o*r 5*ri#'i"tion% for ,e (a-e o)#er-e' t(at t(e &ro,in& "on"ern for #afety in t(e
tran#$ortation of $a##en&er# an' For "arria&e of &oo'# )y #ea re8*ire# a !ore e:a"tin& inter$retation of a'!ira+ty +a,#% !ore
$arti"*+ar+y% t(e r*+e# &o-ernin& "o!!on "arrier#.
We 8*ote ,it( a$$ro-a+ t(e o)#er-ation# of Rao*+ Co+in-a*:% t(e +earne' )arri#ter0at0+a,
30
@
A# a !atter of $rin"i$+e% it i# 'iffi"*+t to fin' a -a+i' 'i#tin"tion )et,een "a#e# in ,(i"( a #(i$ i# *#e' to "on-ey t(e &oo'# of
one an' of #e-era+ $er#on#. W(ere t(e #(i$ (er#e+f i# +et to a "(arterer% #o t(at (e ta6e# o-er t(e "(ar&e an' "ontro+ of (er%
t(e "a#e i# 'ifferentB t(e #(i$o,ner i# not t(en a "arrier. E*t ,(ere (er #er-i"e# on+y are +et% t(e #a!e &ro*n'# for i!$o#in& a
#tri"t re#$on#i)i+ity e:i#t% ,(et(er (e i# e!$+oye' )y one or !any. T(e !a#ter an' t(e "re, are in ea"( "a#e (i# #er-ant#% t(e
frei&(ter in ea"( "a#e i# *#*a++y ,it(o*t any re$re#entati-e on )oar' t(e #(i$B t(e #a!e o$$ort*nitie# for fra*' or "o++*#ion
o""*rB an' t(e #a!e 'iffi"*+ty in 'i#"o-erin& t(e tr*t( a# to ,(at (a# ta6en $+a"e ari#e# . . .
In an a"tion for re"o-ery of 'a!a&e# a&ain#t a "o!!on "arrier on t(e &oo'# #(i$$e'% t(e #(i$$er or "on#i&nee #(o*+' fir#t
$ro-e t(e fa"t of #(i$!ent an' it# "on#e8*ent +o## or 'a!a&e ,(i+e t(e #a!e ,a# in t(e $o##e##ion% a"t*a+ or "on#tr*"ti-e% of
t(e "arrier. T(ereafter% t(e )*r'en of $roof #(ift# to re#$on'ent to $ro-e t(at (e (a# e:er"i#e' e:traor'inary 'i+i&en"e re8*ire'
)y +a, or t(at t(e +o##% 'a!a&e or 'eterioration of t(e "ar&o ,a# '*e to fort*ito*# e-ent% or #o!e ot(er "ir"*!#tan"e#
in"on#i#tent ,it( it# +ia)i+ity.
31
To o*r !in'% re#$on'ent "arrier (a# #*ffi"ient+y o-er"o!e% )y "+ear an' "on-in"in& $roof% t(e prima facie$re#*!$tion of
ne&+i&en"e.
T(e !a#ter of t(e "arryin& -e##e+% Ca$tain Lee Tae Eo% in (i# 'e$o#ition ta6en on 13 A$ri+ 1377 )efore t(e P(i+i$$ine Con#*+
an' Le&a+ Atta"(e in t(e P(i+i$$ine E!)a##y in To6yo% >a$an% te#tifie' t(at )efore t(e ferti+i/er ,a# +oa'e'% t(e fo*r (1
(at"(e# of t(e -e##e+ ,ere "+eane'% 'rie' an' f*!i&ate'. After "o!$+etin& t(e +oa'in& of t(e "ar&o in )*+6 in t(e #(i$=# (o+'#%
t(e #tee+ $ontoon (at"(e# ,ere "+o#e' an' #ea+e' ,it( iron +i'#% t(en "o-ere' ,it( t(ree (3 +ayer# of #er-i"ea)+e tar$a*+in#
,(i"( ,ere tie' ,it( #tee+ )on'#. T(e (at"(e# re!aine' "+o#e an' ti&(t+y #ea+e' ,(i+e t(e #(i$ ,a# in tran#it a# t(e ,ei&(t of
t(e #tee+ "o-er# !a'e it i!$o##i)+e for a $er#on to o$en ,it(o*t t(e *#e of t(e #(i$=# )oo!.
32
It ,a# a+#o #(o,n '*rin& t(e tria+ t(at t(e (*++ of t(e -e##e+ ,a# in &oo' "on'ition% fore"+o#in& t(e $o##i)i+ity of #$i++a&e of t(e
"ar&o into t(e #ea or #ee$a&e of ,ater in#i'e t(e (*++ of t(e -e##e+.
33
W(en MFH ?S*n P+*!? 'o"6e' at it# )ert(in& $+a"e%
re$re#entati-e# of t(e "on#i&nee )oar'e'% an' in t(e $re#en"e of a re$re#entati-e of t(e #(i$o,ner% t(e fore!an% t(e
#te-e'ore#% an' a "ar&o #*r-eyor re$re#entin& CSCI% o$ene' t(e (at"(e# an' in#$e"te' t(e "on'ition of t(e (*++ of t(e -e##e+.
T(e #te-e'ore# *n+oa'e' t(e "ar&o *n'er t(e ,at"(f*+ eye# of t(e #(i$!ate# ,(o ,ere o-er#eein& t(e ,(o+e o$eration on
rotation )a#i#.
34
3
Heri+y% t(e $re#*!$tion of ne&+i&en"e on t(e $art of t(e re#$on'ent "arrier (a# )een effi"a"io*#+y o-er"o!e )y t(e #(o,in& of
e:traor'inary /ea+ an' a##i'*ity e:er"i#e' )y t(e "arrier in t(e "are of t(e "ar&o. T(i# ,a# "onfir!e' )y re#$on'ent a$$e++ate
"o*rt t(*# @
. . . Ee t(at a# it !ay% "ontrary to t(e tria+ "o*rt=# fin'in&% the record of the instant case discloses ample evidence showing that
defendant carrier was not negligent in performing its obligations. Parti"*+ar+y% t(e fo++o,in& te#ti!onie# of $+aintiff0a$$e++ee=#
o,n ,itne##e# "+ear+y #(o, a)#en"e of ne&+i&en"e )y t(e 'efen'ant "arrierB t(at t(e (*++ of t(e -e##e+ at t(e ti!e of t(e
'i#"(ar&e of t(e "ar&o ,a# #ea+e' an' no)o'y "o*+' o$en t(e #a!e e:"e$t in t(e $re#en"e of t(e o,ner of t(e "ar&o an' t(e
re$re#entati-e# of t(e -e##e+ (TSN% 2; >*+y 1377% $. 11B t(at t(e "o-er of t(e (at"(e# ,a# !a'e of #tee+ an' it ,a# o-er+ai'
,it( tar$a*+in#% t(ree +ayer# of tar$a*+in# an' t(erefore t(eir "ontent# ,ere $rote"te' fro! t(e ,eat(er (TSN% < A$ri+ 1372% $.
21B an'% t(at to o$en t(e#e (at"(e#% t(e #ea+# ,o*+' (a-e to )e )ro6en% a++ t(e #ea+# ,ere fo*n' to )e inta"t (TSN% 2; >*+y
1377% $$. 1<014 (e!$(a#i# #*$$+ie'.
T(e $erio' '*rin& ,(i"( $ri-ate re#$on'ent ,a# to o)#er-e t(e 'e&ree of 'i+i&en"e re8*ire' of it a# a $*)+i" "arrier )e&an
fro! t(e ti!e t(e "ar&o ,a# *n"on'itiona++y $+a"e' in it# "(ar&e after t(e -e##e+=# (o+'# ,ere '*+y in#$e"te' an' $a##e'
#"r*tiny )y t(e #(i$$er% *$ to an' *nti+ t(e -e##e+ rea"(e' it# 'e#tination an' it# (*++ ,a# ree:a!ine' )y t(e "on#i&nee% )*t
$rior to *n+oa'in&. T(i# i# "+ear fro! t(e +i!itation "+a*#e a&ree' *$on )y t(e $artie# in t(e A''en'*! to t(e #tan'ar'
?.ENCON? ti!e "(arter0$arty ,(i"( $ro-i'e' for an F.I.O.S.% !eanin&% t(at t(e +oa'in&% #to,in&% tri!!in& an' 'i#"(ar&e of
t(e "ar&o ,a# to )e 'one )y t(e "(arterer% free fro! a++ ri#6 an' e:$en#e to t(e "arrier.
35
Moreo-er% a #(i$o,ner i# +ia)+e for
'a!a&e to t(e "ar&o re#*+tin& fro! i!$ro$er #to,a&e on+y ,(en t(e #to,in& i# 'one )y #te-e'ore# e!$+oye' )y (i!% an'
t(erefore *n'er (i# "ontro+ an' #*$er-i#ion% not ,(en t(e #a!e i# 'one )y t(e "on#i&nee or #te-e'ore# *n'er t(e e!$+oy of
t(e +atter.
36
Arti"+e 1731 of t(e Ne, Ci-i+ Co'e $ro-i'e# t(at "o!!on "arrier# are not re#$on#i)+e for t(e +o##% 'e#tr*"tion or 'eterioration
of t(e &oo'# if "a*#e' )y t(e "(arterer of t(e &oo'# or 'efe"t# in t(e $a"6a&in& or in t(e "ontainer#. T(e Co'e of Co!!er"e
a+#o $ro-i'e# t(at a++ +o##e# an' 'eterioration ,(i"( t(e &oo'# !ay #*ffer '*rin& t(e tran#$ortation )y rea#on of fort*ito*#
e-ent% force majeure% or t(e in(erent 'efe"t of t(e &oo'#% #(a++ )e for t(e a""o*nt an' ri#6 of t(e #(i$$er% an' t(at $roof of
t(e#e a""i'ent# i# in"*!)ent *$on t(e "arrier.
37
T(e "arrier% nonet(e+e##% #(a++ )e +ia)+e for t(e +o## an' 'a!a&e re#*+tin&
fro! t(e $re"e'in& "a*#e# if it i# $ro-e'% a# a&ain#t (i!% t(at t(ey aro#e t(ro*&( (i# ne&+i&en"e or )y rea#on of (i# (a-in&
fai+e' to ta6e t(e $re"a*tion# ,(i"( *#a&e (a# e#ta)+i#(e' a!on& "aref*+ $er#on#.
38
Re#$on'ent "arrier $re#ente' a ,itne## ,(o te#tifie' on t(e "(ara"teri#ti"# of t(e ferti+i/er #(i$$e' an' t(e e:$e"te' ri#6# of
)*+6 #(i$$in&. Mr. E#tani#+ao C(*$*n&"o% a "(e!i"a+ en&ineer ,or6in& ,it( At+a# Ferti+i/er% 'e#"ri)e' 7rea a# a "(e!i"a+
"o!$o*n' "on#i#tin& !o#t+y of a!!onia an' "ar)on !ono:i'e "o!$o*n'# ,(i"( are *#e' a# ferti+i/er. 7rea a+#o "ontain#
14G nitro&en an' i# (i&(+y #o+*)+e in ,ater. 9o,e-er% '*rin& #tora&e% nitro&en an' a!!onia 'o not nor!a++y e-a$orate e-en
on a +on& -oya&e% $ro-i'e' t(at t(e te!$erat*re in#i'e t(e (*++ 'oe# not e:"ee' ei&(ty (2; 'e&ree# "enti&ra'e. Mr.
C(*$*n&"o f*rt(er a''e' t(at in *n+oa'in& ferti+i/er in )*+6 ,it( t(e *#e of a "+a!$e' #(e++% +o##e# '*e to #$i++a&e '*rin& #*"(
o$eration a!o*ntin& to one $er"ent (1G a&ain#t t(e )i++ of +a'in& i# 'ee!e' ?nor!a+? or ?to+era)+e.? T(e $ri!ary "a*#e of
t(e#e #$i++a&e# i# t(e "+a!$e' #(e++ ,(i"( 'oe# not #ea+ -ery ti&(t+y. A+#o% t(e ,in' ten'# to )+o, a,ay #o!e of t(e !ateria+#
'*rin& t(e *n+oa'in& $ro"e##.
T(e 'i##i$ation of 8*antitie# of ferti+i/er% or it# 'aterioration in -a+*e% i# "a*#e' eit(er )y an e:tre!e+y (i&( te!$erat*re in it#
$+a"e of #tora&e% or ,(en it "o!e# in "onta"t ,it( ,ater. W(en 7rea i# 'ren"(e' in ,ater% eit(er fre#( or #a+ine% #o!e of it#
$arti"+e# 'i##o+-e. E*t t(e #a+-a&e' $ortion ,(i"( i# in +i8*i' for! #ti++ re!ain# $otent an' *#a)+e a+t(o*&( no +on&er #a+ea)+e
in it# ori&ina+ !ar6et -a+*e.
T(e $ro)a)i+ity of t(e "ar&o )ein& 'a!a&e' or &ettin& !i:e' or "onta!inate' ,it( forei&n $arti"+e# ,a# !a'e &reater )y t(e
fa"t t(at t(e ferti+i/er ,a# tran#$orte' in ?)*+6%? t(ere)y e:$o#in& it to t(e ini!i"a+ effe"t# of t(e e+e!ent# an' t(e &ri!y
"on'ition of t(e -ario*# $ie"e# of e8*i$!ent *#e' in tran#$ortin& an' (a*+in& it.
T(e e-i'en"e of re#$on'ent "arrier a+#o #(o,e' t(at it ,a# (i&(+y i!$ro)a)+e for #ea ,ater to #ee$ into t(e -e##e+=# (o+'#
'*rin& t(e -oya&e #in"e t(e (*++ of t(e -e##e+ ,a# in &oo' "on'ition an' (er (at"(e# ,ere ti&(t+y "+o#e' an' fir!+y #ea+e'%
!a6in& t(e MFH ?S*n P+*!? in a++ re#$e"t# #ea,ort(y to "arry t(e "ar&o #(e ,a# "(artere' for. If t(ere ,a# +o## or
"onta!ination of t(e "ar&o% it ,a# !ore +i6e+y to (a-e o""*rre' ,(i+e t(e #a!e ,a# )ein& tran#$orte' fro! t(e #(i$ to t(e
'*!$ tr*"6# an' fina++y to t(e "on#i&nee=# ,are(o*#e. T(i# !ay )e &+eane' fro! t(e te#ti!ony of t(e !arine an' "ar&o
#*r-eyor of CSCI ,(o #*$er-i#e' t(e *n+oa'in&. 9e e:$+aine' t(at t(e 12 MFT of a++e&e' ?)ar or'er "ar&o? a# "ontaine' in
t(eir re$ort to PPI ,a# 5*#t an a$$ro:i!ation or e#ti!ate !a'e )y t(e! after t(e ferti+i/er ,a# 'i#"(ar&e' fro! t(e -e##e+ an'
#e&re&ate' fro! t(e re#t of t(e "ar&o.
T(e Co*rt note# t(at it ,a# in t(e !ont( of >*+y ,(en t(e -e##e+ arri-e' $ort an' *n+oa'e' (er "ar&o. It raine' fro! ti!e to
ti!e at t(e (ar)or area ,(i+e t(e "ar&o ,a# )ein& 'i#"(ar&e' a""or'in& to t(e #*$$+y offi"er of PPI% ,(o a+#o te#tifie' t(at it
,a# ,in'y at t(e ,aterfront an' a+on& t(e #(ore+ine ,(ere t(e '*!$ tr*"6# $a##e' enro*te to t(e "on#i&nee=# ,are(o*#e.
In'ee'% ,e a&ree ,it( re#$on'ent "arrier t(at )*+6 #(i$!ent of (i&(+y #o+*)+e &oo'# +i6e ferti+i/er "arrie# ,it( it t(e ri#6 of +o##
or 'a!a&e. More #o% ,it( a -aria)+e ,eat(er "on'ition $re-a+ent '*rin& it# *n+oa'in&% a# ,a# t(e "a#e at )ar. T(i# i# a ri#6 t(e
#(i$$er or t(e o,ner of t(e &oo'# (a# to fa"e. C+ear+y% re#$on'ent "arrier (a# #*ffi"ient+y $ro-e' t(e in(erent "(ara"ter of t(e
&oo'# ,(i"( !a6e# it (i&(+y -*+nera)+e to 'eteriorationB a# ,e++ a# t(e ina'e8*a"y of it# $a"6a&in& ,(i"( f*rt(er "ontri)*te' to
t(e +o##. On t(e ot(er (an'% no $roof ,a# a''*"e' )y t(e $etitioner #(o,in& t(at t(e "arrier ,a# re!i#e in t(e e:er"i#e of '*e
'i+i&en"e in or'er to !ini!i/e t(e +o## or 'a!a&e to t(e &oo'# it "arrie'.
W9EREFORE% t(e $etition i# &"$""'&. T(e a##ai+e' 'e"i#ion of t(e Co*rt of A$$ea+#% ,(i"( re-er#e' t(e tria+ "o*rt%
i# A((%$'&. Con#e8*ent+y% Ci-i+ Ca#e No. 32423 of t(e t(en Co*rt of t(e Fir#t In#tan"e% no, Re&iona+ Tria+ Co*rt% of Mani+a
#(o*+' )e% a# it i# (ere)y &"$""'&.
Loa'#tar S(i$$in& Co.% In". -. Co*rt of A$$ea+#% 31< SCRA 333 (1333
Petitioner Loa'#tar S(i$$in& Co.% In". ((ereafter LOADSTAR% in t(i# $etition for re-ie, on certiorari *n'er R*+e 1< of t(e 1337
R*+e# of Ci-i+ Pro"e'*re% #ee6# to re-er#e an' #et a#i'e t(e fo++o,in&A (a t(e 3; >an*ary 1337 'e"i#ion
J1K
of t(e Co*rt of
A$$ea+# in CA0..R. CH No. 341;1% ,(i"( affir!e' t(e 'e"i#ion of 1 O"to)er 1331
J2K
of t(e Re&iona+ Tria+ Co*rt of Mani+a%
Eran"( 14% in Ci-i+ Ca#e No. 2<02311;% or'erin& LOADSTAR to $ay $ri-ate re#$on'ent Mani+a In#*ran"e Co. ((ereafter MIC
t(e a!o*nt of P4%;47%172% ,it( +e&a+ intere#t fro! t(e fi+in& of t(e "o!$+aint *nti+ f*++y $ai'% P2%;;; a# attorneyL# fee#% an' t(e
"o#t# of t(e #*itB an' () it# re#o+*tion of 13 No-e!)er 1337%
J3K
'enyin& LOADSTARL# !otion for re"on#i'eration of #ai'
'e"i#ion.
T(e fa"t# are *n'i#$*te'.
On 13 No-e!)er 1321% LOADSTAR re"ei-e' on )oar' it# MFH MC(ero6eeN ((ereafter% t(e -e##e+ t(e fo++o,in& &oo'# for
#(i$!entA
1
7;< )a+e# of +a,anit (ar',oo'B
27 )o:e# an' "rate# of ti+e,oo' a##e!)+ie# an' ot(er#B an'
13 )*n'+e# of !o*+'in&# R O W (3 A$iton& Eo+i'eni/e'.
T(e &oo'#% a!o*ntin& to P4%;47%172% ,ere in#*re' for t(e #a!e a!o*nt ,it( MIC a&ain#t -ario*# ri#6# in"+*'in& MTOTAL
LOSS EC TOTAL LOSS OF T9E HESSEL.N T(e -e##e+% in t*rn% ,a# in#*re' )y Pr*'entia+ .*arantee O A##*ran"e% In".
((ereafter P.AI for P1 !i++ion. On 2; No-e!)er 1321% on it# ,ay to Mani+a fro! t(e $ort of Na#i$it% A&*#an 'e+ Norte% t(e
-e##e+% a+on& ,it( it# "ar&o% #an6 off Li!a#a,a I#+an'. A# a re#*+t of t(e tota+ +o## of it# #(i$!ent% t(e "on#i&nee !a'e a
"+ai! ,it( LOADSTAR ,(i"(% (o,e-er% i&nore' t(e #a!e. A# t(e in#*rer% MIC $ai' P4%;7<%;;; to t(e in#*re' in f*++
#ett+e!ent of it# "+ai!% an' t(e +atter e:e"*te' a #*)ro&ation re"ei$t t(erefor.
On 1 Fe)r*ary 132<% MIC fi+e' a "o!$+aint a&ain#t LOADSTAR an' P.AI% a++e&in& t(at t(e #in6in& of t(e -e##e+ ,a# '*e to
t(e fa*+t an' ne&+i&en"e of LOADSTAR an' it# e!$+oyee#. It a+#o $raye' t(at P.AI )e or'ere' to $ay t(e in#*ran"e $ro"ee'#
fro! t(e +o## of t(e -e##e+ 'ire"t+y to MIC% #ai' a!o*nt to )e 'e'*"te' fro! MICL# "+ai! fro! LOADSTAR.
In it# an#,er% LOADSTAR 'enie' any +ia)i+ity for t(e +o## of t(e #(i$$erL# &oo'# an' "+ai!e' t(at t(e #in6in& of it# -e##e+ ,a#
'*e to force majeure. P.AI% on t(e ot(er (an'% a-erre' t(at MIC (a' no "a*#e of a"tion a&ain#t it% LOADSTAR )ein& t(e
$arty in#*re'. In any e-ent% P.AI ,a# +ater 'ro$$e' a# a $arty 'efen'ant after it $ai' t(e in#*ran"e $ro"ee'# to LOADSTAR.
A# #tate' at t(e o*t#et% t(e "o*rt a quo ren'ere' 5*'&!ent in fa-or of MIC% $ro!$tin& LOADSTAR to e+e-ate t(e !atter to t(e
Co*rt of A$$ea+#% ,(i"(% (o,e-er% a&ree' ,it( t(e tria+ "o*rt an' affir!e' it# 'e"i#ionin toto)
In 'i#!i##in& LOADSTARL# a$$ea+% t(e a$$e++ate "o*rt !a'e t(e fo++o,in& o)#er-ation#A
LOADSTAR "annot )e "on#i'ere' a $ri-ate "arrier on t(e #o+e &ro*n' t(at t(ere ,a# a #in&+e #(i$$er on t(at fatef*+
-oya&e. T(e "o*rt note' t(at t(e "(arter of t(e -e##e+ ,a# +i!ite' to t(e #(i$% )*t LOADSTAR retaine' "ontro+ o-er it#
"re,.
J1K
A# a "o!!on "arrier% it i# t(e Co'e of Co!!er"e% not t(e Ci-i+ Co'e% ,(i"( #(o*+' )e a$$+ie' in 'eter!inin& t(e ri&(t#
an' +ia)i+itie# of t(e $artie#.
T(e -e##e+ ,a# not #ea,ort(y )e"a*#e it ,a# *n'er!anne' on t(e 'ay of t(e -oya&e. If it (a' )een #ea,ort(y% it "o*+'
(a-e ,it(#too' t(e Mnat*ra+ an' ine-ita)+e a"tion of t(e #eaN on 2; No-e!)er 1321% ,(en t(e "on'ition of t(e #ea ,a#
!o'erate. T(e -e##e+ #an6% not )e"a*#e of force majeure% )*t )e"a*#e it ,a# not #ea,ort(y. LOADSTARLS a++e&ation
t(at t(e #in6in& ,a# $ro)a)+y '*e to t(e M"on-er&en"e of t(e ,in'#%N a# #tate' )y a PA.ASA e:$ert% ,a# not '*+y
$ro-en at t(e tria+. T(e M+i!ite' +ia)i+ityN r*+e% t(erefore% i# not a$$+i"a)+e "on#i'erin& t(at% in t(i# "a#e% t(ere ,a# an
a"t*a+ fin'in& of ne&+i&en"e on t(e $art of t(e "arrier.
J<K
Eet,een MIC an' LOADSTAR% t(e $ro-i#ion# of t(e Ei++ of La'in& 'o not a$$+y )e"a*#e #ai' $ro-i#ion# )in' on+y t(e
#(i$$erF"on#i&nee an' t(e "arrier. W(en MIC $ai' t(e #(i$$er for t(e &oo'# in#*re'% it ,a# #*)ro&ate' to t(e +atterL#
ri&(t# a# a&ain#t t(e "arrier% LOADSTAR.
J4K
T(ere ,a# a "+ear )rea"( of t(e "ontra"t of "arria&e ,(en t(e #(i$$erL# &oo'# ne-er rea"(e' t(eir
'e#tination. LOADSTARL# 'efen#e of M'i+i&en"e of a &oo' fat(er of a fa!i+yN in t(e trainin& an' #e+e"tion of it# "re, i#
*na-ai+in& )e"a*#e t(i# i# not a $ro$er or "o!$+ete 'efen#e in culpa contractual.
MArt. 341 (of t(e Co'e of Co!!er"e (a# )een 5*'i"ia++y "on#tr*e' to !ean t(at ,(en &oo'# are 'e+i-ere' on )oar' a
#(i$ in &oo' or'er an' "on'ition% an' t(e #(i$o,ner 'e+i-er# t(e! to t(e #(i$$er in )a' or'er an' "on'ition% it t(en
'e-o+-e# *$on t(e #(i$o,ner to )ot( a++e&e an' $ro-e t(at t(e &oo'# ,ere 'a!a&e' )y rea#on of #o!e fa"t ,(i"(
+e&a++y e:e!$t# (i! fro! +ia)i+ity.N Tran#$ortation of t(e !er"(an'i#e at t(e ri#6 an' -ent*re of t(e #(i$$er !ean# t(at
t(e +atter )ear# t(e ri#6 of +o## or 'eterioration of (i# &oo'# ari#in& fro! fort*ito*# e-ent#% force majeure% or t(e in(erent
nat*re an' 'efe"t# of t(e &oo'#% )*t not t(o#e "a*#e' )y t(e $re#*!e' ne&+i&en"e or fa*+t of t(e "arrier% *n+e##
ot(er,i#e $ro-e'.
J7K
T(e error# a##i&ne' )y LOADSTAR )oi+ 'o,n to a 'eter!ination of t(e fo++o,in& i##*e#A
I# t(e MFH MC(ero6eeN a $ri-ate or a "o!!on "arrierD
Di' LOADSTAR o)#er-e '*e an'For or'inary 'i+i&en"e in t(e#e $re!i#e#D
Re&ar'in& t(e fir#t i##*e% LOADSTAR #*)!it# t(at t(e -e##e+ ,a# a $ri-ate "arrier )e"a*#e it ,a# not i##*e' a "ertifi"ate of
$*)+i" "on-enien"e% it 'i' not (a-e a re&*+ar tri$ or #"(e'*+e nor a fi:e' ro*te% an' t(ere ,a# on+y Mone #(i$$er% one
"on#i&nee for a #$e"ia+ "ar&o.N
In ref*tation% MIC ar&*e# t(at t(e i##*e a# to t(e "+a##ifi"ation of t(e MFH MC(ero6eeN ,a# not ti!e+y rai#e' )e+o,B (en"e% it i#
)arre' )y e#to$$e+. W(i+e it i# tr*e t(at t(e -e##e+ (a' on )oar' on+y t(e "ar&o of ,oo' $ro'*"t# for 'e+i-ery to one
"on#i&nee% it ,a# a+#o "arryin& $a##en&er# a# $art of it# re&*+ar )*#ine##. Moreo-er% t(e )i++# of +a'in& in t(i# "a#e !a'e no
!ention of any "(arter $arty )*t on+y a #tate!ent t(at t(e -e##e+ ,a# a M&enera+ "ar&o "arrier.N Neit(er ,a# t(ere any M#$e"ia+
arran&e!entN )et,een LOADSTAR an' t(e #(i$$er re&ar'in& t(e #(i$!ent of t(e "ar&o. T(e #in&*+ar fa"t t(at t(e -e##e+ ,a#
"arryin& a $arti"*+ar ty$e of "ar&o for one #(i$$er i# not #*ffi"ient to "on-ert t(e -e##e+ into a $ri-ate "arrier.
A# re&ar'# t(e #e"on' error% LOADSTAR ar&*e# t(at a# a $ri-ate "arrier% it "annot )e $re#*!e' to (a-e )een ne&+i&ent% an'
t(e )*r'en of $ro-in& ot(er,i#e 'e-o+-e' *$on MIC.
J2K
LOADSTAR a+#o !aintain# t(at t(e -e##e+ ,a# #ea,ort(y. Eefore t(e fatef*+ -oya&e on 13 No-e!)er 1321% t(e -e##e+ ,a#
a++e&e'+y 'ry 'o"6e' at Ie$$e+ P(i+i$$ine# S(i$yar' an' ,a# '*+y in#$e"te' )y t(e !ariti!e #afety en&ineer# of t(e P(i+i$$ine
Coa#t .*ar'% ,(o "ertifie' t(at t(e #(i$ ,a# fit to *n'erta6e a -oya&e. It# "re, at t(e ti!e ,a# e:$erien"e'% +i"en#e' an'
*n8*e#tiona)+y "o!$etent. Wit( a++ t(e#e $re"a*tion#% t(ere "o*+' )e no ot(er "on"+*#ion e:"e$t t(at LOADSTAR e:er"i#e'
t(e 'i+i&en"e of a &oo' fat(er of a fa!i+y in en#*rin& t(e -e##e+L# #ea,ort(ine##.
LOADSTAR f*rt(er "+ai!# t(at it ,a# not re#$on#i)+e for t(e +o## of t(e "ar&o% #*"( +o## )ein& '*e to force majeure. It $oint#
o*t t(at ,(en t(e -e##e+ +eft Na#i$it% A&*#an 'e+ Norte% on 13 No-e!)er 1321% t(e ,eat(er ,a# fine *nti+ t(e ne:t 'ay ,(en
t(e -e##e+ #an6 '*e to #tron& ,a-e#. MICL# ,itne##% .ra"e+ia Ta$e+% f*++y e#ta)+i#(e' t(e e:i#ten"e of t,o ty$(oon#%
MWELFRIN.N an' MCOLIN.%N in#i'e t(e P(i+i$$ine area of re#$on#i)i+ity. In fa"t% on 2; No-e!)er 1321% #i&na+ no. 1 ,a#
'e"+are' o-er Ea#tern Hi#aya#% ,(i"( in"+*'e# Li!a#a,a I#+an'. Ta$e+ a+#o te#tifie' t(at t(e "on-er&en"e of ,in'# )ro*&(t
a)o*t )y t(e#e t,o ty$(oon# #tren&t(ene' ,in' -e+o"ity in t(e area% nat*ra++y $ro'*"in& #tron& ,a-e# an' ,in'#% in t*rn%
"a*#in& t(e -e##e+ to +i#t an' e-ent*a++y #in6.
LOADSTAR &oe# on to ar&*e t(at% )ein& a $ri-ate "arrier% any a&ree!ent +i!itin& it# +ia)i+ity% #*"( a# ,(at tran#$ire' in t(i#
"a#e% i# -a+i'. Sin"e t(e "ar&o ,a# )ein& #(i$$e' at Mo,nerL# ri#6%N LOADSTAR ,a# not +ia)+e for any +o## or 'a!a&e to t(e
#a!e. T(erefore% t(e Co*rt of A$$ea+# erre' in (o+'in& t(at t(e $ro-i#ion# of t(e )i++# of +a'in& a$$+y on+y to t(e #(i$$er an'
t(e "arrier% an' not to t(e in#*rer of t(e &oo'#% ,(i"( "on"+*#ion r*n# "o*nter to t(e S*$re!e Co*rtL# r*+in& in t(e "a#e of "t)
*aul (ire + $arine nsurance !o) v) $acondray + !o), nc),
J3K
and ,ational -nion (ire nsurance !ompany of *ittsburg v)
"tolt#,ielsen *hils), nc)
J1;K
Fina++y% LOADSTAR a-er# t(at MICL# "+ai! (a' a+rea'y $re#"ri)e'% t(e "a#e (a-in& )een in#tit*te' )eyon' t(e $erio' #tate'
in t(e )i++# of +a'in& for in#tit*tin& t(e #a!e P #*it# )a#e' *$on "+ai!# ari#in& fro! #(orta&e% 'a!a&e% or non0'e+i-ery of
<
#(i$!ent #(a++ )e in#tit*te' ,it(in #i:ty 'ay# fro! t(e a""r*a+ of t(e ri&(t of a"tion. T(e -e##e+ #an6 on 2; No-e!)er 1321B
yet% t(e "a#e for re"o-ery ,a# fi+e' on+y on 1 Fe)r*ary 132<.
MIC% on t(e ot(er (an'% "+ai!# t(at LOADSTAR ,a# +ia)+e% not,it(#tan'in& t(at t(e +o## of t(e "ar&o ,a# '*e to force
majeure, )e"a*#e t(e #a!e "on"*rre' ,it( LOADSTARL# fa*+t or ne&+i&en"e.
Se"on'+y% LOADSTAR 'i' not rai#e t(e i##*e of $re#"ri$tion in t(e "o*rt )e+o,B (en"e% t(e #a!e !*#t )e 'ee!e' ,ai-e'.
T(ir'+y% t(e M+i!ite' +ia)i+ityN t(eory i# not a$$+i"a)+e in t(e "a#e at )ar )e"a*#e LOADSTAR ,a# at fa*+t or ne&+i&ent% an'
)e"a*#e it fai+e' to !aintain a #ea,ort(y -e##e+. A*t(ori/in& t(e -oya&e not,it(#tan'in& it# 6no,+e'&e of a ty$(oon i#
tanta!o*nt to ne&+i&en"e.
We fin' no !erit in t(i# $etition.
Anent t(e fir#t a##i&ne' error% ,e (o+' t(at LOADSTAR i# a "o!!on "arrier. It i# not ne"e##ary t(at t(e "arrier )e i##*e' a
"ertifi"ate of $*)+i" "on-enien"e% an' t(i# $*)+i" "(ara"ter i# not a+tere' )y t(e fa"t t(at t(e "arria&e of t(e &oo'# in 8*e#tion
,a# $erio'i"% o""a#iona+% e$i#o'i" or *n#"(e'*+e'.
In #*$$ort of it# $o#ition% LOADSTAR re+ie' on t(e 1342 "a#e of Home nsurance !o) v) American "teamship Agencies, nc.%
J11K
,(ere t(i# Co*rt (e+' t(at a "o!!on "arrier tran#$ortin& #$e"ia+ "ar&o or "(arterin& t(e -e##e+ to a #$e"ia+ $er#on
)e"o!e# a $ri-ate "arrier t(at i# not #*)5e"t to t(e $ro-i#ion# of t(e Ci-i+ Co'e. Any #ti$*+ation in t(e "(arter $arty a)#o+-in&
t(e o,ner fro! +ia)i+ity for +o## '*e to t(e ne&+i&en"e of it# a&ent i# -oi' on+y if t(e #tri"t $o+i"y &o-ernin& "o!!on "arrier# i#
*$(e+'. S*"( $o+i"y (a# no for"e ,(ere t(e $*)+i" at +ar&e i# not in-o+-e'% a# in t(e "a#e of a #(i$ tota++y "(artere' for t(e *#e
of a #in&+e $arty. LOADSTAR a+#o "ite' .alen/uela Hardwood and ndustrial "upply, nc) v) !ourt of Appeals
J12K
an' ,ational
"teel !orp) v) !ourt of Appeals,
J13K
)ot( of ,(i"( *$(e+' t(e Home nsurance 'o"trine.
T(e#e "a#e# in-o6e' )y LOADSTAR are not a$$+i"a)+e in t(e "a#e at )ar for #i!$+e rea#on t(at t(e fa"t*a+ #ettin&# are
'ifferent. T(e re"or'# 'o not 'i#"+o#e t(at t(e MFH MC(ero6ee%N on t(e 'ate in 8*e#tion% *n'ertoo6 to "arry a #$e"ia+ "ar&o or
,a# "(artere' to a #$e"ia+ $er#on on+y. T(ere ,a# no "(arter $arty. T(e )i++# of +a'in& fai+e' to #(o, any #$e"ia+
arran&e!ent% )*t on+y a &enera+ $ro-i#ion to t(e effe"t t(at t(e MFH MC(ero6eeN ,a# a 0general cargo carrier)1
J11K
F*rt(er% t(e
)are fa"t t(at t(e -e##e+ ,a# "arryin& a $arti"*+ar ty$e of "ar&o for one #(i$$er% ,(i"( a$$ear# to )e $*re+y "oin"i'enta+% i# not
rea#on eno*&( to "on-ert t(e -e##e+ fro! a "o!!on to a $ri-ate "arrier% e#$e"ia++y ,(ere% a# in t(i# "a#e% it ,a# #(o,n t(at
t(e -e##e+ ,a# a+#o "arryin& $a##en&er#.
7n'er t(e fa"t# an' "ir"*!#tan"e# o)tainin& in t(i# "a#e% LOADSTAR fit# t(e 'efinition of a "o!!on "arrier *n'er Arti"+e
1732 of t(e Ci-i+ Co'e. In t(e "a#e of &e 2u/man v) !ourt of Appeals,
J1<K
t(e Co*rt 5*:ta$o#e' t(e #tat*tory 'efinition of
M"o!!on "arrier#N ,it( t(e $e"*+iar "ir"*!#tan"e# of t(at "a#e% vi/)3
T(e Ci-i+ Co'e 'efine# M"o!!on "arrier#N in t(e fo++o,in& ter!#A
MArti"+e 1732. Co!!on "arrier# are $er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e )*#ine## of "arryin& or
tran#$ortin& $a##en&er# or &oo'# or )ot(% )y +an'% ,ater% or air for "o!$en#ation% offerin& t(eir #er-i"e# to t(e $*)+i".N
T(e a)o-e arti"+e !a6e# no 'i#tin"tion )et,een one ,(o#e principal )*#ine## a"ti-ity i# t(e "arryin& of $er#on# or &oo'# or
)ot(% an' one ,(o 'oe# #*"( "arryin& on+y a# an ancillary a"ti-ity (in +o"a+ i'io!% a# Ma #i'e+ineNL. Arti"+e 1732 a+#o "aref*++y
a-oi'# !a6in& any 'i#tin"tion )et,een a $er#on or enter$ri#e offerin& tran#$ortation #er-i"e on a regular or scheduled
basis an' one offerin& #*"( #er-i"e on an occasional, episodic or unscheduled basis. Neit(er 'oe# Arti"+e 1732 'i#tin&*i#(
)et,een a "arrier offerin& it# #er-i"e# to t(e M&enera+ $*)+i"%N i.e.% t(e &enera+ "o!!*nity or $o$*+ation% an' one ,(o offer#
#er-i"e# or #o+i"it# )*#ine## on+y fro! a narro, segment of t(e &enera+ $o$*+ation. We t(in6 t(at Arti"+e 1733 'e+i)erate+y
refraine' fro! !a6in& #*"( 'i#tin"tion#.
: : :
It a$$ear# to t(e Co*rt t(at $ri-ate re#$on'ent i# $ro$er+y "(ara"teri/e' a# a "o!!on "arrier e-en t(o*&( (e !ere+y M)a"60
(a*+e'N &oo'# for ot(er !er"(ant# fro! Mani+a to Pan&a#inan% a+t(o*&( #*"( )a"6(a*+in& ,a# 'one on a $erio'i" or
o""a#iona+ rat(er t(an re&*+ar or #"(e'*+e' !anner% an' e-en t(o*&( $ri-ate re#$on'entL# principal o""*$ation ,a# not t(e
"arria&e of &oo'# for ot(er#. T(ere i# no 'i#$*te t(at $ri-ate re#$on'ent "(ar&e' (i# "*#to!er# a fee for (a*+in& t(eir &oo'#B
t(at t(at fee fre8*ent+y fe++ )e+o, "o!!er"ia+ frei&(t rate# i# not re+e-ant (ere.
T(e Co*rt of A$$ea+# referre' to t(e fa"t t(at $ri-ate re#$on'ent (e+' no "ertifi"ate of $*)+i" "on-enien"e% an' "on"+*'e' (e
,a# not a "o!!on "arrier. T(i# i# $a+$a)+e error. A "ertifi"ate of $*)+i" "on-enien"e i# not a re8*i#ite for t(e in"*rrin& of
+ia)i+ity *n'er t(e Ci-i+ Co'e $ro-i#ion# &o-ernin& "o!!on "arrier#. T(at +ia)i+ity ari#e# t(e !o!ent a $er#on or fir! a"t# a# a
"o!!on "arrier% ,it(o*t re&ar' to ,(et(er or not #*"( "arrier (a# a+#o "o!$+ie' ,it( t(e re8*ire!ent# of t(e a$$+i"a)+e
re&*+atory #tat*te an' i!$+e!entin& re&*+ation# an' (a# )een &rante' a "ertifi"ate of $*)+i" "on-enien"e or ot(er
fran"(i#e. To e:e!$t $ri-ate re#$on'ent fro! t(e +ia)i+itie# of a "o!!on "arrier )e"a*#e (e (a# not #e"*re' t(e ne"e##ary
"ertifi"ate of $*)+i" "on-enien"e% ,o*+' )e offen#i-e to #o*n' $*)+i" $o+i"yB t(at ,o*+' )e to re,ar' $ri-ate re#$on'ent
$re"i#e+y for fai+in& to "o!$+y ,it( a$$+i"a)+e #tat*tory re8*ire!ent#. T(e )*#ine## of a "o!!on "arrier i!$in&e# 'ire"t+y an'
inti!ate+y *$on t(e #afety an' ,e++ )ein& an' $ro$erty of t(o#e !e!)er# of t(e &enera+ "o!!*nity ,(o (a$$en to 'ea+ ,it(
#*"( "arrier. T(e +a, i!$o#e# '*tie# an' +ia)i+itie# *$on "o!!on "arrier# for t(e #afety an' $rote"tion of t(o#e ,(o *ti+i/e
t(eir #er-i"e# an' t(e +a, "annot a++o, a "o!!on "arrier to ren'er #*"( '*tie# an' +ia)i+itie# !ere+y fa"*+tati-e )y #i!$+y
fai+in& to o)tain t(e ne"e##ary $er!it# an' a*t(ori/ation#.
Mo-in& on to t(e #e"on' a##i&ne' error% ,e fin' t(at t(e MFH MC(ero6eeN ,a# not #ea,ort(y ,(en it e!)ar6e' on it# -oya&e
on 13 No-e!)er 1321. T(e -e##e+ ,a# not e-en #*ffi"ient+y !anne' at t(e ti!e. MFor a -e##e+ to )e #ea,ort(y% it !*#t )e
a'e8*ate+y e8*i$$e' for t(e -oya&e an' !anne' ,it( a #*ffi"ient n*!)er of "o!$etent offi"er# an' "re,. T(e fai+*re of a
"o!!on "arrier to !aintain in #ea,ort(y "on'ition it# -e##e+ in-o+-e' in a "ontra"t of "arria&e i# a "+ear )rea"( of it# '*ty
$re#"ri)e' in Arti"+e 17<< of t(e Ci-i+ Co'e.N
J14K
Neit(er 'o ,e a&ree ,it( LOADSTARL# ar&*!ent t(at t(e M+i!ite' +ia)i+ityN t(eory #(o*+' )e a$$+ie' in t(i# "a#e. T(e 'o"trine
of +i!ite' +ia)i+ity 'oe# not a$$+y ,(ere t(ere ,a# ne&+i&en"e on t(e $art of t(e -e##e+ o,ner or a&ent.
J17K
LOADSTAR ,a# at
fa*+t or ne&+i&ent in not !aintainin& a #ea,ort(y -e##e+ an' in (a-in& a++o,e' it# -e##e+ to #ai+ 'e#$ite 6no,+e'&e of an
a$$roa"(in& ty$(oon. In any e-ent% it 'i' not #in6 )e"a*#e of any #tor! t(at !ay )e 'ee!e' a# force majeure% ina#!*"( a#
t(e ,in' "on'ition in t(e area ,(ere it #an6 ,a# 'eter!ine' to )e !o'erate. Sin"e it ,a# re!i## in t(e $erfor!an"e of it#
'*tie#% LOADSTAR "annot (i'e )e(in' t(e M+i!ite' +ia)i+ityN 'o"trine to e#"a$e re#$on#i)i+ity for t(e +o## of t(e -e##e+ an' it#
"ar&o.
LOADSTAR a+#o "+ai!# t(at t(e Co*rt of A$$ea+# erre' in (o+'in& it +ia)+e for t(e +o## of t(e &oo'#% in *tter 'i#re&ar' of t(i#
Co*rtL# $rono*n"e!ent# in "t) *aul (ire + $arine ns) !o) v) $acondray + !o), nc),
J12K
an' ,ational -nion (ire nsurance v)
"tolt#,ielsen *hils), nc)
J13K
It ,a# r*+e' in t(e#e t,o "a#e# t(at after $ayin& t(e "+ai! of t(e in#*re' for 'a!a&e# *n'er t(e
in#*ran"e $o+i"y% t(e in#*rer i# #*)ro&ate' !ere+y to t(e ri&(t# of t(e a##*re'% t(at i#% it "an re"o-er on+y t(e a!o*nt t(at !ay%
in t*rn% )e re"o-ere' )y t(e +atter. Sin"e t(e ri&(t of t(e a##*re' in "a#e of +o## or 'a!a&e to t(e &oo'# i# +i!ite' or re#tri"te'
)y t(e $ro-i#ion# in t(e )i++# of +a'in&% a #*it )y t(e in#*rer a# #*)ro&ee i# ne"e##ari+y #*)5e"t to t(e #a!e +i!itation# an'
re#tri"tion#. We 'o not a&ree. In t(e fir#t $+a"e% t(e "a#e# re+ie' on )y LOADSTAR in-o+-e' a +i!itation on t(e "arrierL#
4
+ia)i+ity to an a!o*nt fi:e' in t(e )i++ of +a'in& ,(i"( t(e $artie# !ay enter into% $ro-i'e' t(at t(e #a!e ,a# free+y an' fair+y
a&ree' *$on (Arti"+e# 1713017<;. On t(e ot(er (an'% t(e #ti$*+ation in t(e "a#e at )ar effe"ti-e+y re'*"e# t(e "o!!on
"arrierL# +ia)i+ity for t(e +o## or 'e#tr*"tion of t(e &oo'# to a 'e&ree +e## t(an e:traor'inary (Arti"+e# 1711 an' 171<% t(at i#%
t(e "arrier i# not +ia)+e for any +o## or 'a!a&e to #(i$!ent# !a'e at Mo,nerL# ri#6.N S*"( #ti$*+ation i# o)-io*#+y n*++ an' -oi'
for )ein& "ontrary to $*)+i" $o+i"y.
J2;K
It (a# )een #ai'A
T(ree 6in'# of #ti$*+ation# (a-e often )een !a'e in a )i++ of +a'in&. T(e first i# one e:e!$tin& t(e "arrier fro! any an' a++
+ia)i+ity for +o## or 'a!a&e o""a#ione' )y it# o,n ne&+i&en"e. T(e #e"on' i# one $ro-i'in& for an *n8*a+ifie' +i!itation of #*"(
+ia)i+ity to an a&ree' -a+*ation. An' t(e third i# one +i!itin& t(e +ia)i+ity of t(e "arrier to an a&ree' -a+*ation *n+e## t(e #(i$$er
'e"+are# a (i&(er -a+*e an' $ay# a (i&(er rate of frei&(t. A""or'in& to an a+!o#t *nifor! ,ei&(t of a*t(ority% t(e fir#t an'
#e"on' 6in'# of #ti$*+ation# are in-a+i' a# )ein& "ontrary to $*)+i" $o+i"y% )*t t(e t(ir' i# -a+i' an' enfor"ea)+e.
J21K
Sin"e t(e #ti$*+ation in 8*e#tion i# n*++ an' -oi'% it fo++o,# t(at ,(en MIC $ai' t(e #(i$$er% it ,a# #*)ro&ate' to a++ t(e ri&(t#
,(i"( t(e +atter (a# a&ain#t t(e "o!!on "arrier% LOADSTAR.
Neit(er i# t(ere !erit to t(e "ontention t(at t(e "+ai! in t(i# "a#e ,a# )arre' )y $re#"ri$tion. MICL# "a*#e of a"tion (a' not
yet $re#"ri)e' at t(e ti!e it ,a# "on"erne'. Ina#!*"( a# neit(er t(e Ci-i+ Co'e nor t(e Co'e of Co!!er"e #tate# a #$e"ifi"
$re#"ri$ti-e $erio' on t(e !atter% t(e Carria&e of .oo'# )y Sea A"t (CO.SA P ,(i"( $ro-i'e# for a one0year $erio' of
+i!itation on "+ai!# for +o## of% or 'a!a&e to% "ar&oe# #*#taine' '*rin& tran#it P !ay )e a$$+ie' #*$$+etori+y to t(e "a#e at
)ar. T(i# one0year $re#"ri$ti-e $erio' a+#o a$$+ie# to t(e in#*rer of t(e &oo'.
J22K
In t(i# "a#e% t(e $erio' for fi+in& t(e a"tion for
re"o-ery (a# not yet e+a$#e'. Moreo-er% a #ti$*+ation re'*"in& t(e one0year $erio' i# n*++ an' -oi'B
J23K
it !*#t% a""or'in&+y% )e
#tr*"6 'o,n.
WHEREFORE, t(e in#tant $etition i# DENIED an' t(e "(a++en&e' 'e"i#ion of 3; >an*ary 1337 of t(e Co*rt of A$$ea+# in CA0
..R. CH No. 341;1 i# AFFIRMED. Co#t# a&ain#t $etitioner.
Te#t#FC(ara"teri#ti"#
Fir#t P(i+. In'*#tria+ Cor$. -. Co*rt of A$$ea+#% 3;; SCRA 441
T(i# $etition for re-ie, on "ertiorari a##ai+# t(e De"i#ion of t(e Co*rt of A$$ea+# 'ate' No-e!)er 23% 133<% in CA0..R. SP No.
342;1% affir!in& t(e 'e"i#ion of t(e Re&iona+ Tria+ Co*rt of Eatan&a# City% Eran"( 21% in Ci-i+ Ca#e No. 1233% ,(i"( 'i#!i##e'
$etitioner#= "o!$+aint for a )*#ine## ta: ref*n' i!$o#e' )y t(e City of Eatan&a#.
Petitioner i# a &rantee of a $i$e+ine "on"e##ion *n'er Re$*)+i" A"t No. 327% a# a!en'e'% to "ontra"t% in#ta++ an' o$erate oi+
$i$e+ine#. T(e ori&ina+ $i$e+ine "on"e##ion ,a# &rante' in 1347J1K an' rene,e' )y t(e Ener&y Re&*+atory Eoar' in 1332.J2K
So!eti!e in >an*ary 133<% $etitioner a$$+ie' for a !ayor=# $er!it ,it( t(e Offi"e of t(e Mayor of Eatan&a# City. 9o,e-er%
)efore t(e !ayor=# $er!it "o*+' )e i##*e'% t(e re#$on'ent City Trea#*rer re8*ire' $etitioner to $ay a +o"a+ ta: )a#e' on it#
&ro## re"ei$t# for t(e fi#"a+ year 1333 $*r#*ant to t(e Lo"a+ .o-ern!ent Co'e.J3K T(e re#$on'ent City Trea#*rer a##e##e' a
)*#ine## ta: on t(e $etitioner a!o*ntin& toP3<4%;74.;1 $aya)+e in fo*r in#ta++!ent# )a#e' on t(e &ro## re"ei$t# for $ro'*"t#
$*!$e' at .PS01 for t(e fi#"a+ year 1333 ,(i"( a!o*nte' to P121%421%1<1.;;. In or'er not to (a!$er it# o$eration#%
$etitioner $ai' t(e ta: *n'er $rote#t in t(e a!o*nt of P233%;13.;1 for t(e fir#t 8*arter of 1333.
On >an*ary 2;% 1331% $etitioner fi+e' a +etter0$rote#t a''re##e' to t(e re#$on'ent City Trea#*rer% t(e $ertinent $ortion of ,(i"(
rea'#A
?P+ea#e note t(at o*r Co!$any (FPIC i# a $i$e+ine o$erator ,it( a &o-ern!ent "on"e##ion &rante' *n'er t(e Petro+e*!
A"t. It i# en&a&e' in t(e )*#ine## of tran#$ortin& $etro+e*! $ro'*"t# fro! t(e Eatan&a# refinerie#% -ia $i$e+ine% to S*"at an'
>TF Pan'a"an Ter!ina+#. A# #*"(% o*r Co!$any i# e:e!$t fro! $ayin& ta: on &ro## re"ei$t# *n'er Se"tion 133 of t(e Lo"a+
.o-ern!ent Co'e of 1331 : : : :
?Moreo-er% Tran#$ortation "ontra"tor# are not in"+*'e' in t(e en*!eration of "ontra"tor# *n'er Se"tion 131% Para&ra$( (( of
t(e Lo"a+ .o-ern!ent Co'e. T(erefore% t(e a*t(ority to i!$o#e ta: =on "ontra"tor# an' ot(er in'e$en'ent "ontra"tor#= *n'er
Se"tion 113% Para&ra$( (e of t(e Lo"a+ .o-ern!ent Co'e 'oe# not in"+*'e t(e $o,er to +e-y on tran#$ortation "ontra"tor#.
?T(e i!$o#ition an' a##e##!ent "annot )e "ate&ori/e' a# a !ere fee a*t(ori/e' *n'er Se"tion 117 of t(e Lo"a+ .o-ern!ent
Co'e. T(e #ai' #e"tion +i!it# t(e i!$o#ition of fee# an' "(ar&e# on )*#ine## to #*"( a!o*nt# a# !ay )e "o!!en#*rate to
t(e "o#t of re&*+ation% in#$e"tion% an' +i"en#in&. 9en"e% a##*!in& ar&*en'o t(at FPIC i# +ia)+e for t(e +i"en#e fee% t(e
i!$o#ition t(ereof )a#e' on &ro## re"ei$t# i# -io+ati-e of t(e afore"ite' $ro-i#ion. T(e a!o*nt of P3<4%;74.;1 (P233%;13.;1
$er 8*arter i# not "o!!en#*rate to t(e "o#t of re&*+ation% in#$e"tion an' +i"en#in&. T(e fee i# a+rea'y a re-en*e rai#in&
!ea#*re% an' not a !ere re&*+atory i!$o#ition.?J1K
On Mar"( 2% 1331% t(e re#$on'ent City Trea#*rer 'enie' t(e $rote#t "onten'in& t(at $etitioner "annot )e "on#i'ere' en&a&e'
in tran#$ortation )*#ine##% t(*# it "annot "+ai! e:e!$tion *n'er Se"tion 133 (5 of t(e Lo"a+ .o-ern!ent Co'e.J<K
On >*ne 1<% 1331% $etitioner fi+e' ,it( t(e Re&iona+ Tria+ Co*rt of Eatan&a# City a "o!$+aint J4K for ta: ref*n' ,it( $rayer for a
,rit of $re+i!inary in5*n"tion a&ain#t re#$on'ent# City of Eatan&a# an' A'ora"ion Are++ano in (er "a$a"ity a# City
Trea#*rer. In it# "o!$+aint% $etitioner a++e&e'% inter a+ia% t(atA (1 t(e i!$o#ition an' "o++e"tion of t(e )*#ine## ta: on it# &ro##
re"ei$t# -io+ate# Se"tion 133 of t(e Lo"a+ .o-ern!ent Co'eB (2 t(e a*t(ority of "itie# to i!$o#e an' "o++e"t a ta: on t(e &ro##
re"ei$t# of ?"ontra"tor# an' in'e$en'ent "ontra"tor#? *n'er Se". 111 (e an' 1<1 'oe# not in"+*'e t(e a*t(ority to "o++e"t #*"(
ta:e# on tran#$ortation "ontra"tor# for% a# 'efine' *n'er Se". 131 ((% t(e ter! ?"ontra"tor#? e:"+*'e# tran#$ortation
"ontra"tor#B an'% (3 t(e City Trea#*rer i++e&a++y an' erroneo*#+y i!$o#e' an' "o++e"te' t(e #ai' ta:% t(*# !eritin& t(e
i!!e'iate ref*n' of t(e ta: $ai'.J7K
Tra-er#in& t(e "o!$+aint% t(e re#$on'ent# ar&*e' t(at $etitioner "annot )e e:e!$t fro! ta:e# *n'er Se"tion 133 (5 of t(e
Lo"a+ .o-ern!ent Co'e a# #ai' e:e!$tion a$$+ie# on+y to ?tran#$ortation "ontra"tor# an' $er#on# en&a&e' in t(e
tran#$ortation )y (ire an' "o!!on "arrier# )y air% +an' an' ,ater.? Re#$on'ent# a##ert t(at $i$e+ine# are not in"+*'e' in t(e
ter! ?"o!!on "arrier? ,(i"( refer# #o+e+y to or'inary "arrier# #*"( a# tr*"6#% train#% #(i$# an' t(e +i6e. Re#$on'ent# f*rt(er
$o#it t(at t(e ter! ?"o!!on "arrier? *n'er t(e #ai' "o'e $ertain# to t(e !o'e or !anner )y ,(i"( a $ro'*"t i# 'e+i-ere' to it#
'e#tination.J2K
On O"to)er 3% 1331% t(e tria+ "o*rt ren'ere' a 'e"i#ion 'i#!i##in& t(e "o!$+aint% r*+in& in t(i# ,i#eA
?::: P+aintiff i# eit(er a "ontra"tor or ot(er in'e$en'ent "ontra"tor.
::: t(e e:e!$tion to ta: "+ai!e' )y t(e $+aintiff (a# )e"o!e *n"+ear. It i# a r*+e t(at ta: e:e!$tion# are to )e #tri"t+y
"on#tr*e' a&ain#t t(e ta:$ayer% ta:e# )ein& t(e +ife)+oo' of t(e &o-ern!ent. E:e!$tion !ay t(erefore )e &rante' on+y )y
"+ear an' *ne8*i-o"a+ $ro-i#ion# of +a,.
?P+aintiff "+ai!# t(at it i# a &rantee of a $i$e+ine "on"e##ion *n'er Re$*)+i" A"t 327% (E:(i)it A ,(o#e "on"e##ion ,a# +ate+y
rene,e' )y t(e Ener&y Re&*+atory Eoar' (E:(i)it E. Cet neit(er #ai' +a, nor t(e 'ee' of "on"e##ion &rant any ta:
e:e!$tion *$on t(e $+aintiff.
7
?E-en t(e Lo"a+ .o-ern!ent Co'e i!$o#e# a ta: on fran"(i#e (o+'er# *n'er Se". 137 of t(e Lo"a+ Ta: Co'e. S*"( )ein& t(e
#it*ation o)taine' in t(i# "a#e (e:e!$tion )ein& *n"+ear an' e8*i-o"a+ re#ort to 'i#tin"tion# or ot(er "on#i'eration# !ay )e of
(e+$A
T(at t(e e:e!$tion &rante' *n'er Se". 133 (5 en"o!$a##e# on+y "o!!on "arrier# #o a# not to o-er)*r'en t(e ri'in& $*)+i" or
"o!!*ter# ,it( ta:e#. P+aintiff i# not a "o!!on "arrier% )*t a #$e"ia+ "arrier e:ten'in& it# #er-i"e# an' fa"i+itie# to a #in&+e
#$e"ifi" or ?#$e"ia+ "*#to!er? *n'er a ?#$e"ia+ "ontra"t.?
T(e Lo"a+ Ta: Co'e of 1332 ,a# )a#i"a++y ena"te' to &i-e !ore an' effe"ti-e +o"a+ a*tono!y to +o"a+ &o-ern!ent# t(an t(e
$re-io*# ena"t!ent#% to !a6e t(e! e"ono!i"a++y an' finan"ia++y -ia)+e to #er-e t(e $eo$+e an' 'i#"(ar&e t(eir f*n"tion# ,it(
a "on"o!itant o)+i&ation to a""e$t "ertain 'e-o+*tion of $o,er#% : : : So% "on#i#tent ,it( t(i# $o+i"y e-en fran"(i#e &rantee#
are ta:e' (Se". 137 an' "ontra"tor# are a+#o ta:e' *n'er Se". 113 (e an' 1<1 of t(e Co'e.?J3K
Petitioner a##ai+e' t(e afore#ai' 'e"i#ion )efore t(i# Co*rt -ia a $etition for re-ie,. On Fe)r*ary 27% 133<% ,e referre' t(e
"a#e to t(e re#$on'ent Co*rt of A$$ea+# for "on#i'eration an' a'5*'i"ation.J1;K On No-e!)er 23% 133<% t(e re#$on'ent "o*rt
ren'ere' a 'e"i#ionJ11K affir!in& t(e tria+ "o*rt=# 'i#!i##a+ of $etitioner=# "o!$+aint. Petitioner=# !otion for re"on#i'eration
,a# 'enie' on >*+y 12% 1334.J12K
9en"e% t(i# $etition. At fir#t% t(e $etition ,a# 'enie' '*e "o*r#e in a Re#o+*tion 'ate' No-e!)er 11% 1334.J13K Petitioner
!o-e' for a re"on#i'eration ,(i"( ,a# &rante' )y t(i# Co*rt in a Re#o+*tionJ11K of >an*ary 2;% 1337. T(*#% t(e $etition ,a#
rein#tate'.
Petitioner "+ai!# t(at t(e re#$on'ent Co*rt of A$$ea+# erre' in (o+'in& t(at (1 t(e $etitioner i# not a "o!!on "arrier or a
tran#$ortation "ontra"tor% an' (2 t(e e:e!$tion #o*&(t for )y $etitioner i# not "+ear *n'er t(e +a,.
T(ere i# !erit in t(e $etition.
A ?"o!!on "arrier? !ay )e 'efine'% )roa'+y% a# one ,(o (o+'# (i!#e+f o*t to t(e $*)+i" a# en&a&e' in t(e )*#ine## of
tran#$ortin& $er#on# or $ro$erty fro! $+a"e to $+a"e% for "o!$en#ation% offerin& (i# #er-i"e# to t(e $*)+i" &enera++y.
Arti"+e 1732 of t(e Ci-i+ Co'e 'efine# a ?"o!!on "arrier? a# ?any $er#on% "or$oration% fir! or a##o"iation en&a&e' in t(e
)*#ine## of "arryin& or tran#$ortin& $a##en&er# or &oo'# or )ot(% )y +an'% ,ater% or air% for "o!$en#ation% offerin& t(eir
#er-i"e# to t(e $*)+i".?
T(e te#t for 'eter!inin& ,(et(er a $arty i# a "o!!on "arrier of &oo'# i#A
9e !*#t )e en&a&e' in t(e )*#ine## of "arryin& &oo'# for ot(er# a# a $*)+i" e!$+oy!ent% an' !*#t (o+' (i!#e+f o*t a# rea'y
to en&a&e in t(e tran#$ortation of &oo'# for $er#on &enera++y a# a )*#ine## an' not a# a "a#*a+ o""*$ationB
9e !*#t *n'erta6e to "arry &oo'# of t(e 6in' to ,(i"( (i# )*#ine## i# "onfine'B
9e !*#t *n'erta6e to "arry )y t(e !et(o' )y ,(i"( (i# )*#ine## i# "on'*"te' an' o-er (i# e#ta)+i#(e' roa'#B an'
T(e tran#$ortation !*#t )e for (ire.J1<K
Ea#e' on t(e a)o-e 'efinition# an' re8*ire!ent#% t(ere i# no 'o*)t t(at $etitioner i# a "o!!on "arrier. It i# en&a&e' in t(e
)*#ine## of tran#$ortin& or "arryin& &oo'#% i.e. $etro+e*! $ro'*"t#% for (ire a# a $*)+i" e!$+oy!ent. It *n'erta6e# to "arry for
a++ $er#on# in'ifferent+y% t(at i#% to a++ $er#on# ,(o "(oo#e to e!$+oy it# #er-i"e#% an' tran#$ort# t(e &oo'# )y +an' an' for
"o!$en#ation. T(e fa"t t(at $etitioner (a# a +i!ite' "+iente+e 'oe# not e:"+*'e it fro! t(e 'efinition of a "o!!on
"arrier. In De .*/!an -#. Co*rt of A$$ea+#J14K ,e r*+e' t(atA
?T(e a)o-e arti"+e (Art. 1732% Ci-i+ Co'e !a6e# no 'i#tin"tion )et,een one ,(o#e $rin"i$a+ )*#ine## a"ti-ity i# t(e "arryin& of
$er#on# or &oo'# or )ot(% an' one ,(o 'oe# #*"( "arryin& on+y a# an an"i++ary a"ti-ity (in +o"a+ i'io!% a# a =#i'e+ine=. Arti"+e
1732 : : : a-oi'# !a6in& any 'i#tin"tion )et,een a $er#on or enter$ri#e offerin& tran#$ortation #er-i"e on a re&*+ar or
#"(e'*+e' )a#i# an' one offerin& #*"( #er-i"e on an o""a#iona+% e$i#o'i" or *n#"(e'*+e' )a#i#. Neit(er 'oe# Arti"+e 1732
'i#tin&*i#( )et,een a "arrier offerin& it# #er-i"e# to t(e =&enera+ $*)+i"%= i.e.% t(e &enera+ "o!!*nity or $o$*+ation% an' one
,(o offer# #er-i"e# or #o+i"it# )*#ine## on+y fro! a narro, #e&!ent of t(e &enera+ $o$*+ation. We t(in6 t(at Arti"+e 1277
'e+i)erate+y refraine' fro! !a6in& #*"( 'i#tin"tion#.
So *n'er#too'% t(e "on"e$t of ="o!!on "arrier= *n'er Arti"+e 1732 !ay )e #een to "oin"i'e neat+y ,it( t(e notion of =$*)+i"
#er-i"e%= *n'er t(e P*)+i" Ser-i"e A"t (Co!!on,ea+t( A"t No. 1114% a# a!en'e' ,(i"( at +ea#t $artia++y #*$$+e!ent# t(e +a,
on "o!!on "arrier# #et fort( in t(e Ci-i+ Co'e. 7n'er Se"tion 13% $ara&ra$( () of t(e P*)+i" Ser-i"e A"t% =$*)+i" #er-i"e=
in"+*'e#A
=e-ery $er#on t(at no, or (ereafter !ay o,n% o$erate% !ana&e% or "ontro+ in t(e P(i+i$$ine#% for (ire or "o!$en#ation% ,it(
&enera+ or +i!ite' "+iente+e% ,(et(er $er!anent% o""a#iona+ or a""i'enta+% an' 'one for &enera+ )*#ine## $*r$o#e#% any
"o!!on "arrier% rai+roa'% #treet rai+,ay% tra"tion rai+,ay% #*),ay !otor -e(i"+e% eit(er for frei&(t or $a##en&er% or )ot(% ,it( or
,it(o*t fi:e' ro*te an' ,(ate-er !ay )e it# "+a##ifi"ation% frei&(t or "arrier #er-i"e of any "+a##% e:$re## #er-i"e% #tea!)oat% or
#tea!#(i$ +ine% $ontine#% ferrie# an' ,ater "raft% en&a&e' in t(e tran#$ortation of $a##en&er# or frei&(t or )ot(% #(i$yar'%
!arine re$air #(o$% ,(arf or 'o"6% i"e $+ant% i"e0refri&eration $+ant% "ana+% irri&ation #y#te! &a#% e+e"tri" +i&(t (eat an' $o,er%
,ater #*$$+y an' $o,er $etro+e*!% #e,era&e #y#te!% ,ire or ,ire+e## "o!!*ni"ation# #y#te!#% ,ire or ,ire+e## )roa'"a#tin&
#tation# an' ot(er #i!i+ar $*)+i" #er-i"e#.= ?(7n'er#"orin& S*$$+ie'
A+#o% re#$on'ent=# ar&*!ent t(at t(e ter! ?"o!!on "arrier? a# *#e' in Se"tion 133 (5 of t(e Lo"a+ .o-ern!ent Co'e refer#
on+y to "o!!on "arrier# tran#$ortin& &oo'# an' $a##en&er# t(ro*&( !o-in& -e(i"+e# or -e##e+# eit(er )y +an'% #ea or ,ater%
i# erroneo*#.
A# "orre"t+y $ointe' o*t )y $etitioner% t(e 'efinition of ?"o!!on "arrier#? in t(e Ci-i+ Co'e !a6e# no 'i#tin"tion a# to t(e
!ean# of tran#$ortin&% a# +on& a# it i# )y +an'% ,ater or air. It 'oe# not $ro-i'e t(at t(e tran#$ortation of t(e $a##en&er# or
&oo'# #(o*+' )e )y !otor -e(i"+e. In fa"t% in t(e 7nite' State#% oi+ $i$e +ine o$erator# are "on#i'ere' "o!!on "arrier#.J17K
7n'er t(e Petro+e*! A"t of t(e P(i+i$$ine# (Re$*)+i" A"t 327% $etitioner i# "on#i'ere' a ?"o!!on "arrier.? T(*#% Arti"+e 24
t(ereof $ro-i'e# t(atA
?Art. 24. Pi$e +ine "on"e##ionaire a# a "o!!on "arrier. 0 A $i$e +ine #(a++ (a-e t(e $referentia+ ri&(t to *ti+i/e in#ta++ation# for
t(e tran#$ortation of $etro+e*! o,ne' )y (i!% )*t i# o)+i&ate' to *ti+i/e t(e re!ainin& tran#$ortation "a$a"ity $ro rata for t(e
tran#$ortation of #*"( ot(er $etro+e*! a# !ay )e offere' )y ot(er# for tran#$ort% an' to "(ar&e ,it(o*t 'i#"ri!ination #*"(
rate# a# !ay (a-e )een a$$ro-e' )y t(e Se"retary of A&ri"*+t*re an' Nat*ra+ Re#o*r"e#.?
Re$*)+i" A"t 327 a+#o re&ar'# $etro+e*! o$eration a# a $*)+i" *ti+ity. Pertinent $ortion of Arti"+e 7 t(ereof $ro-i'e#A
?t(at e-eryt(in& re+atin& to t(e e:$+oration for an' e:$+oitation of $etro+e*! : : an' e-eryt(in& re+atin& to t(e !an*fa"t*re%
refinin&% #tora&e% or tran#$ortation )y #$e"ia+ !et(o'# of $etro+e*!% i# (ere)y 'e"+are' to )e a$*)+i" *ti+ity.? (7n'er#"orin&
S*$$+ie'
T(e E*rea* of Interna+ Re-en*e +i6e,i#e "on#i'er# t(e $etitioner a ?"o!!on "arrier.? In EIR R*+in& No. ;43023% it 'e"+are'A
?: : : #in"e J$etitionerK i# a $i$e+ine "on"e##ionaire t(at i# en&a&e' on+y in tran#$ortin& $etro+e*! $ro'*"t#% it i# "on#i'ere' a
"o!!on "arrier *n'er Re$*)+i" A"t No. 327 : : :. S*"( )ein& t(e "a#e% it i# not #*)5e"t to ,it((o+'in& ta: $re#"ri)e' )y
Re-en*e Re&*+ation# No. 13072% a# a!en'e'.?
2
Fro! t(e fore&oin& 'i#8*i#ition% t(ere i# no 'o*)t t(at $etitioner i# a ?"o!!on "arrier? an'% t(erefore% e:e!$t fro! t(e
)*#ine## ta: a# $ro-i'e' for in Se"tion 133 (5% of t(e Lo"a+ .o-ern!ent Co'e% to ,itA
?Se"tion 133. Co!!on Li!itation# on t(e Ta:in& Po,er# of Lo"a+ .o-ern!ent 7nit#. 0 7n+e## ot(er,i#e $ro-i'e' (erein% t(e
e:er"i#e of t(e ta:in& $o,er# of $ro-in"e#% "itie#% !*ni"i$a+itie#% an' )aran&ay# #(a++ not e:ten' to t(e +e-y of t(e fo++o,in& A
: : : : : : : : :
(5 Ta:e# on t(e &ro## re"ei$t# of tran#$ortation "ontra"tor# an' $er#on# en&a&e' in t(e tran#$ortation of $a##en&er# or
frei&(t )y (ire an' "o!!on "arrier# )y air% +an' or ,ater% e:"e$t a# $ro-i'e' in t(i# Co'e.?
T(e 'e+i)eration# "on'*"te' in t(e 9o*#e of Re$re#entati-e# on t(e Lo"a+ .o-ern!ent Co'e of 1331 are i++*!inatin&A
?MR. AQ7INO (A. T(an6 yo*% Mr. S$ea6er.
Mr. S$ea6er% ,e ,o*+' +i6e to $ro"ee' to $a&e 3<% +ine 1. It #tate# A ?SEC.121 Jno, Se". 131K. Co!!on Li!itation# on t(e
Ta:in& Po,er# of Lo"a+ .o-ern!ent 7nit#.? : : :
MR. AQ7INO (A.. T(an6 yo* Mr. S$ea6er.
Sti++ on $a&e 3<% #*)$ara&ra$( <% on ta:e# on t(e )*#ine## of tran#$ortation. T(i# a$$ear# to )e one of t(o#e )ein& 'ee!e'
to )e e:e!$te' fro! t(e ta:in& $o,er# of t(e +o"a+ &o-ern!ent *nit#. May ,e 6no, t(e rea#on ,(y t(e tran#$ortation
)*#ine## i# )ein& e:"+*'e' fro! t(e ta:in& $o,er# of t(e +o"a+ &o-ern!ent *nit#D
MR. >AHIER (E.. Mr. S$ea6er% t(ere i# an e:"e$tion "ontaine' in Se"tion 121 (no, Se". 131% +ine 14% $ara&ra$( <. It #tate#
t(at +o"a+ &o-ern!ent *nit# !ay not i!$o#e ta:e# on t(e )*#ine## of tran#$ortation% e:"e$t a# ot(er,i#e $ro-i'e' in t(i# "o'e.
No,% Mr. S$ea6er% if t(e .ent+e!an ,o*+' "are to &o to $a&e 32 of Eoo6 II% one "an #ee t(ere t(at $ro-in"e# (a-e t(e $o,er
to i!$o#e a ta: on )*#ine## en5oyin& a fran"(i#e at t(e rate of not !ore t(an one0(a+f of 1 $er"ent of t(e &ro## ann*a+
re"ei$t#. So% tran#$ortation "ontra"tor# ,(o are en5oyin& a fran"(i#e ,o*+' )e #*)5e"t to ta: )y t(e $ro-in"e. T(at i# t(e
e:"e$tion% Mr. S$ea6er.
W(at ,e ,ant to &*ar' a&ain#t (ere% Mr. S$ea6er% i# t(e i!$o#ition of ta:e# )y +o"a+ &o-ern!ent *nit# on t(e "arrier
)*#ine##. Lo"a+ &o-ern!ent *nit# !ay i!$o#e ta:e# on to$ of ,(at i# a+rea'y )ein& i!$o#e' )y t(e Nationa+ Interna+
Re-en*e Co'e ,(i"( i# t(e #o0"a++e' ?"o!!on "arrier# ta:.? We 'o not ,ant a '*$+i"ation of t(i# ta:% #o ,e 5*#t $ro-i'e' for
an e:"e$tion *n'er Se"tion 12< Jno, Se". 137K t(at a $ro-in"e !ay i!$o#e t(i# ta: at a #$e"ifi" rate.
MR. AQ7INO (A.. T(an6 yo* for t(at "+arifi"ation% Mr. S$ea6er. : : :J12K
It i# "+ear t(at t(e +e&i#+ati-e intent in e:"+*'in& fro! t(e ta:in& $o,er of t(e +o"a+ &o-ern!ent *nit t(e i!$o#ition of )*#ine##
ta: a&ain#t "o!!on "arrier# i# to $re-ent a '*$+i"ation of t(e #o0"a++e' ?"o!!on "arrier=# ta:.?
Petitioner i# a+rea'y $ayin& t(ree (3G $er"ent "o!!on "arrier=# ta: on it# &ro## #a+e#Fearnin&# *n'er t(e Nationa+ Interna+
Re-en*e Co'e.J13K To ta: $etitioner a&ain on it# &ro## re"ei$t# in it# tran#$ortation of $etro+e*! )*#ine## ,o*+' 'efeat t(e
$*r$o#e of t(e Lo"a+ .o-ern!ent Co'e.
W9EREFORE% t(e $etition i# (ere)y .RANTED. T(e 'e"i#ion of t(e re#$on'ent Co*rt of A$$ea+# 'ate' No-e!)er 23% 133<
in CA0..R. SP No. 342;1 i# REHERSED an' SET ASIDE
Nationa+ Stee+ Cor$. -. Co*rt of A$$ea+#% 223 SCRA 1< (1337
T(e Co*rt fin'# o""a#ion to a$$+y t(e r*+e# on t(e #ea,ort(ine## of a private "arrier% it# o,nerL# re#$on#i)i+ity for 'a!a&e to
t(e "ar&o an' it# +ia)i+ity for 'e!*rra&e an' attorneyL# fee#. T(e Co*rt a+#o reiterate# t(e ,e++06no,n r*+e t(at fin'in&# of fa"t#
of tria+ "o*rt#% ,(en affir!e' )y t(e Co*rt of A$$ea+#% are )in'in& on t(i# Co*rt.
The Case
Eefore *# are t,o #e$arate $etition# for re-ie, fi+e' )y Nationa+ Stee+ Cor$oration (NSC an' H+a#on# S(i$$in&% In". (HSI%
)ot( of ,(i"( a##ai+ t(e A*&*#t 12% 1333 De"i#ion of t(e Co*rt of A$$ea+#.
J1K
T(e Co*rt of A$$ea+# !o'ifie' t(e 'e"i#ion of t(e
Re&iona+ Tria+ Co*rt of Pa#i&% Metro Mani+a% Eran"( 143 in Ci-i+ Ca#e No. 23317. T(e RTC 'i#$o#e' a# fo++o,#A
MW9EREFORE% 5*'&!ent i# (ere)y ren'ere' in fa-or of 'efen'ant an' a&ain#t t(e $+aintiff 'i#!i##in& t(e "o!$+aint ,it( "o#t
a&ain#t $+aintiff% an' or'erin& $+aintiff to $ay t(e 'efen'ant on t(e "o*nter"+ai! a# fo++o,#A
T(e #*! of P7<%;;;.;; a# *n$ai' frei&(t an' P22%;;;.;; a# 'e!*rra&e ,it( intere#t at t(e +e&a+ rate on )ot( a!o*nt#
fro! A$ri+ 7% 1374 *nti+ t(e #a!e #(a++ (a-e )een f*++y $ai'B
AttorneyL# fee# an' e:$en#e# of +iti&ation in t(e #*! of P1;;%;;;.;;B an'
Co#t of #*it.
SO ORDERED.N
J2K
On t(e ot(er (an'% t(e Co*rt of A$$ea+# r*+e'A
MW9EREFORE% $re!i#e# "on#i'ere'% t(e 'e"i#ion a$$ea+e' fro! i# !o'ifie' )y re'*"in& t(e a,ar' for 'e!*rra&e
to P11%;;;.;; an' 'e+etin& t(e a,ar' for attorneyL# fee# an' e:$en#e# of +iti&ation. E:"e$t a# t(*# !o'ifie'% t(e 'e"i#ion i#
AFFIRMED. T(ere i# no $rono*n"e!ent a# to "o#t#.
SO ORDERED.N
J3K
The Facts
T(e $. .lasons i# a -e##e+ ,(i"( ren'er# tra!$in& #er-i"e an'% a# #*"(% 'oe# not tran#$ort "ar&o or #(i$!ent for t(e
&enera+ $*)+i". It# #er-i"e# are a-ai+a)+e on+y to #$e"ifi" $er#on# ,(o enter into a #$e"ia+ "ontra"t of "(arter $arty ,it( it#
o,ner. It i# *n'i#$*te' t(at t(e #(i$ i# a $ri-ate "arrier. An' it i# in t(i# "a$a"ity t(at it# o,ner% H+a#on# S(i$$in&% In".%
entere' into a "ontra"t of affrei&(t!ent or "ontra"t of -oya&e "(arter (ire ,it( Nationa+ Stee+ Cor$oration.
T(e fa"t# a# fo*n' )y Re#$on'ent Co*rt of A$$ea+# are a# fo++o,#A
M(1 On >*+y 17% 1371% $+aintiff Nationa+ Stee+ Cor$oration (NSC a# C(arterer an' 'efen'ant H+a#on# S(i$$in&% In". (HSI a#
O,ner% entere' into a Contra"t of Hoya&e C(arter 9ire (E:(i)it RELB a+#o E:(i)it R1L ,(ere)y NSC (ire' HSIL# -e##e+% t(e MH
RHLASONS IL to !a6e one (1 -oya&e to +oa' #tee+ $ro'*"t# at I+i&an City an' 'i#"(ar&e t(e! at Nort( 9ar)or% Mani+a% *n'er
t(e fo++o,in& ter!# an' "on'ition#% vi/3
R1. : : : : : :.
Car&oA F*++ "ar&o of #tee+ $ro'*"t# of not +e## t(an 2%<;; MT% 1;G !ore or +e## at Ma#terL# o$tion.
3. : : : : : :
Frei&(tFPay!entA P3;.;; F!etri" ton% FIOST )a#i#. Pay!ent *$on $re#entation of Ei++ of La'in& ,it(in fifteen (1< 'ay#.
Lay'ay#FCan"e++in&A >*+y 24% 1371FA*&. <% 1371.
Loa'in&FDi#"(ar&in& RateA 7<; ton# $er WWDS9INC. (Weat(er Wor6in& Day of 21 "on#e"*ti-e (o*r#% S*n'ay# an'
9o+i'ay# In"+*'e'.
De!*rra&eFDi#$at"(A P2%;;;.;;FP1%;;;.;; $er 'ay.
2. : : : : : :
Car&o In#*ran"eA C(artererL# an'For S(i$$erL# !*#t in#*re t(e "ar&oe#. S(i$o,ner# not re#$on#i)+e for +o##e#F'a!a&e#
e:"e$t on $ro-en ,i++f*+ ne&+i&en"e of t(e offi"er# of t(e -e##e+.
3
Ot(er ter!#A(a A++ ter!#F"on'ition# of NONCASAI CFP J#i"K or ot(er internationa++y re"o&ni/e' C(arter Party A&ree!ent #(a++
for! $art of t(i# Contra"t.
: : : : : : : : :L
T(e ter!# RF.I.O.S.T.L ,(i"( i# *#e' in t(e #(i$$in& )*#ine## i# a #tan'ar' $ro-i#ion in t(e NANCOSAI C(arter Party ,(i"(
#tan'# for RFrei&(t In an' O*t in"+*'in& Ste-e'orin& an' Tra'in&L% ,(i"( !ean# t(at t(e (an'+in&% +oa'in& an' *n+oa'in& of t(e
"ar&oe# are t(e re#$on#i)i+ity of t(e C(arterer. 7n'er Para&ra$( < of t(e NANCOSAI C(arter Party% it #tate#% RC(arterer# to
+oa'% #to, an' 'i#"(ar&e t(e "ar&o free of ri#6 an' e:$en#e# to o,ner#. : : :L (7n'er#"orin& #*$$+ie'.
7n'er $ara&ra$( 1; t(ereof% it i# $ro-i'e' t(at R(o,ner# #(a++% )efore an' at t(e )e&innin& of t(e -oya&e% e:er"i#e '*e
'i+i&en"e to !a6e t(e -e##e+ #ea,ort(y an' $ro$er+y !anne'% e8*i$$e' an' #*$$+ie' an' to !a6e t(e (o+'# an' a++ ot(er
$art# of t(e -e##e+ in ,(i"( "ar&o i# "arrie'% fit an' #afe for it# re"e$tion% "arria&e an' $re#er-ation. O,ner# #(a++ not )e +ia)+e
for +o## of or 'a!a&e of t(e "ar&o ari#in& or re#*+tin& fro!A *n#ea,ort(ine## *n+e## "a*#e' )y ,ant of '*e 'i+i&en"e on t(e
$art of t(e o,ner# to !a6e t(e -e##e+ #ea,ort(y% an' to #e"*re t(at t(e -e##e+ i# $ro$er+y !anne'% e8*i$$e' an' #*$$+ie'
an' to !a6e t(e (o+'# an' a++ ot(er $art# of t(e -e##e+ in ,(i"( "ar&o i# "arrie'% fit an' #afe for it# re"e$tion% "arria&e an'
$re#er-ationB :::B $eri+#% 'an&er# an' a""i'ent# of t(e #ea or ot(er na-i&a)+e ,ater#B :::B ,a#ta&e in )*+6 or ,ei&(t or any
ot(er +o## or 'a!a&e ari#in& fro! in(erent 'efe"t% 8*a+ity or -i"e of t(e "ar&oB in#*ffi"ien"y of $a"6in&B :::B +atent 'efe"t# not
'i#"o-era)+e )y '*e 'i+i&en"eB any ot(er "a*#e ari#in& ,it(o*t t(e a"t*a+ fa*+t or $ri-ity of O,ner# or ,it(o*t t(e fa*+t of t(e
a&ent# or #er-ant# of o,ner#.L
Para&ra$( 12 of #ai' NANCOSAI C(arter Party a+#o $ro-i'e# t(at R(o,ner# #(a++ not )e re#$on#i)+e for #$+it% "(afin& an'For
any 'a!a&e *n+e## "a*#e' )y t(e ne&+i&en"e or 'efa*+t of t(e !a#ter an' "re,.L
On A*&*#t 4% 7 an' 2% 1371% in a""or'an"e ,it( t(e Contra"t of Hoya&e C(arter 9ire% t(e MH RHLASONS IL +oa'e' at $+aintiffL#
$ier at I+i&an City% t(e NSCL# #(i$!ent of 1%477 #6i'# of tin$+ate# an' 32 $a"6a&e# of (ot ro++e' #(eet# or a tota+ of 1%743
$a"6a&e# ,it( a tota+ ,ei&(t of a)o*t 2%121.13 !etri" ton# for "arria&e to Mani+a. T(e #(i$!ent ,a# $+a"e' in t(e t(ree (3
(at"(e# of t(e #(i$. C(ief Mate .on/a+o Sa)an'o% a"tin& a# a&ent of t(e -e##e+J%K a"6no,+e'&e' re"ei$t of t(e "ar&o on
)oar' an' #i&ne' t(e "orre#$on'in& )i++ of +a'in&% E.L.P.P. No. ;233 (E:(i)it RDL on A*&*#t 2% 1371.
T(e -e##e+ arri-e' ,it( t(e "ar&o at Pier 12% Nort( 9ar)or% Mani+a% on A*&*#t 12% 1371. T(e fo++o,in& 'ay% A*&*#t 13% 1371%
,(en t(e -e##e+L# t(ree (3 (at"(e# "ontainin& t(e #(i$!ent ,ere o$ene' )y $+aintiffL# a&ent#% near+y a++ t(e #6i'# of tin$+ate#
an' (ot ro++e' #(eet# ,ere a++e&e'+y fo*n' to )e ,et an' r*#ty. T(e "ar&o ,a# 'i#"(ar&e' an' *n+oa'e' )y #te-e'ore# (ire'
)y t(e C(arterer. 7n+oa'in& ,a# "o!$+ete' on+y on A*&*#t 21% 1371 after in"*rrin& a 'e+ay of e+e-en (11 'ay# '*e to t(e
(ea-y rain ,(i"( interr*$te' t(e *n+oa'in& o$eration#. (E:(i)it REL
To 'eter!ine t(e nat*re an' e:tent of t(e ,ettin& an' r*#tin&% NSC "a++e' for a #*r-ey of t(e #(i$!ent )y t(e Mani+a A'5*#ter#
an' S*r-eyor# Co!$any (MASCO. In a +etter to t(e NSC 'ate' Mar"( 17% 137< (E:(i)it R.L% MASCO !a'e a re$ort of it#
o"*+ar in#$e"tion "on'*"te' on t(e "ar&o% )ot( ,(i+e it ,a# #ti++ on )oar' t(e -e##e+ an' +ater at t(e NDC ,are(o*#e in P*re/a
St.% Sta. Me#a% Mani+a ,(ere t(e "ar&o ,a# ta6en an' #tore'. MASCO re$orte' t(at it fo*n' ,ettin& an' r*#tin& of t(e
$a"6a&e# of (ot ro++e' #(eet# an' !eta+ "o-er# of t(e tin$+ate#B t(at tar$a*+in (at"( "o-er# ,ere note' torn at -ario*# e:tent#B
t(at "ontainerF!eta+ "a#in&# of t(e #6i'# ,ere r*#tin& a++ o-er. MASCO -ent*re' t(e o$inion t(at Rr*#tin& of t(e tin$+ate# ,a#
"a*#e' )y "onta"t ,it( SEA WATER #*#taine' ,(i+e #ti++ on )oar' t(e -e##e+ a# a "on#e8*en"e of t(e (ea-y ,eat(er an'
ro*&( #ea# en"o*ntere' ,(i+e en ro*te to 'e#tination (E:(i)it RFL. It ,a# a+#o re$orte' t(at MASCOL# #*r-eyor# 're, at
ran'o! #a!$+e# of )a' or'er $a"6in& !ateria+# of t(e tin$+ate# an' 'e+i-ere' t(e #a!e to t(e M.I.T. Te#tin& La)oratorie# for
ana+y#i#. On A*&*#t 31% 1371% t(e M.I.T. Te#tin& La)oratorie# i##*e' Re$ort No. 177; (E:(i)it RIL ,(i"( in $art% #tate#% RT(e
ana+y#i# of )a' or'er #a!$+e# of $a"6in& !ateria+# ::: #(o,# t(at ,ettin& ,a# "a*#e' )y "onta"t ,it( SEA WATERL.
On Se$te!)er 4% 1371% on t(e )a#i# of t(e afore#ai' Re$ort No. 177;% $+aintiff fi+e' ,it( t(e 'efen'ant it# "+ai! for 'a!a&e#
#*ffere' '*e to t(e 'o,n&ra'in& of t(e 'a!a&e' tin$+ate# in t(e a!o*nt of P311%11<.12. T(en on O"to)er 3% 1371% $+aintiff
for!a++y 'e!an'e' $ay!ent of #ai' "+ai! )*t 'efen'ant HSI ref*#e' an' fai+e' to $ay. P+aintiff fi+e' it# "o!$+aint a&ain#t
'efen'ant on A$ri+ 21% 1374 ,(i"( ,a# 'o"6ete' a# Ci-i+ Ca#e No. 23317% CFI% Ri/a+.
In it# "o!$+aint% $+aintiff "+ai!e' t(at it #*#taine' +o##e# in t(e afore#ai' a!o*nt of P311%11<.12 a# a re#*+t of t(e a"t% ne&+e"t
an' 'efa*+t of t(e !a#ter an' "re, in t(e !ana&e!ent of t(e -e##e+ a# ,e++ a# t(e ,ant of '*e 'i+i&en"e on t(e $art of t(e
'efen'ant to !a6e t(e -e##e+ #ea,ort(y an' to !a6e t(e (o+'# an' a++ ot(er $art# of t(e -e##e+ in ,(i"( t(e "ar&o ,a#
"arrie'% fit an' #afe for it# re"e$tion% "arria&e an' $re#er-ation 00 a++ in -io+ation of 'efen'antL# *n'erta6in& *n'er t(eir
Contra"t of Hoya&e C(arter 9ire.
In it# an#,er% 'efen'ant 'enie' +ia)i+ity for t(e a++e&e' 'a!a&e "+ai!in& t(at t(e MH RHLASONS IL ,a# #ea,ort(y in a++
re#$e"t# for t(e "arria&e of $+aintiffL# "ar&oB t(at #ai' -e##e+ ,a# not a R"o!!on "arrierL ina#!*"( a# #(e ,a# *n'er -oya&e
"(arter "ontra"t ,it( t(e $+aintiff a# "(arterer *n'er t(e "(arter $artyB t(at in t(e "o*r#e of t(e -oya&e fro! I+i&an City to
Mani+a% t(e MH RHLASONS IL en"o*ntere' -ery ro*&( #ea#% #tron& ,in'# an' a'-er#e ,eat(er "on'ition% "a*#in& #tron& ,in'#
an' )i& ,a-e# to "ontin*o*#+y $o*n' a&ain#t t(e -e##e+ an' #ea,ater to o-erf+o, on it# 'e"6 an' (at"( "o-er#B t(at *n'er t(e
Contra"t of Hoya&e C(arter 9ire% 'efen'ant #(a++ not )e re#$on#i)+e for +o##e#F'a!a&e# e:"e$t on $ro-en ,i++f*+ ne&+i&en"e of
t(e offi"er# of t(e -e##e+% t(at t(e offi"er# of #ai' MH RHLASONS IL e:er"i#e' '*e 'i+i&en"e an' $ro$er #ea!an#(i$ an' ,ere
not ,i++f*++y ne&+i&entB t(at f*rt(er!ore t(e Hoya&e C(arter Party $ro-i'e# t(at +oa'in& an' 'i#"(ar&in& of t(e "ar&o ,a# on
FIOST ter!# ,(i"( !ean# t(at t(e -e##e+ ,a# free of ri#6 an' e:$en#e in "onne"tion ,it( t(e +oa'in& an' 'i#"(ar&in& of t(e
"ar&oB t(at t(e 'a!a&e% if any% ,a# '*e to t(e in(erent 'efe"t% 8*a+ity or -i"e of t(e "ar&o or to t(e in#*ffi"ient $a"6in& t(ereof
or to +atent 'efe"t of t(e "ar&o not 'i#"o-era)+e )y '*e 'i+i&en"e or to any ot(er "a*#e ari#in& ,it(o*t t(e a"t*a+ fa*+t or $ri-ity
of 'efen'ant an' ,it(o*t t(e fa*+t of t(e a&ent# or #er-ant# of 'efen'antB "on#e8*ent+y% 'efen'ant i# not +ia)+eB t(at t(e
#te-e'ore# of $+aintiff ,(o 'i#"(ar&e' t(e "ar&o in Mani+a ,ere ne&+i&ent an' 'i' not e:er"i#e '*e "are in t(e 'i#"(ar&e of t(e
"ar&oB an' t(at t(e "ar&o ,a# e:$o#e' to rain an' #ea,ater #$ray ,(i+e on t(e $ier or in tran#it fro! t(e $ier to $+aintiffL#
,are(o*#e after 'i#"(ar&e fro! t(e -e##e+B an' t(at $+aintiffL# "+ai! ,a# (i&(+y #$e"*+ati-e an' &ro##+y e:a&&erate' an' t(at
t(e #!a++ #tain !ar6# or #,eat !ar6# on t(e e'&e# of t(e tin$+ate# ,ere !a&nifie' an' "on#i'ere' tota+ +o## of t(e
"ar&o. Fina++y% 'efen'ant "+ai!e' t(at it (a' "o!$+ie' ,it( a++ it# '*tie# an' o)+i&ation# *n'er t(e Hoya&e C(arter 9ire
Contra"t an' (a' no re#$on#i)i+ity ,(at#oe-er to $+aintiff. In t*rn% it a++e&e' t(e fo++o,in& "o*nter"+ai!A
T(at 'e#$ite t(e f*++ an' $ro$er $erfor!an"e )y 'efen'ant of it# o)+i&ation# *n'er t(e Hoya&e C(arter 9ire Contra"t% $+aintiff
fai+e' an' ref*#e' to $ay t(e a&ree' "(arter (ire of P7<%;;;.;; 'e#$ite 'e!an'# !a'e )y 'efen'antB
T(at *n'er t(eir Hoya&e C(arter 9ire Contra"t% $+aintiff (a' a&ree' to $ay 'efen'ant t(e #*! of P2%;;;.;; $er 'ay for
'e!*rra&e. T(e -e##e+ ,a# on 'e!*rra&e for e+e-en (11 'ay# in Mani+a ,aitin& for $+aintiff to 'i#"(ar&e it# "ar&o fro! t(e
-e##e+. T(*#% $+aintiff ,a# +ia)+e to $ay 'efen'ant 'e!*rra&e in t(e tota+ a!o*nt of P22%;;;.;;.
For fi+in& a "+ear+y *nfo*n'e' "i-i+ a"tion a&ain#t 'efen'ant% $+aintiff #(o*+' )e or'ere' to $ay 'efen'ant attorneyL# fee# an' a++
e:$en#e# of +iti&ation in t(e a!o*nt of not +e## t(an P1;;%;;;.;;.
Fro! t(e e-i'en"e $re#ente' )y )ot( $artie#% t(e tria+ "o*rt "a!e o*t ,it( t(e fo++o,in& fin'in&# ,(i"( ,ere #et fort( in it#
'e"i#ionA
1;
T(e MH RHLASONS IL i# a -e##e+ of P(i+i$$ine re&i#try en&a&e' in t(e tra!$in& #er-i"e an' i# a-ai+a)+e for (ire on+y *n'er
#$e"ia+ "ontra"t# of "(arter $arty a# in t(i# $arti"*+ar "a#e.
T(at for $*r$o#e# of t(e -oya&e "o-ere' )y t(e Contra"t of Hoya&e C(arter 9ire (E:(. R1L% t(e MH RHLASONS IL ,a# "o-ere'
)y t(e re8*ire' #ea,ort(ine## "ertifi"ate# in"+*'in& t(e Certifi"ation of C+a##ifi"ation i##*e' )y an internationa+ "+a##ifi"ation
#o"iety% t(e NIPPON IAI>I ICOIAI (E:(. R1LB Coa#t,i#e Li"en#e fro! t(e Eoar' of Tran#$ortation (E:(. R<LB Internationa+
Loa'+ine Certifi"ate fro! t(e P(i+i$$ine Coa#t .*ar' (E:(. R4LB Car&o S(i$ Safety E8*i$!ent Certifi"ate a+#o fro! t(e
P(i+i$$ine Coa#t .*ar' (E:(. R7LB S(i$ Ra'io Station Li"en#e (E:(. R2LB Certifi"ate of In#$e"tion )y t(e P(i+i$$ine Coa#t .*ar'
(E:(. R12LB an' Certifi"ate of A$$ro-a+ for Con-er#ion i##*e' )y t(e E*rea* of C*#to!# (E:(. R3L. T(at )ein& a -e##e+
en&a&e' in )ot( o-er#ea# an' "oa#t,i#e tra'e% t(e MH RHLASONS IL (a# a (i&(er 'e&ree of #ea,ort(ine## an' #afety.
Eefore it $ro"ee'e' to I+i&an City to $erfor! t(e -oya&e "a++e' for )y t(e Contra"t of Hoya&e C(arter 9ire% t(e MH RHLASONS
IL *n'er,ent 'ry'o"6in& in Ce)* an' ,a# t(oro*&(+y in#$e"te' )y t(e P(i+i$$ine Coa#t .*ar'. In fa"t% #*)5e"t -oya&e ,a# t(e
-e##e+L# fir#t -oya&e after t(e 'ry'o"6in&. T(e e-i'en"e #(o,# t(at t(e MH RHLASONS IL ,a# #ea,ort(y an' $ro$er+y
!anne'% e8*i$$e' an' #*$$+ie' ,(en it *n'ertoo6 t(e -oya&e. It (a' a++ t(e re8*ire' "ertifi"ate# of #ea,ort(ine##.
T(e "ar&oF#(i$!ent ,a# #e"*re+y #to,e' in t(ree (3 (at"(e# of t(e #(i$. T(e (at"( o$enin&# ,ere "o-ere' )y (at"()oar'#
,(i"( ,ere in t*rn "o-ere' )y t,o or 'o*)+e tar$a*+in#. T(e (at"( "o-er# ,ere ,ater ti&(t. F*rt(er!ore% *n'er t(e
(at"()oar'# ,ere #tee+ )ea!# to &i-e #*$$ort.
T(e "+ai! of t(e $+aintiff t(at 'efen'ant -io+ate' t(e "ontra"t of "arria&e i# not #*$$orte' )y e-i'en"e. T(e $ro-i#ion# of t(e
Ci-i+ Co'e on "o!!on "arrier# $*r#*ant to ,(i"( t(ere e:i#t# a $re#*!$tion of ne&+i&en"e in "a#e of +o## or 'a!a&e to t(e
"ar&o are not a$$+i"a)+e. A# to t(e 'a!a&e to t(e tin$+ate# ,(i"( ,a# a++e&e'+y '*e to t(e ,ettin& an' r*#tin& t(ereof% t(ere i#
*nre)*tte' te#ti!ony of ,itne## Hi"ente An&+ion&to t(at tin$+ate# R#,eatL )y t(e!#e+-e# ,(en $a"6e' e-en ,it(o*t )ein& in
"ontra"t (#i" ,it( ,ater fro! o*t#i'e e#$e"ia++y ,(en t(e ,eat(er i# )a' or rainin&. T(e r*#t "a*#e' )y #,eat or !oi#t*re on
t(e tin$+ate# !ay )e "on#i'ere' a# a +o## or 'a!a&e )*t t(en% 'efen'ant "annot )e (e+' +ia)+e for it $*r#*ant to Arti"+e 1731 of
t(e Ci-i+ Ca#e ,(i"( e:e!$t# t(e "arrier fro! re#$on#i)i+ity for +o## or 'a!a&e ari#in& fro! t(e R"(ara"ter of t(e &oo'# : :
:L. A++ t(e 1%743 #6i'# of t(e tin$+ate# "o*+' not (a-e )een 'a!a&e' )y ,ater a# "+ai!e' )y $+aintiff. It ,a# #(o,n a# "+ai!e'
)y $+aintiff t(at t(e tin$+ate# t(e!#e+-e# ,ere ,ra$$e' in 6raft $a$er +inin& an' "orr*&ate' "ar')oar'# "o*+' not )e affe"te' )y
,ater fro! o*t#i'e.
T(e #te-e'ore# (ire' )y t(e $+aintiff to 'i#"(ar&e t(e "ar&o of tin$+ate# ,ere ne&+i&ent in not "+o#in& t(e (at"( o$enin&# of t(e
MH RHLASONS IL ,(en rain# o""*rre' '*rin& t(e 'i#"(ar&in& of t(e "ar&o t(*# a++o,in& rain,ater to enter t(e (at"(e#. It ,a#
$ro-en t(at t(e #te-e'ore# !ere+y #et *$ te!$orary tent# to "o-er t(e (at"( o$enin&# in "a#e of rain #o t(at it ,o*+' )e ea#y
for t(e! to re#*!e ,or6 ,(en t(e rain# #to$$e' )y 5*#t re!o-in& t(e tent or "an-a#. Ee"a*#e of t(i# i!$ro$er "o-erin& of t(e
(at"(e# )y t(e #te-e'ore# '*rin& t(e 'i#"(ar&in& an' *n+oa'in& o$eration# ,(i"( ,ere interr*$te' )y rain#% rain,ater 'rifte'
into t(e "ar&o t(ro*&( t(e (at"( o$enin&#. P*r#*ant to $ara&ra$( < of t(e NANCOSAI J#i"K C(arter Party ,(i"( ,a# e:$re##+y
!a'e $art of t(e Contra"t of Hoya&e C(arter 9ire% t(e +oa'in&% #to,in& an' 'i#"(ar&in& of t(e "ar&o i# t(e #o+e re#$on#i)i+ity
of t(e $+aintiff "(arterer an' 'efen'ant "arrier (a# no +ia)i+ity for ,(ate-er 'a!a&e !ay o""*r or !ay)e J#i"K "a*#e' to t(e
"ar&o in t(e $ro"e##.
It ,a# a+#o e#ta)+i#(e' t(at t(e -e##e+ en"o*ntere' ro*&( #ea# an' )a' ,eat(er ,(i+e en ro*te fro! I+i&an City to Mani+a
"a*#in& #ea ,ater to #$+a#( on t(e #(i$L# 'e"6 on a""o*nt of ,(i"( t(e !a#ter of t(e -e##e+ (Mr. Antonio C. D*!+ao fi+e' a
RMarine Prote#tL on A*&*#t 13% 1371 (E:(. R1<L ,(i"( "an )e in-o6e' )y 'efen'ant a# a for"e !a5e*re t(at ,o*+' e:e!$t t(e
'efen'ant fro! +ia)i+ity.
P+aintiff 'i' not "o!$+y ,it( t(e re8*ire!ent $re#"ri)e' in $ara&ra$( 3 of t(e Hoya&e C(arter 9ire "ontra"t t(at it ,a# to in#*re
t(e "ar&o )e"a*#e it 'i' not. 9a' $+aintiff "o!$+ie' ,it( t(e re8*ire!ent% t(en it "o*+' (a-e re"o-ere' it# +o## or 'a!a&e fro!
t(e in#*rer. P+aintiff a+#o -io+ate' t(e "(arter $arty "ontra"t ,(en it +oa'e' not on+y R#tee+ $ro'*"t#L% i.e. #tee+ )ar#% an&*+ar
)ar# an' t(e +i6e )*t a+#o tin$+ate# an' (ot ro++e' #(eet# ,(i"( are (i&( &ra'e "ar&o "o!!an'in& a (i&(er frei&(t. T(*#
$+aintiff ,a# a)+e to #(i$ (i&( &ra'e "ar&o at a +o,er frei&(t rate.
A# re&ar'# 'efen'antL# "o*nter"+ai!% t(e "ontra"t of -oya&e "(arter (ire *n'er $ara&ra$( 1 t(ereof% fi:e' t(e frei&(t at P3;.;;
$er !etri" ton $aya)+e to 'efen'ant "arrier *$on $re#entation of t(e )i++ of +a'in& ,it(in fifteen (1< 'ay#. P+aintiff (a# not $ai'
t(e tota+ frei&(t '*e of P7<%;;;.;; 'e#$ite 'e!an'#. T(e e-i'en"e a+#o #(o,e' t(at t(e $+aintiff ,a# re8*ire' an' )o*n'
*n'er $ara&ra$( 7 of t(e #a!e Hoya&e C(arter 9ire "ontra"t to $ay 'e!*rra&e of P2%;;;.;; $er 'ay of 'e+ay in t(e *n+oa'in&
of t(e "ar&oe#. T(e 'e+ay a!o*nte' to e+e-en (11 'ay# t(ere)y !a6in& $+aintiff +ia)+e to $ay 'efen'ant for 'e!*rra&e in t(e
a!o*nt ofP22%;;;.;;.
A$$ea+in& t(e RTC 'e"i#ion to t(e Co*rt of A$$ea+#% NSC a++e&e' #i: error#A
I
T(e tria+ "o*rt erre' in fin'in& t(at t(e MH RHLASONS IL ,a# #ea,ort(y% $ro$er+y !anne'% e8*i$$e' an' #*$$+ie'% an' t(at
t(ere i# no $roof of ,i++f*+ ne&+i&en"e of t(e -e##e+L# offi"er#.
II
T(e tria+ "o*rt erre' in fin'in& t(at t(e r*#tin& of NSCL# tin$+ate# ,a# '*e to t(e in(erent nat*re or "(ara"ter of t(e &oo'# an'
not '*e to "onta"t ,it( #ea,ater.
III
T(e tria+ "o*rt erre' in fin'in& t(at t(e #te-e'ore# (ire' )y NSC ,ere ne&+i&ent in t(e *n+oa'in& of NSCL# #(i$!ent.
IV
T(e tria+ "o*rt erre' in e:e!$tin& HSI fro! +ia)i+ity on t(e &ro*n' of for"e !a5e*re.
V
T(e tria+ "o*rt erre' in fin'in& t(at NSC -io+ate' t(e "ontra"t of -oya&e "(arter (ire.
VI
T(e tria+ "o*rt erre' in or'erin& NSC to $ay frei&(t% 'e!*rra&e an' attorneyL# fee#% to HSI.N
J1K
A# ear+ier #tate'% t(e Co*rt of A$$ea+# !o'ifie' t(e 'e"i#ion of t(e tria+ "o*rt )y re'*"in& t(e 'e!*rra&e fro! P22%;;;.;;
to P11%;;;.;; an' 'e+etin& t(e a,ar' of attorney# fee# an' e:$en#e# of +iti&ation. NSC an' HSI fi+e' #e$arate !otion# for
re"on#i'eration. In a Re#o+*tion
J<K
'ate' O"to)er 2;% 1333% t(e a$$e++ate "o*rt 'enie' )ot( !otion#. 7n'a*nte'% NSC an'
HSI fi+e' t(eir re#$e"ti-e $etition# for re-ie, )efore t(i# Co*rt. On !otion of HSI% t(e Co*rt or'ere' on Fe)r*ary 11% 1331 t(e
"on#o+i'ation of t(e#e $etition#.
J4K
The Issues
In it# $etition
J7K
an' !e!oran'*!%
J2K
NSC rai#e# t(e fo++o,in& 8*e#tion# of +a, an' fa"tA
Quest!"s !# $a%
M1. W(et(er or not a "(arterer of a -e##e+ i# +ia)+e for 'e!*rra&e '*e to "ar&o *n+oa'in& 'e+ay# "a*#e' )y ,eat(er
interr*$tionB
11
2. W(et(er or not t(e a++e&e' R#ea,ort(ine## "ertifi"ate#L (E:(i)it# R3L% R1L% R<L% R4L% R7L% R2L% R3L% R11L an' R12L ,ere
a'!i##i)+e in e-i'en"e an' "on#tit*te' e-i'en"e of t(e -e##e+L# #ea,ort(ine## at t(e )e&innin& of t(e -oya&e#B an'
W(et(er or not a "(artererL# fai+*re to in#*re it# "ar&o e:e!$t# t(e #(i$o,ner fro! +ia)i+ity for "ar&o 'a!a&e.N
Quest!"s !# Fact
M1. W(et(er or not t(e -e##e+ ,a# #ea,ort(y an' "ar&o0,ort(yB
2. W(et(er or not -e##e+L# offi"er# an' "re, ,ere ne&+i&ent in (an'+in& an' "arin& for NSCL# "ar&oB
W(et(er or not NSCL# "ar&o of tin$+ate# 'i' #,eat '*rin& t(e -oya&e an'% (en"e% r*#te' on t(eir o,nB an'
(1 W(et(er or not NSCL# #te-e'ore# ,ere ne&+i&ent an' "a*#e' t(e ,ettin&JFKr*#tin& of NSCL# tin$+ate#.N
In it# #e$arate $etition%
J3K
HSI #*)!it# for t(e "on#i'eration of t(i# Co*rt t(e fo++o,in& a++e&e' error# of t(e CAA
MA. T(e re#$on'ent Co*rt of A$$ea+# "o!!itte' an error of +a, in re'*"in& t(e a,ar' of 'e!*rra&e fro! P22%;;;.;;
to P11%;;;.;;.
E. T(e re#$on'ent Co*rt of A$$ea+# "o!!itte' an error of +a, in 'e+etin& t(e a,ar' of P1;;%;;; for attorneyL# fee# an'
e:$en#e# of +iti&ation.N
A!$+ifyin& t(e fore&oin&% HSI rai#e# t(e fo++o,in& i##*e# in it# !e!oran'*!A
J1;K
MI. W(et(er or not t(e $ro-i#ion# of t(e Ci-i+ Co'e of t(e P(i+i$$ine# on "o!!on "arrier# $*r#*ant to ,(i"( t(ere e:i#tJ#K a
$re#*!$tion of ne&+i&en"e a&ain#t t(e "o!!on "arrier in "a#e of +o## or 'a!a&e to t(e "ar&o are a$$+i"a)+e to a $ri-ate
"arrier.
II. W(et(er or not t(e ter!# an' "on'ition# of t(e Contra"t of Hoya&e C(arter 9ire% in"+*'in& t(e Nanyo/ai C(arter% are -a+i'
an' )in'in& on )ot( "ontra"tin& $artie#.N
T(e fore&oin& i##*e# rai#e' )y t(e $artie# ,i++ )e 'i#"*##e' *n'er t(e fo++o,in& (ea'in&#A
Q*e#tion# of Fa"t
Effe"t of NSCL# Fai+*re to In#*re t(e Car&o
A'!i##i)i+ity of Certifi"ate# Pro-in& Sea,ort(ine##
De!*rra&e an' AttorneyL# Fee#.
The C!u&t's Ru(")
T(e Co*rt affir!# t(e a##ai+e' De"i#ion of t(e Co*rt of A$$ea+#% e:"e$t in re#$e"t of t(e 'e!*rra&e.
*&e(+"a&, -atte&. Common Carrier or Private Carrier ?
At t(e o*t#et% it i# e##entia+ to e#ta)+i#( ,(et(er HSI "ontra"te' ,it( NSC a# a "o!!on "arrier or a# a $ri-ate "arrier. T(e
re#o+*tion of t(i# $re+i!inary 8*e#tion 'eter!ine# t(e +a,% #tan'ar' of 'i+i&en"e an' )*r'en of $roof a$$+i"a)+e to t(e $re#ent
"a#e.
Arti"+e 1732 of t(e Ci-i+ Co'e 'efine# a "o!!on "arrier a# M$er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e
#er-i"e# to t(e $*)+i".N It (a# )een (e+' t(at t(e tr*e te#t of a "o!!on "arrier i# t(e "arria&e of $a##en&er# or &oo'#% $ro-i'e'
it (a# #$a"e% forall ,(o o$t to a-ai+ t(e!#e+-e# of it# tran#$ortation #er-i"e for a fee.
J11K
A "arrier ,(i"( 'oe# not 8*a+ify *n'er
t(e a)o-e te#t i# 'ee!e' a $ri-ate "arrier. M.enera++y% $ri-ate "arria&e i# *n'erta6en )y #$e"ia+ a&ree!ent an' t(e "arrier
'oe# not (o+' (i!#e+f o*t to "arry &oo'# for t(e &enera+ $*)+i". T(e !o#t ty$i"a+% a+t(o*&( not t(e on+y for! of $ri-ate
"arria&e% i# t(e "(arter $arty% a !ariti!e "ontra"t )y ,(i"( t(e "(arterer% a $arty ot(er t(an t(e #(i$o,ner% o)tain# t(e *#e an'
#er-i"e of a++ or #o!e $art of a #(i$ for a $erio' of ti!e or a -oya&e or -oya&e#.N
J12K
In t(e in#tant "a#e% it i# *n'i#$*te' t(at HSI 'i' not offer it# #er-i"e# to t(e &enera+ $*)+i". A# fo*n' )y t(e Re&iona+ Tria+
Co*rt% it "arrie' $a##en&er# or &oo'# on+y for t(o#e it "(o#e *n'er a M#$e"ia+ "ontra"t of "(arter $arty.N
J13K
A# "orre"t+y
"on"+*'e' )y t(e Co*rt of A$$ea+#% t(e $. .lasons M,a# not a "o!!on )*t a $ri-ate "arrier.N
J11K
Con#e8*ent+y% t(e ri&(t#
an' o)+i&ation# of HSI an' NSC% in"+*'in& t(eir re#$e"ti-e +ia)i+ity for 'a!a&e to t(e "ar&o% are 'eter!ine' $ri!ari+y )y
#ti$*+ation# in t(eir "ontra"t of $ri-ate "arria&e or "(arter $arty.
J1<K
Re"ent+y% in Ha+en/*e+a 9ar',oo' an' In'*#tria+ S*$$+y%
In".% vs) Co*rt of A$$ea+# an' Se-en Erot(er# S(i$$in& Cor$oration%
J14K
t(e Co*rt r*+e'A
M : : : in a "ontra"t of $ri-ate "arria&e% t(e $artie# !ay free+y #ti$*+ate t(eir '*tie# an' o)+i&ation# ,(i"( $erfor"e ,o*+' )e
)in'in& on t(e!. 7n+i6e in a "ontra"t in-o+-in& a "o!!on "arrier% $ri-ate "arria&e 'oe# not in-o+-e t(e &enera+ $*)+i". 9en"e%
t(e #trin&ent $ro-i#ion# of t(e Ci-i+ Co'e on "o!!on "arrier# $rote"tin& t(e &enera+ $*)+i" "annot 5*#tifia)+y )e a$$+ie' to a
#(i$ tran#$ortin& "o!!er"ia+ &oo'# a# a $ri-ate "arrier. Con#e8*ent+y% t(e $*)+i" $o+i"y e!)o'ie' t(erein i# not "ontra-ene'
)y #ti$*+ation# in a "(arter $arty t(at +e##en or re!o-e t(e $rote"tion &i-en )y +a, in "ontra"t# in-o+-in& "o!!on "arrier#.N
J17K
E/te"t !# V0I's Res1!"s2(t, a"3 $a2(t, O4e& 50C's Ca&)!
It i# "+ear fro! t(e $artie#L Contra"t of Hoya&e C(arter 9ire% 'ate' >*+y 17% 1371% t(at HSI M#(a++ not )e re#$on#i)+e for +o##e#
e:"e$t on $ro-en ,i++f*+ ne&+i&en"e of t(e offi"er# of t(e -e##e+.N T(e NANCOSAI C(arter Party% ,(i"( ,a# in"or$orate' in t(e
$artie#L "ontra"t of tran#$ortation% f*rt(er $ro-i'e' t(at t(e #(i$o,ner #(a++ not )e +ia)+e for +o## of or 'a!a&e to t(e "ar&o
ari#in& or re#*+tin& fro! *n#ea,ort(ine##% *n+e## t(e #a!e ,a# "a*#e' )y it# +a"6 of '*e 'i+i&en"e to !a6e t(e -e##e+
#ea,ort(y or to en#*re t(at t(e #a!e ,a# M$ro$er+y !anne'% e8*i$$e' an' #*$$+ie'%N an' to M!a6e t(e (o+'# an' a++ ot(er
$art# of t(e -e##e+ in ,(i"( "ar&o J,a#K "arrie'% fit an' #afe for it# re"e$tion% "arria&e an' $re#er-ation.N
J12K
T(e NANCOSAI
C(arter Party a+#o $ro-i'e' t(at MJoK,ner# #(a++ not )e re#$on#i)+e for #$+it% "(afin& an'For any 'a!a&e *n+e## "a*#e' )y t(e
ne&+i&en"e or 'efa*+t of t(e !a#ter or "re,.N
J13K
6u&3e" !# *&!!#
In -ie, of t(e afore!entione' "ontra"t*a+ #ti$*+ation#% NSC !*#t $ro-e t(at t(e 'a!a&e to it# #(i$!ent ,a# "a*#e' )y HSIL#
,i++f*+ ne&+i&en"e or fai+*re to e:er"i#e '*e 'i+i&en"e in !a6in&$. .lasons #ea,ort(y an' fit for (o+'in&% "arryin& an'
#afe6ee$in& t(e "ar&o. Ine+*"ta)+y% t(e )*r'en of $roof ,a# $+a"e' on NSC )y t(e $artie#L a&ree!ent.
T(i# -ie, fin'# f*rt(er #*$$ort in t(e Co'e of Co!!er"e ,(i"( $ertinent+y $ro-i'e#A
MArt. 341. Mer"(an'i#e #(a++ )e tran#$orte' at t(e ri#6 an' -ent*re of t(e #(i$$er% if t(e "ontrary (a# not )een e:$re##+y
#ti$*+ate'.
T(erefore% t(e 'a!a&e an' i!$air!ent #*ffere' )y t(e &oo'# '*rin& t(e tran#$ortation% '*e to fort*ito*# e-ent% for"e !a5e*re%
or t(e nat*re an' in(erent 'efe"t of t(e t(in&#% #(a++ )e for t(e a""o*nt an' ri#6 of t(e #(i$$er.
T(e )*r'en of $roof of t(e#e a""i'ent# i# on t(e "arrier.N
MArt. 342. T(e "arrier% (o,e-er% #(a++ )e +ia)+e for 'a!a&e# ari#in& fro! t(e "a*#e !entione' in t(e $re"e'in& arti"+e if $roof#
a&ain#t (i! #(o, t(at t(ey o""*rre' on a""o*nt of (i# ne&+i&en"e or (i# o!i##ion to ta6e t(e $re"a*tion# *#*a++y a'o$te' )y
"aref*+ $er#on#% *n+e## t(e #(i$$er "o!!itte' fra*' in t(e )i++ of +a'in&% !a6in& (i! to )e+ie-e t(at t(e &oo'# ,ere of a "+a##
or 8*a+ity 'ifferent fro! ,(at t(ey rea++y ,ere.N
Ee"a*#e t(e $. .lasons ,a# a $ri-ate "arrier% t(e #(i$o,nerL# o)+i&ation# are &o-erne' )y t(e fore&oin& $ro-i#ion# of t(e
Co'e of Co!!er"e an' not )y t(e Ci-i+ Co'e ,(i"(% a# a &enera+ r*+e% $+a"e# t(e prima facie $re#*!$tion of ne&+i&en"e on a
"o!!on "arrier. It i# a (orn)oo6 'o"trine t(atA
12
MIn an a"tion a&ain#t a $ri-ate "arrier for +o## of% or in5*ry to% "ar&o% t(e )*r'en i# on t(e $+aintiff to $ro-e t(at t(e "arrier ,a#
ne&+i&ent or *n#ea,ort(y% an' t(e fa"t t(at t(e &oo'# ,ere +o#t or 'a!a&e' ,(i+e in t(e "arrierL# "*#to'y 'oe# not $*t t(e
)*r'en of $roof on t(e "arrier.
Sin"e : : : a $ri-ate "arrier i# not an in#*rer )*t *n'erta6e# on+y to e:er"i#e '*e "are in t(e $rote"tion of t(e &oo'# "o!!itte'
to it# "are% t(e )*r'en of $ro-in& ne&+i&en"e or a )rea"( of t(at '*ty re#t# on $+aintiff an' $roof of +o## of% or 'a!a&e to% "ar&o
,(i+e in t(e "arrierL# $o##e##ion 'oe# not "a#t on it t(e )*r'en of $ro-in& $ro$er "are an' 'i+i&en"e on it# $art or t(at t(e +o##
o""*rre' fro! an e:"e$te' "a*#e in t(e "ontra"t or )i++ of +a'in&. 9o,e-er% in 'i#"(ar&in& t(e )*r'en of $roof% $+aintiff i#
entit+e' to t(e )enefit of t(e $re#*!$tion# an' inferen"e# )y ,(i"( t(e +a, ai'# t(e )ai+or in an a"tion a&ain#t a )ai+ee% an'
#in"e t(e "arrier i# in a )etter $o#ition to 6no, t(e "a*#e of t(e +o## an' t(at it ,a# not one in-o+-in& it# +ia)i+ity% t(e +a,
re8*ire# t(at it "o!e for,ar' ,it( t(e infor!ation a-ai+a)+e to it% an' it# fai+*re to 'o #o ,arrant# an inferen"e or $re#*!$tion
of it# +ia)i+ity. 9o,e-er% #*"( inferen"e# an' $re#*!$tion#% ,(i+e t(ey !ay affe"t t(e )*r'en of "o!in& for,ar' ,it( e-i'en"e%
'o not a+ter t(e )*r'en of $roof ,(i"( re!ain# on $+aintiff% an'% ,(ere t(e "arrier "o!e# for,ar' ,it( e-i'en"e e:$+ainin& t(e
+o## or 'a!a&e% t(e )*r'en of &oin& for,ar' ,it( t(e e-i'en"e i# a&ain on $+aintiff.
W(ere t(e a"tion i# )a#e' on t(e #(i$o,nerL# ,arranty of #ea,ort(ine##% t(e )*r'en of $ro-in& a )rea"( t(ereof an' t(at #*"(
)rea"( ,a# t(e $ro:i!ate "a*#e of t(e 'a!a&e re#t# on $+aintiff% an' $roof t(at t(e &oo'# ,ere +o#t or 'a!a&e' ,(i+e in t(e
"arrierL# $o##e##ion 'oe# not "a#t on it t(e )*r'en of $ro-in& #ea,ort(ine##. : : : W(ere t(e "ontra"t of "arria&e e:e!$t# t(e
"arrier fro! +ia)i+ity for *n#ea,ort(ine## not 'i#"o-era)+e )y '*e 'i+i&en"e% t(e "arrier (a# t(e $re+i!inary )*r'en of $ro-in&
t(e e:er"i#e of '*e 'i+i&en"e to !a6e t(e -e##e+ #ea,ort(y.N
J2;K
In t(e in#tant "a#e% t(e Co*rt of A$$ea+# "orre"t+y fo*n' t(at NSC M(a# not ta6en t(e "orre"t $o#ition in re+ation to t(e 8*e#tion
of ,(o (a# t(e )*r'en of $roof. T(*#% in it# )rief ($$. 1;011% after "itin& C+a*#e 1; an' C+a*#e 12 of t(e NANCOSAI C(arter
Party (in"i'enta++y $+aintiff0a$$e++antL# JNSCL#K inter$retation of C+a*#e 12 i# not e-en "orre"t% it ar&*e# t(at Ra "aref*+
e:a!ination of t(e e-i'en"e ,i++ #(o, t(at HSI !i#era)+y fai+e' to "o!$+y ,it( any of t(e#e o)+i&ation#L a# if 'efen'ant0
a$$e++ee JHSIK (a' t(e )*r'en of $roof.N
J21K
F&st Issue. Questions of Fact
Ea#e' on t(e fore&oin&% t(e 'eter!ination of t(e fo++o,in& fa"t*a+ 8*e#tion# i# !anife#t+y re+e-antA (1 ,(et(er HSI e:er"i#e'
'*e 'i+i&en"e in !a6in& $. .lasons #ea,ort(y for t(e inten'e' $*r$o#e *n'er t(e "(arter $artyB (2 ,(et(er t(e 'a!a&e to
t(e "ar&o #(o*+' )e attri)*te' to t(e ,i++f*+ ne&+i&en"e of t(e offi"er# an' "re, of t(e -e##e+ or of t(e #te-e'ore# (ire' )y NSCB
an' (3 ,(et(er t(e r*#tin& of t(e tin$+ate# ,a# "a*#e' )y it# o,n M#,eatN or )y "onta"t ,it( #ea,ater.
T(e#e 8*e#tion# of fa"t ,ere t(re#(e' o*t an' 'e"i'e' )y t(e tria+ "o*rt% ,(i"( (a' t(e fir#t(an' o$$ort*nity to (ear t(e
$artie#L "onf+i"tin& "+ai!# an' to "aref*++y ,ei&( t(eir re#$e"ti-e e-i'en"e. T(e fin'in&# of t(e tria+ "o*rt ,ere #*)#e8*ent+y
affir!e' )y t(e Co*rt of A$$ea+#. W(ere t(e fa"t*a+ fin'in&# of )ot( t(e tria+ "o*rt an' t(e Co*rt of A$$ea+# "oin"i'e% t(e
#a!e are )in'in& on t(i# Co*rt.
J22K
We #tre## t(at% #*)5e"t to #o!e e:"e$tiona+ in#tan"e#%
J23K
on+y 8*e#tion# of +a, 00 not
8*e#tion# of fa"t 00 !ay )e rai#e' )efore t(i# Co*rt in a $etition for re-ie, *n'er R*+e 1< of t(e R*+e# of Co*rt. After a
t(oro*&( re-ie, of t(e "a#e at )ar% ,e fin' no rea#on to 'i#t*r) t(e +o,er "o*rt#L fa"t*a+ fin'in&#% a# in'ee' NSC (a# not
#*""e##f*++y $ro-en t(e a$$+i"ation of any of t(e afore"ite' e:"e$tion#.
Was -V V(as!"s I Seaworthy ?
In any e-ent% t(e re"or'# re-ea+ t(at HSI e:er"i#e' '*e 'i+i&en"e to !a6e t(e #(i$ #ea,ort(y an' fit for t(e "arria&e of NSCL#
"ar&o of #tee+ an' tin$+ate#. T(i# i# #(o,n )y t(e fa"t t(at it ,a# 'ry'o"6e' an' in#$e"te' )y t(e P(i+i$$ine Coa#t .*ar'
)efore it $ro"ee'e' to I+i&an City for it# -oya&e to Mani+a *n'er t(e "ontra"t of -oya&e "(arter (ire.
J21K
T(e -e##e+L# -oya&e
fro! I+i&an to Mani+a ,a# t(e -e##e+L# first voyage after drydocking. T(e P(i+i$$ine Coa#t .*ar' Station in Ce)* "+eare' it
a# seaworthy, fitted and equipped4 it met all requirements for trading as cargo vessel.
J2<K
T(e Co*rt of A$$ea+# it#e+f #*#taine'
t(e "on"+*#ion of t(e tria+ "o*rt t(at $. .lasons ,a# #ea,ort(y. We fin' no rea#on to !o'ify or re-er#e t(i# fin'in& of )ot(
t(e tria+ an' t(e a$$e++ate "o*rt#.
Wh! We&e 5e)()e"t. 0ea+e" !& 0te4e3!&es 7
A# note' ear+ier% t(e NSC (a' t(e )*r'en of $ro-in& t(at t(e 'a!a&e to t(e "ar&o ,a# "a*#e' )y t(e ne&+i&en"e of t(e
offi"er# an' t(e "re, of $. .lasons in !a6in& t(eir -e##e+ #ea,ort(y an' fit for t(e "arria&e of tin$+ate#. NSC fai+e' to
'i#"(ar&e t(i# )*r'en.
Eefore *#% NSC re+ie# (ea-i+y on it# "+ai! t(at $. .lasons (a' *#e' an o+' an' torn tar$a*+in or "an-a# to "o-er t(e (at"(e#
t(ro*&( ,(i"( t(e "ar&o ,a# +oa'e' into t(e "ar&o (o+' of t(e #(i$. It fa*+t# t(e Co*rt of A$$ea+# for fai+in& to "on#i'er #*"(
"+ai! a# an M*n"ontro-erte' fa"tN
J24K
an' 'enie# t(at $. .lasons M,a# e8*i$$e' ,it( ne, "an-a# "o-er# in tan'e! ,it( t(e
o+' one# a# in'i"ate' in t(e Marine Prote#t :::.N
J27K
We 'i#a&ree.
T(e re"or'# #*ffi"ient+y #*$$ort HSIL# "ontention t(at t(e #(i$ *#e' t(e o+' tar$a*+in% on+y in a''ition to t(e ne,
one *#e' $ri!ari+y to !a6e t(e #(i$L# (at"(e# ,aterti&(t. T(e fore&oin& are "+ear fro! t(e !arine $rote#t of t(e !a#ter of
t(e $. .lasons % Antonio C. D*!+ao% an' t(e 'e$o#ition of t(e #(i$L# )oat#,ain% >o#e Pa#"*a. T(e #a+ient $ortion# of #ai'
!arine $rote#t rea'A
M: : : T(at t(e MFH MHLASONS IN 'e$arte' I+i&an City or or a)o*t ;73; (o*r# of A*&*#t 2% 1371% +oa'e' ,it( a$$ro:i!ate+y
2%127.3 ton# of #tee+ $+ate# an' tin $+ate# "on#i&ne' to Nationa+ Stee+ Cor$orationB t(at )efore 'e$art*re% t(e -e##e+ ,a#
ri&&e'% f*++y e8*i$$e' an' "+eare' )y t(e a*t(oritie#B t(at on or a)o*t A*&*#t 3% 1371% ,(i+e in t(e -i"inity of t(e ,e#tern $art of
Ne&ro# an' Panay% ,e en"o*ntere' -ery ro*&( #ea# an' #tron& ,in'# an' Mani+a offi"e ,a# a'-i#e' )y te+e&ra! of t(e
a'-er#e ,eat(er "on'ition# en"o*ntere'B t(at in t(e !ornin& of A*&*#t 1;% 1371% t(e ,eat(er "on'ition "(an&e' to ,or#e an'
#tron& ,in'# an' )i& ,a-e# "ontin*e' $o*n'in& t(e -e##e+ at (er $ort #i'e "a*#in& #ea ,ater to o-erf+o, on 'e"6 an'(at"(
(#i" "o-er# an' ,(i"( "a*#e' t(e fir#t +ayer of t(e "an-a## "o-erin& to &i-e ,ay ,(i+e t(e ne, "an-a## "o-erin& #ti++ (o+'in&
onB
T(at t(e ,eat(er "on'ition i!$ro-e' ,(en ,e rea"(e' D*!a+i Point $rote"te' )y Min'oroB t(at ,e re0#e"*re' t(e "an-a##
"o-erin& )a"6 to $o#itionB t(at in t(e afternoon of A*&*#t 1;% 1371% ,(i+e enterin& Mari"a)an Pa##a&e% ,e ,ere a&ain
e:$o#e' to !o'erate #ea# an' (ea-y rain#B t(at ,(i+e a$$roa"(in& Fort*ne I#+an'% ,e en"o*ntere' a&ain ro*&( #ea#% #tron&
,in'# an' )i& ,a-e# ,(i"( "a*#e' t(e #a!e "an-a## to &i-e ,ay an' +ea-in& t(e ne, "an-a## (o+'in& onB
::: ::: :::N
J22K
An' t(e re+e-ant $ortion# of >o#e Pa#"*aL# 'e$o#ition are a# fo++o,#A
MQA W(at i# t(e $*r$o#e of t(e "an-a# "o-erD
AA So t(at t(e "ar&o ,o*+' not )e #oa6e' ,it( ,ater.
AA An' ,i++ yo* 'e#"ri)e (o, t(e "an-a# "o-er ,a# #e"*re' on t(e (at"( o$enin&D
WITNESS
AA It ,a# $+a"e' f+at on to$ of t(e (at"( "o-er% ,it( a +itt+e "an-a# f+o,in& o-er t(e #i'e# an' ,e $+a"eJ'K a f+at )ar o-er
t(e "an-a# on t(e #i'e of t(e (at"(e# an' t(en ,e $+a"eJ'K a #to$$er #o t(at t(e "an-a# "o*+' not )e re!o-e'.
ATTC DEL ROSARIO
13
QA An' ,i++ yo* te++ *# t(e #i/e of t(e (at"( o$enin&D T(e +en&t( an' t(e ,i't( of t(e (at"( o$enin&.
AA Forty0fi-e feet )y t(irty0fi-e feet% #ir.
: : : : : : : : :
QA 9o, ,a# t(e "an-a# #*$$orte' in t(e !i''+e of t(e (at"( o$enin&D
AA T(ere i# a (at"( )oar'.
ATTC DEL ROSARIO
QA W(at i# t(e (at"( )oar' !a'e ofD
AA It i# !a'e of ,oo'% ,it( a (an'+e.
QA An' a#i'e fro! t(e (at"( )oar'% i# t(ere any ot(er !ateria+ t(ere to "o-er t(e (at"(D
AA T(ere i# a )ea! #*$$ortin& t(e (at"( )oar'.
QA W(at i# t(i# )ea! !a'e ofD
AA It i# !a'e of #tee+% #ir.
QA I# t(e )ea! t(at ,a# $+a"e' in t(e (at"( o$enin& "o-erin& t(e ,(o+e (at"( o$enin&D
AA No% #ir.
QA 9o, !any (at"( )ea!# ,ere t(ere $+a"e' a"ro## t(e o$enin&D
AA T(ere are fi-e )ea!# in one (at"( o$enin&.
ATTC DEL ROSARIO
QA An' on to$ of t(e )ea!# yo* #ai' t(ere i# a (at"( )oar'. 9o, !any $ie"e# of ,oo' are $*t on to$D
AA P+enty% #ir% )e"a*#e t(ere are #e-era+ $ie"e# on to$ of t(e (at"( )ea!.
QA An' i# t(ere a #$a"e )et,een t(e (at"( )oar'#D
AA T(ere i# none% #ir.
QA T(ey are ti&(t to&et(erD
AA Ce#% #ir.
QA 9o, ti&(tD
AA Hery ti&(t% #ir.
QA No,% on to$ of t(e (at"( )oar'#% a""or'in& to yo*% i# t(e "an-a# "o-er. 9o, !any "an-a# "o-er#D
AA T,o% #ir.N
J23K
T(at '*e 'i+i&en"e ,a# e:er"i#e' )y t(e offi"er# an' t(e "re, of t(e $. .lasons ,a# f*rt(er 'e!on#trate' )y t(e fa"t t(at%
'e#$ite en"o*nterin& ro*&( ,eat(er t,i"e% t(e ne, tar$a*+in 'i' not &i-e ,ay an' t(e #(i$L# (at"(e# an' "ar&o (o+'#
re!aine' ,ater$roof. A# a$t+y #tate' )y t(e Co*rt of A$$ea+#% M::: ,e fin' no rea#on not to #*#tain t(e "on"+*#ion of t(e
+o,er "o*rt )a#e' on o-er,(e+!in& e-i'en"e% t(at t(e MH RHLASONS IL ,a# #ea,ort(y ,(en it *n'ertoo6 t(e -oya&e on
A*&*#t 2% 1371 "arryin& on )oar' t(ereof $+aintiff0a$$e++antL# #(i$!ent of 1%477 #6i'# of tin$+ate# an' 32 $a"6a&e# of (ot
ro++e' #(eet# or a tota+ of 1%743 $a"6a&e# fro! NSCL# $ier in I+i&an City arri-in& #afe+y at Nort( 9ar)or% Port Area% Mani+a% on
A*&*#t 12% 1371B :::.N
J3;K
In'ee'% NSC fai+e' to 'i#"(ar&e it# )*r'en to #(o, ne&+i&en"e on t(e $art of t(e offi"er# an' t(e "re, of $. .lasons . On
t(e "ontrary% t(e re"or'# re-ea+ t(at it ,a# t(e #te-e'ore# of NSC ,(o ,ere ne&+i&ent in *n+oa'in& t(e "ar&o fro! t(e #(i$.
T(e #te-e'ore# e!$+oye' on+y a tent0+i6e !ateria+ to "o-er t(e (at"(e# ,(en #tron& rain# o""a#ione' )y a $a##in& ty$(oon
'i#r*$te' t(e *n+oa'in& of t(e "ar&o. T(i# tent0+i6e "o-erin&% (o,e-er% ,a# "+ear+y ina'e8*ate for 6ee$in& rain an' #ea,ater
a,ay fro! t(e (at"(e# of t(e #(i$. Hi"ente An&+ion&to% an offi"er of HSI% te#tifie' t(*#A
MATTC SAMORAA
QA No,% '*rin& yo*r te#ti!ony on No-e!)er <% 1373% yo* #tate' on A*&*#t 11 yo* ,ent on )oar' t(e -e##e+ *$on
noti"e fro! t(e Nationa+ Stee+ Cor$oration in or'er to "on'*"t t(e in#$e"tion of t(e "ar&o. D*rin& t(e "o*r#e of t(e
in-e#ti&ation% 'i' yo* "(an"e to #ee t(e 'i#"(ar&in& o$erationD
WITNESSA
AA Ce#% #ir% *$on !y arri-a+ at t(e -e##e+% I #a, #o!e of t(e tin$+ate# a+rea'y 'i#"(ar&e' on t(e $ier )*t !a5ority of t(e
tin$+ate# ,ere in#i'e t(e (a++% a++ t(e (at"(e# ,ere o$ene'.
QA In "onne"tion ,it( t(e#e "ar&oe# ,(i"( ,ere *n+oa'e'% ,(ere i# t(e $+a"e.
AA At t(e Pier.
QA W(at ,a# *#e' to $rote"t t(e #a!e fro! ,eat(erD
ATTC LOPESA
We o)5e"t% yo*r 9onor% t(i# 8*e#tion ,a# a+rea'y a#6e'. T(i# $arti"*+ar !atter . . . t(e tran#"ri$t of #teno&ra$(i" note#
#(o,# t(e #a!e ,a# "o-ere' in t(e 'ire"t e:a!ination.
ATTC SAMORAA
Pre"i#e+y% yo*r 9onor% ,e ,o*+' +i6e to &o on 'etai+% t(i# i# t(e #erio*# $art of t(e te#ti!ony.
CO7RTA
A++ ri&(t% ,itne## !ay an#,er.
ATTC LOPESA
QA W(at ,a# *#e' in or'er to $rote"t t(e "ar&o fro! t(e ,eat(erD
AA A )a#e of "an-a# ,a# *#e' a# "o-er on to$ of t(e tin $+ate#% an' tent# ,ere )*i+t at t(e o$enin& of t(e (at"(e#.
QA Co* a+#o #tate' t(at t(e (at"(e# ,ere a+rea'y o$ene' an' t(at t(ere ,ere tent# "on#tr*"te' at t(e o$enin& of t(e
(at"(e# to $rote"t t(e "ar&o fro! t(e rain. No,% ,i++ yo* 'e#"ri)e JtoK t(e Co*rt t(e tent# "on#tr*"te'.
AA T(e tent# are 5*#t a )a#e of "an-a# ,(i"( +oo6 +i6e a tent of an In'ian "a!$ rai#eJ'K (i&( at t(e !i''+e ,it( t(e
,(o+e #i'e #e$arate' 'o,n to t(e (at"(% t(e #i/e of t(e (at"( an' it i# #oa6# J#i"K at t(e !i''+e )e"a*#e of t(o#e ,eat(er
an' t(i# "an )e *#e' on+y to te!$orari+y $rote"t t(e "ar&o fro! &ettin& ,et )y rain#.
QA No,% i# t(i# $ro"e'*re a'o$te' )y t(e #te-e'ore# of "o-erin& tent# $ro$erD
AA No% #ir% at t(e ti!e t(ey ,ere 'i#"(ar&in& t(e "ar&o% t(ere ,a# a ty$(oon $a##in& )y an' t(e (at"( tent ,a# not
&oo' eno*&( to (o+' a++ of it to $re-ent t(e ,ater #oa6in& t(ro*&( t(e "an-a# an' enter t(e "ar&o.
QA In t(e "o*r#e of yo*r in#$e"tion% Mr. An&+in&to J#i"K% 'i' yo* #ee in fa"t t(e ,ater enter an' #oa6 into t(e "an-a# an'
tin$+ate#.
AA Ce#% #ir% t(e #e"on' ti!e I ,ent t(ere% I #a, it.
QA A# o,ner of t(e -e##e+% 'i' yo* not a'-i#e t(e Nationa+ Stee+ Cor$oration JofK t(e $ro"e'*re a'o$te' )y it#
#te-e'ore# in 'i#"(ar&in& t(e "ar&o $arti"*+ar+y in t(i# tent "o-erin& of t(e (at"(e#D
AA Ce#% #ir% I 'i' t(e fir#t ti!e I #a, it% I "a++e' t(e attention of t(e #te-e'ore# )*t t(e #te-e'ore# 'i' not !in' at a++% #o% I
"a++e' t(e attention of t(e re$re#entati-e of t(e Nationa+ Stee+ )*t not(in& ,a# 'one% 5*#t t(e #a!e. Fina++y% I ,rote a
+etter to t(e!.N
J31K
11
NSC atte!$t# to 'i#"re'it t(e te#ti!ony of An&+ion&to )y 8*e#tionin& (i# fai+*re to "o!$+ain i!!e'iate+y a)o*t t(e #te-e'ore#L
ne&+i&en"e on t(e fir#t 'ay of *n+oa'in&% $ointin& o*t t(at (e ,rote (i# +etter to $etitioner on+y #e-en 'ay# +ater.
J32K
T(e Co*rt i#
not $er#*a'e'. An&+ion&toL# "an'i' an#,er in (i# afore8*ote' te#ti!ony #ati#fa"tori+y e:$+aine' t(e 'e+ay. Se-en 'ay#
+a$#e' )e"a*#e (e fir#t "a++e' t(e attention of t(e #te-e'ore#% t(en t(e NSCL# re$re#entati-e% a)o*t t(e ne&+i&ent an'
'efe"ti-e $ro"e'*re a'o$te' in *n+oa'in& t(e "ar&o. T(i# #erie# of a"tion# "on#tit*te# a rea#ona)+e re#$on#e in a""or' ,it(
"o!!on #en#e an' or'inary (*!an e:$erien"e. Hi"ente An&+ion&to "o*+' not )e )+a!e' for "a++in& t(e #te-e'ore#L attention
fir#t an' t(en t(e NSCL# re$re#entati-e on +o"ation )efore for!a++y infor!in& NSC of t(e ne&+i&en"e (e (a' o)#er-e'% )e"a*#e
(e ,a# not re#$on#i)+e for t(e #te-e'ore# or t(e *n+oa'in& o$eration#. In fa"t% (e ,a# !ere+y e:$re##in& "on"ern for NSC
,(i"( ,a# *+ti!ate+y re#$on#i)+e for t(e #te-e'ore# it (a' (ire' an' t(e $erfor!an"e of t(eir ta#6 to *n+oa' t(e "ar&o.
We #ee no rea#on to re-er#e t(e tria+ an' t(e a$$e++ate "o*rt#L fin'in&# an' "on"+*#ion# on t(i# $oint% vi/A
MIn t(e T9IRD a##i&ne' error% JNSCK "+ai!# t(at t(e tria+ "o*rt erre' in fin'in& t(at t(e #te-e'ore# (ire' )y NSC ,ere ne&+i&ent
in t(e *n+oa'in& of NSCL# #(i$!ent. We 'o not t(in6 #o. S*"( ne&+i&en"e a""or'in& to t(e tria+ "o*rt i# e-i'ent in t(e
#te-e'ore# (ire' )y JNSCK% not "+o#in& t(e (at"( of MH RHLASONS IL ,(en rain# o""*rre' '*rin& t(e 'i#"(ar&in& of t(e "ar&o
t(*# a++o,in& rain ,ater an' #ea,ater #$ray to enter t(e (at"(e# an' to 'rift to an' fa++ on t(e "ar&o. It ,a# $ro-en t(at t(e
#te-e'ore# !ere+y #et *$ te!$orary tent# or "an-a# to "o-er t(e (at"( o$enin&# ,(en it raine' '*rin& t(e *n+oa'in&
o$eration# #o t(at it ,o*+' )e ea#ier for t(e! to re#*!e ,or6 after t(e rain# #to$$e' )y 5*#t re!o-in& #ai' tent# or "an-a##. It
(a# a+#o )een #(o,n t(at on A*&*#t 2;% 1371% HSI Pre#i'ent Hi"ente An&+ion&to ,rote JNSCK "a++in& attention to t(e !anner
t(e #te-e'ore# (ire' )y JNSCK ,ere 'i#"(ar&in& t(e "ar&o on rainy 'ay# an' t(e i!$ro$er "+o#in& of t(e (at"(e# ,(i"(
a++o,e' "ontin*o*# (ea-y rain ,ater to +ea6 t(ro*&( an' 'ri$ to t(e tin$+ate#L "o-er# an' JHi"ente An&+ion&toK a+#o #*&&e#tin&
t(at '*e to fo*r (1 'ay# "ontin*o# rain# ,it( #tron& ,in'# t(at t(e (at"(e# )e tota++y "+o#e' 'o,n an' "o-ere' ,it( "an-a#
an' t(e (at"( tent# +o,ere'. (E:( R13L. T(i# +etter ,a# re"ei-e' )y JNSCK on 22 A*&*#t 1371 ,(i+e 'i#"(ar&in& o$eration#
,ere #ti++ &oin& on (E:(i)it R130AL.N
J33K
T(e fa"t t(at NSC a"t*a++y a""e$te' an' $ro"ee'e' to re!o-e t(e "ar&o fro! t(e #(i$ '*rin& *nfa-ora)+e ,eat(er ,i++ not
!a6e HSI +ia)+e for any 'a!a&e "a*#e' t(ere)y. In $a##in&% it !ay )e note' t(at t(e NSC !ay #ee6 in'e!nifi"ation% #*)5e"t
to t(e +a,# on $re#"ri$tion% fro! t(e #te-e'orin& "o!$any at fa*+t in t(e 'i#"(ar&e o$eration#. MA #te-e'ore "o!$any
en&a&e' in 'i#"(ar&in& "ar&o ::: (a# t(e '*ty to +oa' t(e "ar&o ::: in a $r*'ent !anner% an' it i# +ia)+e for in5*ry to% or +o##
of% "ar&o "a*#e' )y it# ne&+i&en"e ::: an' ,(ere t(e offi"er# an' !e!)er# an' "re, of t(e -e##e+ 'o not(in& an' (a-e no
re#$on#i)i+ity in t(e 'i#"(ar&e of "ar&o )y #te-e'ore# ::: t(e -e##e+ i# not +ia)+e for +o## of% or 'a!a&e to% t(e "ar&o "a*#e'
)y t(e ne&+i&en"e of t(e #te-e'ore# :::N
J31K
a# in t(e in#tant "a#e.
8! T"1(ates 0%eat97
T(e tria+ "o*rt re+ie' on t(e te#ti!ony of Hi"ente An&+ion&to in fin'in& t(at M ::: tin$+ate# R#,eatL )y t(e!#e+-e# ,(en $a"6e'
e-en ,it(o*t )ein& in "onta"t ,it( ,ater fro! o*t#i'e e#$e"ia++y ,(en t(e ,eat(er i# )a' or rainin& :::.N
J3<K
T(e Co*rt of
A$$ea+# affir!e' t(e tria+ "o*rtL# fin'in&.
A 'i#"*##ion of t(i# i##*e a$$ear# in"on#e8*entia+ an' *nne"e##ary. A# $re-io*#+y 'i#"*##e'% t(e 'a!a&e to t(e tin$+ate#
,a# o""a#ione' not )y air)orne !oi#t*re )*t )y "onta"t ,it( rain an' #ea,ater ,(i"( t(e #te-e'ore# ne&+i&ent+y a++o,e' to
#ee$ in '*rin& t(e *n+oa'in&.
0ec!"3 Issue. Effect of NSCs Failure to Insure the Cargo
T(e o)+i&ation of NSC to in#*re t(e "ar&o #ti$*+ate' in t(e Contra"t of Hoya&e C(arter 9ire i# tota++y #e$arate an' 'i#tin"t fro!
t(e "ontra"t*a+ or #tat*tory re#$on#i)i+ity t(at !ay )e in"*rre' )y HSI for 'a!a&e to t(e "ar&o "a*#e' )y t(e ,i++f*+ ne&+i&en"e
of t(e offi"er# an' t(e "re, of $. .lasons . C+ear+y% t(erefore% NSCL# fai+*re to in#*re t(e "ar&o ,i++ not affe"t it# ri&(t% a#
o,ner an' rea+ $arty in intere#t% to fi+e an a"tion a&ain#t HSI for 'a!a&e# "a*#e' )y t(e +atterL# ,i++f*+ ne&+i&en"e. We 'o not
fin' anyt(in& in t(e "(arter $arty t(at ,o*+' !a6e t(e +ia)i+ity of HSI for 'a!a&e to t(e "ar&o "ontin&ent on or affe"te' in any
!anner )y NSCL# o)tainin& an in#*ran"e o-er t(e "ar&o.
Th&3 Issue. Amissi!ility of Certificates Proving Seaworthiness
NSCL# "ontention t(at $. .lasons ,a# not #ea,ort(y i# an"(ore' on t(e a++e&e' ina'!i##i)i+ity of t(e "ertifi"ate# of
#ea,ort(ine## offere' in e-i'en"e )y HSI. T(e #ai' "ertifi"ate# in"+*'e t(e fo++o,in&A
Certifi"ate of In#$e"tion of t(e P(i+i$$ine Coa#t .*ar' at Ce)*
Certifi"ate of In#$e"tion fro! t(e P(i+i$$ine Coa#t .*ar'
Internationa+ Loa' Line Certifi"ate fro! t(e P(i+i$$ine Coa#t .*ar'
Coa#t,i#e Li"en#e fro! t(e Eoar' of Tran#$ortation
Certifi"ate of A$$ro-a+ for Con-er#ion i##*e' )y t(e E*rea* of C*#to!#.
J34K
NSC ar&*e# t(at t(e "ertifi"ate# are (ear#ay for not (a-in& )een $re#ente' in a""or'an"e ,it( t(e R*+e# of Co*rt. It $oint#
o*t t(at E:(i)it# 3% 1 an' 11 a++e&e'+y are Mnot ,ritten re"or'# or a"t# of $*)+i" offi"er#NB ,(i+e E:(i)it# <% 4% 7% 2% 3% 11 an' 12
are not Me-i'en"e' )y offi"ia+ $*)+i"ation# or "ertifie' tr*e "o$ie#N a# re8*ire' )y Se"tion# 2< an' 24% R*+e 132% of t(e R*+e# of
Co*rt.
J37K
After a "aref*+ e:a!ination of t(e#e e:(i)it#% t(e Co*rt r*+e# t(at E:(i)it# 3% 1% <% 4% 7% 2% 3 an' 12 are ina'!i##i)+e% for t(ey
(a-e not )een $ro$er+y offere' a# e-i'en"e. E:(i)it# 3 an' 1 are "ertifi"ate# i##*e' )y $ri-ate $artie#% )*t t(ey (a-e not )een
$ro-en )y one ,(o #a, t(e ,ritin& e:e"*te'% or )y e-i'en"e of t(e &en*inene## of t(e (an',ritin& of t(e !a6er% or )y a
#*)#"ri)in& ,itne##. E:(i)it# <% 4% 7% 2% 3% an' 12 are $(oto"o$ie#% )*t t(eir a'!i##ion *n'er t(e )e#t e-i'en"e r*+e (a-e not
)een 'e!on#trate'.
We fin'% (o,e-er% t(at E:(i)it 11 i# a'!i##i)+e *n'er a ,e++0#ett+e' e:"e$tion to t(e (ear#ay r*+e $er Se"tion 11 of R*+e 13; of
t(e R*+e# of Co*rt% ,(i"( $ro-i'e# t(at M(entrie# in offi"ia+ re"or'# !a'e in t(e $erfor!an"e of a '*ty )y a $*)+i" offi"er of t(e
P(i+i$$ine#% or )y a $er#on in t(e $erfor!an"e of a '*ty #$e"ia++y en5oine' )y +a,% are prima facie e-i'en"e of t(e fa"t# t(erein
#tate'.N
J32K
E:(i)it 11 i# an ori&ina+ "ertifi"ate of t(e P(i+i$$ine Coa#t .*ar' in Ce)* i##*e' )y Lie*tenant >*nior .ra'e No+i C.
F+ore# to t(e effe"t t(at Mt(e -e##e+ RHLASONS IL ,a# 'ry'o"6e' : : : an' PC. In#$e"tor# ,ere #ent on )oar' for in#$e"tion :
: :. After "o!$+etion of 'ry'o"6in& an' '*+y in#$e"te' )y PC. In#$e"tor#% t(e -e##e+ RHLASONS IL% a "ar&o -e##e+% i# in
#ea,ort(y "on'ition% !eet# a++ re8*ire!ent#% fitte' an' e8*i$$e' for tra'in& a# a "ar&o -e##e+ ,a# "+eare' )y t(e P(i+i$$ine
Coa#t .*ar' an' #ai+e' for Ce)* Port on >*+y 1;% 1371.N (#i" NSCL# "+ai!% t(erefore% i# o)-io*#+y !i#+ea'in& an' erroneo*#.
At any rate% it #(o*+' )e #tre##e' t(at t(at NSC (a# t(e )*r'en of $ro-in& t(at $. .lasons ,a# not #ea,ort(y. A# o)#er-e'
ear+ier% t(e -e##e+ ,a# a $ri-ate "arrier an'% a# #*"(% it 'i' not (a-e t(e o)+i&ation of a "o!!on "arrier to #(o, t(at it ,a#
#ea,ort(y. In'ee'% NSC &+arin&+y fai+e' to 'i#"(ar&e it# '*ty of $ro-in& t(e ,i++f*+ ne&+i&en"e of HSI in !a6in& t(e #(i$
#ea,ort(y re#*+tin& in 'a!a&e to it# "ar&o. A##ai+in& t(e &en*inene## of t(e "ertifi"ate of #ea,ort(ine## i# not #*ffi"ient $roof
t(at t(e -e##e+ ,a# not #ea,ort(y.
F!u&th Issue. "emurrage an Attorneys Fees
T(e "ontra"t of -oya&e "(arter (ire $ro-i'e# inter aliaA
::: ::: :::
1<
2. Car&oA F*++ "ar&o of #tee+ $ro'*"t# of not +e## t(an 2%<;; MT% 1;G !ore or +e## at Ma#terL# o$tion.
::: ::: :::
Loa'in&FDi#"(ar&in& Rate A 7<; ton# $er WWDS9INC.
De!*rra&eFDi#$at"( A P2%;;;.;;FP1%;;;.;; $er 'ay.N
J33K
T(e Co*rt 'efine' 'e!*rra&e in it# #tri"t #en#e a# t(e "o!$en#ation $ro-i'e' for in t(e "ontra"t of affrei&(t!ent for t(e
'etention of t(e -e##e+ )eyon' t(e +ayti!e or t(at $erio' of ti!e a&ree' on for +oa'in& an' *n+oa'in& of "ar&o.
J1;K
It i# &i-en to
"o!$en#ate t(e #(i$o,ner for t(e non*#e of t(e -e##e+. On t(e ot(er (an'% t(e fo++o,in& i# ,e++0#ett+e'A
MLayti!e r*n# a""or'in& to t(e $arti"*+ar "+a*#e of t(e "(arter $arty. : : : If +ayti!e i# e:$re##e' in Rr*nnin& 'ay#%L t(i# !ean#
'ay# ,(en t(e #(i$ ,o*+' )e r*n "ontin*o*#+y% an' (o+i'ay# are not e:"e$te'. A 8*a+ifi"ation of R,eat(er $er!ittin&L e:"e$t#
on+y t(o#e 'ay# ,(en )a' ,eat(er rea#ona)+y $re-ent# t(e ,or6 "onte!$+ate'.N
J11K
In t(i# "a#e% t(e "ontra"t of -oya&e "(arter (ire $ro-i'e' for a fo*r0'ay +ayti!eB it a+#o 8*a+ifie' +ayti!e a# WWDS9INC or
,eat(er ,or6in& 'ay# S*n'ay# an' (o+i'ay# in"+*'e'.
J12K
T(e r*nnin& of +ayti!e ,a# t(*# !a'e #*)5e"t to t(e ,eat(er% an'
,o*+' "ea#e to r*n in t(e e-ent *nfa-ora)+e ,eat(er interfere' ,it( t(e *n+oa'in& of "ar&o.
J13K
Con#e8*ent+y% NSC !ay not )e
(e+' +ia)+e for 'e!*rra&e a# t(e fo*r0'ay +ayti!e a++o,e' it 'i' not +a$#e% (a-in& )een to++e' )y *nfa-ora)+e ,eat(er "on'ition
in -ie, of t(e WWDS9INC 8*a+ifi"ation a&ree' *$on )y t(e $artie#. C+ear+y% it ,a# error for t(e tria+ "o*rt an' t(e Co*rt of
A$$ea+# to (a-e fo*n' an' affir!e' re#$e"ti-e+y t(at NSC in"*rre' e+e-en 'ay# of 'e+ay in *n+oa'in& t(e "ar&o. T(e tria+
"o*rt arri-e' at t(i# erroneo*# fin'in& )y #*)tra"tin& fro! t(e t,e+-e 'ay#% #$e"ifi"a++y A*&*#t 13% 1371 to A*&*#t 21% 1371%
t(e on+y 'ay of *n+oa'in& *n(a!$ere' )y *nfa-ora)+e ,eat(er or rain ,(i"( ,a# A*&*#t 22% 1371. Ea#e' on o*r $re-io*#
'i#"*##ion% #*"( fin'in& i# a re-er#i)+e error. A# !entione'% t(e re#$on'ent a$$e++ate "o*rt a+#o erre' in r*+in& t(at NSC ,a#
+ia)+e to HSI for 'e!*rra&e% e-en if it re'*"e' t(e a!o*nt )y (a+f.
:tt!&"e,'s Fees
HSI a##i&n# a# error of +a, t(e Co*rt of A$$ea+#L 'e+etion of t(e a,ar' of attorneyL# fee#. We 'i#a&ree. W(i+e HSI ,a#
"o!$e++e' to +iti&ate to $rote"t it# ri&(t#% #*"( fa"t )y it#e+f ,i++ not 5*#tify an a,ar' of attorneyL# fee# *n'er Arti"+e 22;2 of t(e
Ci-i+ Co'e ,(en M : : : no #*ffi"ient #(o,in& of )a' fait( ,o*+' )e ref+e"te' in a $artyL# $er#i#ten"e in a "a#e ot(er t(an an
erroneo*# "on-i"tion of t(e ri&(teo*#ne## of (i# "a*#e : : :.N
J11K
Moreo-er% attorneyL# fee# !ay not )e a,ar'e' to a $arty for
t(e rea#on a+one t(at t(e 5*'&!ent ren'ere' ,a# fa-ora)+e to t(e +atter% a# t(i# i# tanta!o*nt to i!$o#in& a $re!i*! on oneL#
ri&(t to +iti&ate or #ee6 5*'i"ia+ re're## of +e&iti!ate &rie-an"e#.
J1<K
E1(!)ue
At )otto!% t(i# a$$ea+ rea++y (in&e# on a fa"t*a+ i##*eA ,(en% (o, an' ,(o "a*#e' t(e 'a!a&e to t(e "ar&oD Ran&e'
a&ain#t NSC are t,o for!i'a)+e tr*t(#. Fir#t% )ot( +o,er "o*rt# fo*n' t(at #*"( 'a!a&e ,a# )ro*&(t a)o*t '*rin& t(e
*n+oa'in& $ro"e## ,(en rain an' #ea,ater #ee$e' t(ro*&( t(e "ar&o '*e to t(e fa*+t or ne&+i&en"e of t(e #te-e'ore#
e!$+oye' )y it. Ea#i" i# t(e r*+e t(at fa"t*a+ fin'in&# of t(e tria+ "o*rt% ,(en affir!e' )y t(e Co*rt of A$$ea+#% are )in'in& on
t(e S*$re!e Co*rt. A+t(o*&( t(ere are #ett+e' e:"e$tion#% NSC (a# not #ati#fa"tori+y #(o,n t(at t(i# "a#e i# one of
t(e!. Se"on'% t(e a&ree!ent )et,een t(e $artie# 00 t(e Contra"t of Hoya&e C(arter 9ire 00 $+a"e' t(e )*r'en of $roof for
#*"( +o## or 'a!a&e *$on t(e #(i$$er% not *$on t(e #(i$o,ner. S*"( #ti$*+ation% ,(i+e 'i#a'-anta&eo*# to NSC% i# -a+i'
)e"a*#e t(e $artie# entere' into a "ontra"t of $ri-ate "(arter% not one of "o!!on "arria&e. Ea#i" too i# t(e 'o"trine t(at
"o*rt# "annot re+ie-e a $arty fro! t(e effe"t# of a $ri-ate "ontra"t free+y entere' into% on t(e &ro*n' t(at it i# a++e&e'+y one0
#i'e' or *nfair to t(e $+aintiff. T(e "(arter $arty i# a nor!a+ "o!!er"ia+ "ontra"t an' it# #ti$*+ation# are a&ree' *$on in
"on#i'eration of !any fa"tor#% not t(e +ea#t of ,(i"( i# t(e tran#$ort $ri"e ,(i"( i# 'eter!ine' not on+y )y t(e a"t*a+ "o#t# )*t
a+#o )y t(e ri#6# an' )*r'en# a##*!e' )y t(e #(i$$er in re&ar' to $o##i)+e +o## or 'a!a&e to t(e "ar&o. In re"o&nition of
#*"( fa"tor#% t(e $artie# e-en #ti$*+ate' t(at t(e #(i$$er #(o*+' in#*re t(e "ar&o to $rote"t it#e+f fro! t(e ri#6# it *n'ertoo6
*n'er t(e "(arter $arty. T(at NSC fai+e' or ne&+e"te' to $rote"t it#e+f ,it( #*"( in#*ran"e #(o*+' not a'-er#e+y affe"t HSI%
,(i"( (a' not(in& to 'o ,it( #*"( fai+*re or ne&+e"t.
WHEREFORE% $re!i#e# "on#i'ere'% t(e in#tant "on#o+i'ate' $etition# are (ere)y DENIED. T(e 8*e#tione' De"i#ion of t(e
Co*rt of A$$ea+# i# AFFIRMED ,it( t(e MODIFICATION t(at t(e 'e!*rra&e a,ar'e' to HSI i# 'e+ete'. No $rono*n"e!ent
a# to "o#t#.
0O OR8ERE8;
,arvasa, !)5), (!hairman, %omero, $elo, an' (rancisco, 55.% "on"*r.
P(i+. A!eri"an .en. In#. Co!$any -. PIS S(i$$in& Co!$any% ..R. No. 113;32% A$ri+ 3% 2;;3
T(e $etition )efore t(e Co*rt #ee6# a re-ie, of t(e 'e"i#ion of t(e Co*rt of A$$ea+# in C.A. ..R. CH No. <417;% $ro!*+&ate'
on 2< >*ne 2;;1% ,(i"( (a# affir!e' in toto t(e 5*'&!ent of t(e Re&iona+ Tria+ Co*rt (RTC% Eran"( 4<% of Ma6ati% 'i#!i##in&
t(e "o!$+aint for 'a!a&e# fi+e' )y $etitioner in#*ran"e "or$oration a&ain#t re#$on'ent #(i$$in& "o!$any.
Da-ao 7nion Mar6etin& Cor$oration (D7MC "ontra"te' t(e #er-i"e# of re#$on'ent PIS S(i$$in& Co!$any (PIS S(i$$in&
for t(e #(i$!ent to Ta"+o)an City of #e-enty0fi-e t(o*#an' (7<%;;; )a&# of "e!ent ,ort( T(ree Mi++ion T(ree 9*n're'
Se-enty0Fi-e T(o*#an' Pe#o# (P3%37<%;;;.;;. D7MC in#*re' t(e &oo'# for it# f*++ -a+*e ,it( $etitioner P(i+i$$ine A!eri"an
.enera+ In#*ran"e Co!$any (P(i+a!&en. T(e &oo'# ,ere +oa'e' a)oar' t(e '*!) )ar&e Li!ar I )e+on&in& to PIS
S(i$$in&. On t(e e-enin& of 22 De"e!)er 1322% a)o*t nine oL"+o"6% ,(i+eLi!ar I ,a# )ein& to,e' )y re#$on'entL#
t*&)oat% MT Iron Ea&+e% t(e )ar&e #an6 a "o*$+e of !i+e# off t(e "oa#t of D*!a&a#a Point% in Sa!)oan&a 'e+ S*r% )rin&in&
'o,n ,it( it t(e entire "ar&o of 7<%;;; )a&# of "e!ent.
D7MC fi+e' a for!a+ "+ai! ,it( P(i+a!&en for t(e f*++ a!o*nt of t(e in#*ran"e. P(i+a!&en $ro!$t+y !a'e $ay!entB it t(en
#o*&(t rei!)*r#e!ent fro! PIS S(i$$in& of t(e #*! $ai' to D7MC )*t t(e #(i$$in& "o!$any ref*#e' to $ay% $ro!$tin&
P(i+a!&en to fi+e #*it a&ain#t PIS S(i$$in& ,it( t(e Ma6ati RTC.
T(e RTC 'i#!i##e' t(e "o!$+aint after fin'in& t(at t(e tota+ +o## of t(e "ar&o "o*+' (a-e )een "a*#e' eit(er )y a fort*ito*#
e-ent% in ,(i"( "a#e t(e #(i$ o,ner ,a# not +ia)+e% or t(ro*&( t(e ne&+i&en"e of t(e "a$tain an' "re, of t(e -e##e+ an' t(at%
*n'er Arti"+e <27 of t(e Co'e of Co!!er"e a'o$tin& t(e MLi!ite' Lia)i+ity R*+e%N t(e #(i$ o,ner "o*+' free it#e+f of +ia)i+ity )y
a)an'onin&% a# it a$$arent+y #o 'i'% t(e -e##e+ ,it( a++ (er e8*i$!ent an' earne' frei&(ta&e.
P(i+a!&en inter$o#e' an a$$ea+ to t(e Co*rt of A$$ea+# ,(i"( affir!e' in toto t(e 'e"i#ion of t(e tria+ "o*rt. T(e a$$e++ate
"o*rt r*+e' t(at e-i'en"e to e#ta)+i#( t(at PIS S(i$$in& ,a# a "o!!on "arrier at t(e ti!e it *n'ertoo6 to tran#$ort t(e )a&# of
"e!ent ,a# ,antin& )e"a*#e t(e $e"*+iar !et(o' of t(e #(i$$in& "o!$anyL# "arryin& &oo'# for ot(er# ,a# not &enera++y (e+'
o*t a# a )*#ine## )*t a# a "a#*a+ o""*$ation. It t(en "on"+*'e' t(at PIS S(i$$in&% not )ein& a "o!!on "arrier% ,a# not
e:$e"te' to o)#er-e t(e #trin&ent e:traor'inary 'i+i&en"e re8*ire' of "o!!on "arrier# in t(e "are of &oo'#. T(e a$$e++ate
"o*rt% !oreo-er% fo*n' t(at t(e +o## of t(e &oo'# ,a# #*ffi"ient+y e#ta)+i#(e' a# (a-in& )een '*e to fort*ito*# e-ent% ne&atin&
any +ia)i+ity on t(e $art of PIS S(i$$in& to t(e #(i$$er.
14
In t(e in#tant a$$ea+% P(i+a!&en "onten'# t(at t(e a$$e++ate "o*rt (a# "o!!itte' a $atent error in r*+in& t(at PIS S(i$$in& i#
not a "o!!on "arrier an' t(at it i# not +ia)+e for t(e +o## of t(e #*)5e"t "ar&o. T(e fa"t t(at re#$on'ent (a# a +i!ite' "+iente+e%
$etitioner ar&*e#% 'oe# not !i+itate a&ain#t re#$on'entL# )ein& a "o!!on "arrier an' t(at t(e on+y ,ay )y ,(i"( #*"( "arrier
"an )e (e+' e:e!$t for t(e +o## of t(e "ar&o ,o*+' )e if t(e +o## ,ere "a*#e' )y nat*ra+ 'i#a#ter or "a+a!ity. Petitioner a-er#
t(at ty$(oon ?APIAN.? (a# not entere' t(e P(i+i$$ine area of re#$on#i)i+ity an' t(at% e-en if it 'i'% re#$on'ent ,o*+' not )e
e:e!$t fro! +ia)i+ity )e"a*#e it# e!$+oyee#% $arti"*+ar+y t(e t*&!a#ter% (a-e fai+e' to e:er"i#e '*e 'i+i&en"e to $re-ent or
!ini!i/e t(e +o##.
PIS S(i$$in&% in it# "o!!ent% *r&e# t(at t(e $etition #(o*+' )e 'enie' )e"a*#e ,(at P(i+a!&en #ee6# i# not a re-ie, on
$oint# or error# of +a, )*t a re-ie, of t(e *n'i#$*te' fa"t*a+ fin'in&# of t(e RTC an' t(e a$$e++ate "o*rt. In any e-ent% PIS
S(i$$in& $oint# o*t% t(e fin'in&# an' "on"+*#ion# of )ot( "o*rt# fin' #*$$ort fro! t(e e-i'en"e an' a$$+i"a)+e 5*ri#$r*'en"e.
T(e 'eter!ination of $o##i)+e +ia)i+ity on t(e $art of PIS S(i$$in& )oi+# 'o,n to t(e 8*e#tion of ,(et(er it i# a $ri-ate "arrier or
a "o!!on "arrier an'% in eit(er "a#e% to t(e ot(er 8*e#tion of ,(et(er or not it (a# o)#er-e' t(e $ro$er 'i+i&en"e (or'inary% if a
$ri-ate "arrier% or e:traor'inary% if a "o!!on "arrier re8*ire' of it &i-en t(e "ir"*!#tan"e#.
T(e fin'in&# of fa"t !a'e )y t(e Co*rt of A$$ea+#% $arti"*+ar+y ,(en #*"( fin'in&# are "on#i#tent ,it( t(o#e of t(e tria+ "o*rt%
!ay not at +i)erty )e re-ie,e' )y t(i# Co*rt in a $etition for re-ie, *n'er R*+e 1< of t(e R*+e# of Co*rt.
J1K T(e "on"+*#ion# 'eri-e' fro! t(o#e fa"t*a+ fin'in&#% (o,e-er% are not ne"e##ari+y 5*#t !atter# of fa"t a# ,(en t(ey are #o
+in6e' to% or ine:tri"a)+y intert,ine' ,it(% a re8*i#ite a$$re"iation of t(e a$$+i"a)+e +a,. In #*"( in#tan"e#% t(e "on"+*#ion#
!a'e "o*+' ,e++ )e rai#e' a# )ein& a$$ro$riate i##*e# in a $etition for re-ie, )efore t(i# Co*rt. T(*#% an i##*e ,(et(er a
"arrier i# $ri-ate or "o!!on on t(e )a#i# of t(e fa"t# fo*n' )y a tria+ "o*rt or t(e a$$e++ate "o*rt "an )e a -a+i' an' re-ie,a)+e
8*e#tion of +a,.
MArti"+e 1732. Co!!on "arrier# are $er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e )*#ine## of "arryin& or
tran#$ortin& $a##en&er# or &oo'# or )ot(% )y +an'% ,ater% or air for "o!$en#ation% offerin& t(eir #er-i"e# to t(e $*)+i".N
Co!$+e!entary to t(e "o'a+ 'efinition i# Se"tion 13% $ara&ra$( ()% of t(e P*)+i" Ser-i"e A"tB it 'efine# M$*)+i" #er-i"eN to )e P
M: : : e-ery $er#on t(at no, or (ereafter !ay o,n% o$erate% !ana&e% or "ontro+ in t(e P(i+i$$ine#% for (ire or "o!$en#ation%
,it( &enera+ or +i!ite' "+iente+e% ,(et(er $er!anent% o""a#iona+ or a""i'enta+% an' 'one for &enera+ )*#ine## $*r$o#e#% any
"o!!on "arrier% rai+roa'% #treet rai+,ay% #*),ay !otor -e(i"+e% eit(er for frei&(t or $a##en&er% or )ot(% ,it( or ,it(o*t fi:e'
ro*te an' ,(ate-er !ay )e it# "+a##ifi"ation% frei&(t or "arrier #er-i"e of any "+a##% e:$re## #er-i"e% #tea!)oat% or #tea!#(i$%
or #tea!#(i$ +ine% $ontine#% ferrie# an' ,ater "raft% en&a&e' in t(e tran#$ortation of $a##en&er# or frei&(t or )ot(% #(i$yar'%
!arine re$air #(o$% ,(arf or 'o"6% i"e $+ant% i"e refri&eration $+ant% "ana+% irri&ation #y#te!% &a#% e+e"tri" +i&(t% (eat an' $o,er%
,ater #*$$+y an' $o,er $etro+e*!% #e,era&e #y#te!% ,ire or ,ire+e## "o!!*ni"ation #y#te!#% ,ire or ,ire+e## )roa'"a#tin&
#tation# an' ot(er #i!i+ar $*)+i" #er-i"e#. : : :. (7n'er#"orin& #*$$+ie'.N
T(e $re-ai+in& 'o"trine on t(e 8*e#tion i# t(at en*n"iate' in t(e +ea'in& "a#e of De .*/!an -#. Co*rt of A$$ea+#.J2K A$$+yin&
Arti"+e 1732 of t(e Co'e% in "on5*n"tion ,it( Se"tion 13() of t(e P*)+i" Ser-i"e A"t% t(i# Co*rt (a# (e+'A
MT(e a)o-e arti"+e !a6e# no 'i#tin"tion )et,een one ,(o#e $rin"i$a+ )*#ine## a"ti-ity i# t(e "arryin& of $er#on# or &oo'# or
)ot(% an' one ,(o 'oe# #*"( "arryin& on+y a# an an"i++ary a"ti-ity (in +o"a+ i'io!% a# Ta #i'e+ineL. Arti"+e 1732 a+#o "aref*++y
a-oi'# !a6in& any 'i#tin"tion )et,een a $er#on or enter$ri#e offerin& tran#$ortation #er-i"e on a re&*+ar or #"(e'*+e'
)a#i# an' one offerin& #*"( #er-i"e on an o""a#iona+% e$i#o'i" or *n#"(e'*+e' )a#i#. Neit(er 'oe# Arti"+e 1732 'i#tin&*i#(
)et,een a "arrier offerin& it# #er-i"e# to t(e T&enera+ $*)+i"%L i.e.% t(e &enera+ "o!!*nity or $o$*+ation% an' one ,(o offer#
#er-i"e# or #o+i"it# )*#ine## on+y fro! a narro, #e&!ent of t(e &enera+ $o$*+ation. We t(in6 t(at Arti"+e 1732 'e+i)erate+y
refraine' fro! !a6in& #*"( 'i#tin"tion#.
MSo *n'er#too'% t(e "on"e$t of T"o!!on "arrierL *n'er Arti"+e 1732 !ay )e #een to "oin"i'e neat+y ,it( t(e notion of T$*)+i"
#er-i"e%L *n'er t(e P*)+i" Ser-i"e A"t (Co!!on,ea+t( A"t No. 1114% a# a!en'e' ,(i"( at +ea#t $artia++y #*$$+e!ent# t(e +a,
on "o!!on "arrier# #et fort( in t(e Ci-i+ Co'e.N
M*"( of t(e 'i#tin"tion )et,een a M"o!!on or $*)+i" "arrierN an' a N$ri-ate or #$e"ia+ "arrierN +ie# in t(e "(ara"ter of t(e
)*#ine##% #*"( t(at if t(e *n'erta6in& i# an i#o+ate' tran#a"tion% not a $art of t(e )*#ine## or o""*$ation% an' t(e "arrier 'oe#
not (o+' it#e+f o*t to "arry t(e &oo'# for t(e &enera+ $*)+i" or to a +i!ite' "+iente+e% a+t(o*&( in-o+-in& t(e "arria&e of &oo'# for
a fee%J3K t(e $er#on or "or$oration $ro-i'in& #*"( #er-i"e "o*+' -ery ,e++ )e 5*#t a $ri-ate "arrier. A ty$i"a+ "a#e i# t(at of a
"(arter $arty ,(i"( in"+*'e# )ot( t(e -e##e+ an' it# "re,% #*"( a# in a )are)oat or 'e!i#e% ,(ere t(e "(arterer o)tain# t(e
*#e an' #er-i"e of a++ or #o!e $art of a #(i$ for a $erio' of ti!e or a -oya&e or -oya&e#J1K an' &et# t(e "ontro+ of t(e -e##e+
an' it# "re,.J<K Contrary to t(e "on"+*#ion !a'e )y t(e a$$e++ate "o*rt% it# fa"t*a+ fin'in&# in'i"ate t(at PIS S(i$$in& (a#
en&a&e' it#e+f in t(e )*#ine## of "arryin& &oo'# for ot(er#% a+t(o*&( for a +i!ite' "+iente+e% *n'erta6in& to "arry #*"( &oo'# for
a fee. T(e re&*+arity of it# a"ti-itie# in t(i# area in'i"ate# !ore t(an 5*#t a "a#*a+ a"ti-ity on it# $art.J4K Neit(er "an t(e "on"e$t
of a "o!!on "arrier "(an&e !ere+y )e"a*#e in'i-i'*a+ "ontra"t# are e:e"*te' or entere' into ,it( $atron# of t(e
"arrier. S*"( re#tri"ti-e inter$retation ,o*+' !a6e it ea#y for a "o!!on "arrier to e#"a$e +ia)i+ity )y t(e #i!$+e e:$e'ient of
enterin& into t(o#e 'i#tin"t a&ree!ent# ,it( "+ient#.
A''re##in& no, t(e i##*e of ,(et(er or not PIS S(i$$in& (a# e:er"i#e' t(e $ro$er 'i+i&en"e 'e!an'e' of "o!!on "arrier#%
Arti"+e 1733 of t(e Ci-i+ Co'e re8*ire# "o!!on "arrier# to o)#er-e e:traor'inary 'i+i&en"e in t(e -i&i+an"e o-er t(e &oo'# t(ey
"arry. In "a#e of +o##% 'e#tr*"tion or 'eterioration of &oo'#% "o!!on "arrier# are $re#*!e' to (a-e )een at fa*+t or to (a-e
a"te' ne&+i&ent+y% an' t(e )*r'en of $ro-in& ot(er,i#e re#t# on t(e!.J7K T(e $ro-i#ion# of Arti"+e 1733% not,it(#tan'in&%
"o!!on "arrier# are e:e!$t fro! +ia)i+ity for +o##% 'e#tr*"tion% or 'eterioration of t(e &oo'# '*e to any of t(e fo++o,in& "a*#e#A
F+oo'% #tor!% eart(8*a6e% +i&(tnin&% or ot(er nat*ra+ 'i#a#ter or "a+a!ityB
T(e "(ara"ter of t(e &oo'# or 'efe"t# in t(e $a"6in& or in t(e "ontainer#B an'
Or'er or a"t of "o!$etent $*)+i" a*t(ority.J2K
T(e a$$e++ate "o*rt r*+e'% &at(ere' fro! t(e te#ti!onie# an' #,orn !arine $rote#t# of t(e re#$e"ti-e -e##e+ !a#ter# of Li!ar
I an' MT Iron Ea&+e% t(at t(ere ,a# no ,ay )y ,(i"( t(e )ar&eL# or t(e t*&)oatL# "re, "o*+' (a-e $re-ente' t(e #in6in&
of Li!ar I. T(e -e##e+ ,a# #*''en+y to##e' )y ,a-e# of e:traor'inary (ei&(t of #i: (4 to ei&(t (2 feet an' )*ffete' )y #tron&
,in'# of 1.< 6not# re#*+tin& in t(e entry of ,ater into t(e )ar&eL# (at"(e#. T(e offi"ia+ Certifi"ate of In#$e"tion of t(e )ar&e
i##*e' )y t(e P(i+i$$ine Coa#t&*ar' an' t(e Coa#t,i#e Loa' Line Certifi"ate ,o*+' atte#t to t(e #ea,ort(ine## of Li!ar I an'
#(o*+' #tren&t(en t(e fa"t*a+ fin'in&# of t(e a$$e++ate "o*rt.
Fin'in&# of fa"t of t(e Co*rt of A$$ea+# &enera++y "on"+*'e t(i# Co*rtB none of t(e re"o&ni/e' e:"e$tion# fro! t(e r*+e 0
(1 ,(en t(e fa"t*a+ fin'in&# of t(e Co*rt of A$$ea+# an' t(e tria+ "o*rt are "ontra'i"toryB (2 ,(en t(e "on"+*#ion i# a fin'in&
&ro*n'e' entire+y on #$e"*+ation% #*r!i#e#% or "on5e"t*re#B (3 ,(en t(e inferen"e !a'e )y t(e Co*rt of A$$ea+# fro! it#
fin'in&# of fa"t i# !anife#t+y !i#ta6en% a)#*r'% or i!$o##i)+eB (1 ,(en t(ere i# a &ra-e a)*#e of 'i#"retion in t(e a$$re"iation
17
of fa"t#B (< ,(en t(e a$$e++ate "o*rt% in !a6in& it# fin'in&#% ,ent )eyon' t(e i##*e# of t(e "a#e an' #*"( fin'in&# are "ontrary
to t(e a'!i##ion# of )ot( a$$e++ant an' a$$e++eeB (4 ,(en t(e 5*'&!ent of t(e Co*rt of A$$ea+# i# $re!i#e' on a
!i#a$$re(en#ion of fa"t#B (7 ,(en t(e Co*rt of A$$ea+# fai+e' to noti"e "ertain re+e-ant fa"t# ,(i"(% if $ro$er+y "on#i'ere'%
,o*+' 5*#tify a 'ifferent "on"+*#ionB (2 ,(en t(e fin'in&# of fa"t are t(e!#e+-e# "onf+i"tin&B (3 ,(en t(e fin'in&# of fa"t are
"on"+*#ion# ,it(o*t "itation of t(e #$e"ifi" e-i'en"e on ,(i"( t(ey are )a#e'B an' (1; ,(en t(e fin'in&# of fa"t of t(e Co*rt
of A$$ea+# are $re!i#e' on t(e a)#en"e of e-i'en"e )*t #*"( fin'in&# are "ontra'i"te' )y t(e e-i'en"e on re"or' P ,o*+'
a$$ear to )e "+ear+y e:tant in t(i# in#tan"e.
A++ &i-en t(en% t(e a$$e++ate "o*rt 'i' not err in it# 5*'&!ent a)#o+-in& PIS S(i$$in& fro! +ia)i+ity for t(e +o## of t(e D7MC
"ar&o.
W9EREFORE% t(e $etition i# DENIED. No "o#t#.
A#ia Li&(tera&e an' S(i$$in&% In". -. Co*rt of A$$ea+#% ..R. No. 117214% A*&*#t 13% 2;;3
On a$$ea+ i# t(e Co*rt of A$$ea+#L May 11% 2;;; De"i#ion
J1K
in CA0..R. CH No. 1313< an' Fe)r*ary 21% 2;;1
Re#o+*tion
J2K
affir!in& ,it( !o'ifi"ation t(e A$ri+ 4% 1331 De"i#ion
J3K
of t(e Re&iona+ Tria+ Co*rt of Mani+a ,(i"( fo*n' $etitioner
+ia)+e to $ay $ri-ate re#$on'ent t(e a!o*nt of in'e!nity an' attorney=# fee#.
Fir#t% t(e fa"t#.
On >*ne 13% 133;% 3%1<; !etri" ton# of Eetter We#tern W(ite W(eat in )*+6% -a+*e' at 7SU123%132.3<
J1K
,a# #(i$$e' )y
Mar*)eni A!eri"an Cor$oration of Port+an'% Ore&on on )oar' t(e -e##e+ MFH NEO CCMEIDI7M H024 for 'e+i-ery to t(e
"on#i&nee% .enera+ Mi++in& Cor$oration in Mani+a% e-i'en"e' )y Ei++ of La'in& No. PTDFMan01.
J<K
T(e #(i$!ent ,a# in#*re'
)y t(e $ri-ate re#$on'ent Pr*'entia+ .*arantee an' A##*ran"e% In". a&ain#t +o## or 'a!a&e for P11%421%771.7< *n'er Marine
Car&o Ri#6 Note RN 112<3F3;.
J4K
On >*+y 2<% 133;% t(e "arryin& -e##e+ arri-e' in Mani+a an' t(e "ar&o ,a# tran#ferre' to t(e "*#to'y of t(e $etitioner A#ia
Li&(tera&e an' S(i$$in&% In". T(e $etitioner ,a# "ontra"te' )y t(e "on#i&nee a# "arrier to 'e+i-er t(e "ar&o to "on#i&nee=#
,are(o*#e at Eo. 7&on&% Pa#i& City.
On A*&*#t 1<% 133;% 3;; !etri" ton# of t(e #(i$!ent ,a# +oa'e' on )ar&e PSTSI III% e-i'en"e' )y Li&(tera&e Re"ei$t No.
;341
J7K
for 'e+i-ery to "on#i&nee. T(e "ar&o 'i' not rea"( it# 'e#tination.
It a$$ear# t(at on A*&*#t 17% 133;% t(e tran#$ort of #ai' "ar&o ,a# #*#$en'e' '*e to a ,arnin& of an in"o!in& ty$(oon. On
A*&*#t 22% 133;% t(e $etitioner $ro"ee'e' to $*++ t(e )ar&e to En&ineerin& I#+an' off Ea#e"o to #ee6 #(e+ter fro! t(e
a$$roa"(in& ty$(oon. PSTSI III ,a# tie' 'o,n to ot(er )ar&e# ,(i"( arri-e' a(ea' of it ,(i+e ,eat(erin& o*t t(e #tor! t(at
ni&(t. A fe, 'ay# after% t(e )ar&e 'e-e+o$e' a +i#t )e"a*#e of a (o+e it #*#taine' after (ittin& an *n#een $rot*)eran"e
*n'erneat( t(e ,ater. T(e $etitioner fi+e' a Marine Prote#t on A*&*#t 22% 133;.
J2K
It +i6e,i#e #e"*re' t(e #er-i"e# of .a#$ar
Sa+-a&in& Cor$oration ,(i"( ref+oate' t(e )ar&e.
J3K
T(e (o+e ,a# t(en $at"(e' ,it( "+ay an' "e!ent.
T(e )ar&e ,a# t(en to,e' to ISLOFF ter!ina+ )efore it fina++y (ea'e' to,ar'# t(e "on#i&nee=# ,(arf on Se$te!)er <%
133;. 7$on rea"(in& t(e Sta. Me#a #$i++,ay#% t(e )ar&e a&ain ran a&ro*n' '*e to #tron& "*rrent. To a-oi' t(e "o!$+ete
#in6in& of t(e )ar&e% a $ortion of t(e &oo'# ,a# tran#ferre' to t(ree ot(er )ar&e#.
J1;K

T(e ne:t 'ay% Se$te!)er 4% 133;% t(e to,in& )it# of t(e )ar&e )ro6e. It #an6 "o!$+ete+y% re#*+tin& in t(e tota+ +o## of t(e
re!ainin& "ar&o.
J11K
A #e"on' Marine Prote#t ,a# fi+e' on Se$te!)er 7% 133;.
J12K
On Se$te!)er 11% 133;% a )i''in& ,a# "on'*"te' to 'i#$o#e of t(e 'a!a&e' ,(eat retrie-e' an' +oa'e' on t(e t(ree ot(er
)ar&e#.
J13K
T(e tota+ $ro"ee'# fro! t(e #a+e of t(e #a+-a&e' "ar&o ,a# P2;1%373.7<.
J11K
On t(e #a!e 'ate% Se$te!)er 11% 133;% "on#i&nee #ent a "+ai! +etter to t(e $etitioner% an' anot(er +etter 'ate' Se$te!)er
12% 133; to t(e $ri-ate re#$on'ent for t(e -a+*e of t(e +o#t "ar&o.
On >an*ary 3;% 1331% t(e $ri-ate re#$on'ent in'e!nifie' t(e "on#i&nee in t(e a!o*nt of P1%1;1%4<1.22.
J1<K
T(ereafter% a#
#*)ro&ee% it #o*&(t re"o-ery of #ai' a!o*nt fro! t(e $etitioner% )*t to no a-ai+.
On >*+y 3% 1331% t(e $ri-ate re#$on'ent fi+e' a "o!$+aint a&ain#t t(e $etitioner for re"o-ery of t(e a!o*nt of in'e!nity%
attorney=# fee# an' "o#t of #*it.
J14K
Petitioner fi+e' it# an#,er ,it( "o*nter"+ai!.
J17K
T(e Re&iona+ Tria+ Co*rt r*+e' in fa-or of t(e $ri-ate re#$on'ent. T(e 'i#$o#iti-e $ortion of it# De"i#ion #tate#A
WHEREFORE% $re!i#e# "on#i'ere'% 5*'&!ent i# (ere)y ren'ere' or'erin& 'efen'ant A#ia Li&(tera&e O S(i$$in&% In". +ia)+e
to $ay $+aintiff Pr*'entia+ .*arantee O A##*ran"e Co.% In". t(e #*! of P1%1;1%4<1.22 ,it( intere#t fro! t(e 'ate "o!$+aint
,a# fi+e' on >*+y 3% 1331 *nti+ f*++y #ati#fie' $+*# 1;G of t(e a!o*nt a,ar'e' a# an' for attorney=# fee#. Defen'ant=#
"o*nter"+ai! i# (ere)y DISMISSED. Wit( "o#t# a&ain#t 'efen'ant.
J12K
Petitioner a$$ea+e' to t(e Co*rt of A$$ea+# in#i#tin& t(at it i# not a "o!!on "arrier. T(e a$$e++ate "o*rt affir!e' t(e 'e"i#ion
of t(e tria+ "o*rt ,it( !o'ifi"ation. T(e 'i#$o#iti-e $ortion of it# 'e"i#ion rea'#A
W9EREFORE% t(e 'e"i#ion a$$ea+e' fro! i# (ere)y AFFIRMED ,it( !o'ifi"ation in t(e #en#e t(at t(e #a+-a&e -a+*e
of P2;1%373.7< #(a++ )e 'e'*"te' fro! t(e a!o*nt of P1%1;1%4<1.22. Co#t# a&ain#t a$$e++ant.
SO ORDERED.
PetitionerL# Motion for Re"on#i'eration 'ate' >*ne 3% 2;;; ,a# +i6e,i#e 'enie' )y t(e a$$e++ate "o*rt in a Re#o+*tion
$ro!*+&ate' on Fe)r*ary 21% 2;;1.
9en"e% t(i# $etition. Petitioner #*)!it# t(e fo++o,in& error# a++e&e'+y "o!!itte' )y t(e a$$e++ate "o*rt% vi/A
J13K
T9E CO7RT OF APPEALS DECIDED T9E CASE A 6-7 IN A WAC NOT IN ACCORD WIT9 LAW ANDFOR WIT9 T9E
APPLICAELE DECISIONS OF T9E S7PREME CO7RT W9EN IT 9ELD T9AT PETITIONER IS A COMMON
CARRIER.
APPLICAELE DECISIONS OF T9E S7PREME CO7RT W9EN IT AFFIRMED T9E FINDIN. OF T9E LOWER
CO7RT A 6-7 T9AT ON T9E EASIS OF T9E PROHISIONS OF T9E CIHIL CODE APPLICAELE TO COMMON
CARRIERS% 0TH' 87"" 7( TH' !A%27 ", TH'%'(7%', 97%,' 9: TH' !A%%'% , A88 !A"'" ';!'*T ,
TH' (.' <=> !A"'" ',-$'%AT'&)1
APPLICAELE DECISIONS OF T9E S7PREME CO7RT W9EN IT EFFECTIHELC CONCL7DED T9AT PETITIONER
FAILED TO EVERCISE D7E DILI.ENCE ANDFOR WAS NE.LI.ENT IN ITS CARE AND C7STODC OF T9E
CONSI.NEELS CAR.O.
T(e i##*e# to )e re#o+-e' areA
W(et(er t(e $etitioner i# a "o!!on "arrierB an'%
A##*!in& t(e $etitioner i# a "o!!on "arrier% ,(et(er it e:er"i#e' e:traor'inary 'i+i&en"e in it# "are an' "*#to'y of t(e
"on#i&neeL# "ar&o.
On t(e fir#t i##*e% ,e r*+e t(at $etitioner i# a "o!!on "arrier.
12
Arti"+e 1732 of t(e Ci-i+ Co'e 'efine# common carriers a# $er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e
#er-i"e# to t(e $*)+i".
Petitioner "onten'# t(at it i# not a "o!!on "arrier )*t a $ri-ate "arrier. A++e&e'+y% it (a# no fi:e' an' $*)+i"+y 6no,n ro*te%
!aintain# no ter!ina+#% an' i##*e# no ti"6et#. It $oint# o*t t(at it i# not o)+i&e' to "arry in'i#"ri!inate+y for any $er#on. It i#
not )o*n' to "arry &oo'# *n+e## it "on#ent#. In #(ort% it 'oe# not (o+' o*t it# #er-i"e# to t(e &enera+ $*)+i".
J2;K
We 'i#a&ree.
In 8e <u=+a" 4s; C!u&t !# :11ea(s,
J21K
,e (e+' t(at t(e 'efinition of common carriers in Arti"+e 1732 of t(e Ci-i+ Co'e !a6e#
no 'i#tin"tion )et,een one ,(o#e $rin"i$a+ )*#ine## a"ti-ity i# t(e "arryin& of $er#on# or &oo'# or )ot(% an' one ,(o 'oe#
#*"( "arryin& on+y a# an an"i++ary a"ti-ity. We a+#o 'i' not 'i#tin&*i#( )et,een a $er#on or enter$ri#e offerin& tran#$ortation
#er-i"e on a re&*+ar or #"(e'*+e' )a#i# an' one offerin& #*"( #er-i"e on an o""a#iona+% e$i#o'i" or *n#"(e'*+e'
)a#i#. F*rt(er% ,e r*+e' t(at Arti"+e 1732 'oe# not 'i#tin&*i#( )et,een a "arrier offerin& it# #er-i"e# to t(e general public% an'
one ,(o offer# #er-i"e# or #o+i"it# )*#ine## on+y fro! a narro, #e&!ent of t(e &enera+ $o$*+ation.
In t(e "a#e at )ar% t(e $rin"i$a+ )*#ine## of t(e $etitioner i# t(at of +i&(tera&e an' 'raya&e
J22K
an' it offer# it# )ar&e# to t(e
$*)+i" for "arryin& or tran#$ortin& &oo'# )y ,ater for "o!$en#ation. Petitioner i# "+ear+y a "o!!on "arrier. In 8e
<u=+a"% supra%
J23K
,e "on#i'ere' $ri-ate re#$on'ent Erne#to Cen'aWa to )e a "o!!on "arrier e-en if (i# $rin"i$a+
o""*$ation ,a# not t(e "arria&e of &oo'# for ot(er#% )*t t(at of )*yin& *#e' )ott+e# an' #"ra$ !eta+ in Pan&a#inan an' #e++in&
t(e#e ite!# in Mani+a.
We t(erefore (o+' t(at $etitioner i# a "o!!on "arrier ,(et(er it# "arryin& of &oo'# i# 'one on an irre&*+ar rat(er t(an
#"(e'*+e' !anner% an' ,it( an on+y +i!ite' "+iente+e. A "o!!on "arrier nee' not (a-e fi:e' an' $*)+i"+y 6no,n
ro*te#. Neit(er 'oe# it (a-e to !aintain ter!ina+# or i##*e ti"6et#.
To )e #*re% $etitioner fit# t(e te#t of a "o!!on "arrier a# +ai' 'o,n in 6asc!s 4s; C!u&t !# :11ea(s.
J21K
T(e te#t to 'eter!ine
a "o!!on "arrier i# M,(et(er t(e &i-en *n'erta6in& i# a $art of t(e )*#ine## en&a&e' in )y t(e "arrier ,(i"( (e (a# (e+' o*t
to t(e &enera+ $*)+i" a# (i# o""*$ation rat(er t(an t(e 8*antity or e:tent of t(e )*#ine## tran#a"te'.N
J2<K
In t(e "a#e at )ar% t(e
$etitioner a'!itte' t(at it i# en&a&e' in t(e )*#ine## of #(i$$in& an' +i&(tera&e%
J24K
offerin& it# )ar&e# to t(e $*)+i"% 'e#$ite it#
+i!ite' "+iente+e for "arryin& or tran#$ortin& &oo'# )y ,ater for "o!$en#ation.
J27K
On t(e #e"on' i##*e% ,e *$(o+' t(e fin'in&# of t(e +o,er "o*rt# t(at $etitioner fai+e' to e:er"i#e e:traor'inary 'i+i&en"e in it#
"are an' "*#to'y of t(e "on#i&neeL# &oo'#.
Co!!on "arrier# are )o*n' to o)#er-e e:traor'inary 'i+i&en"e in t(e -i&i+an"e o-er t(e &oo'# tran#$orte' )y t(e!.
J22K
T(ey
are $re#*!e' to (a-e )een at fa*+t or to (a-e a"te' ne&+i&ent+y if t(e &oo'# are +o#t% 'e#troye' or 'eteriorate'.
J23K
To
o-er"o!e t(e $re#*!$tion of ne&+i&en"e in t(e "a#e of +o##% 'e#tr*"tion or 'eterioration of t(e &oo'#% t(e "o!!on "arrier
!*#t $ro-e t(at it e:er"i#e' e:traor'inary 'i+i&en"e. T(ere are% (o,e-er% e:"e$tion# to t(i# r*+e. Arti"+e 1731 of t(e Ci-i+
Co'e en*!erate# t(e in#tan"e# ,(en t(e $re#*!$tion of ne&+i&en"e 'oe# not atta"(A
Art. 1731. Co!!on "arrier# are re#$on#i)+e for t(e +o##% 'e#tr*"tion% or 'eterioration of t(e &oo'#% *n+e## t(e #a!e i# '*e to
any of t(e fo++o,in& "a*#e# on+yA
F+oo'% #tor!% eart(8*a6e% +i&(tnin&% or ot(er nat*ra+ 'i#a#ter or "a+a!ityB
T(e "(ara"ter of t(e &oo'# or 'efe"t# in t(e $a"6in& or in t(e "ontainer#B
Or'er or a"t of "o!$etent $*)+i" a*t(ority.
In t(e "a#e at )ar% t(e )ar&e "o!$+ete+y #an6 after it# to,in& )it# )ro6e% re#*+tin& in t(e tota+ +o## of it# "ar&o. Petitioner "+ai!#
t(at t(i# ,a# "a*#e' )y a ty$(oon% (en"e% it #(o*+' not )e (e+' +ia)+e for t(e +o## of t(e "ar&o. 9o,e-er% $etitioner fai+e' to
$ro-e t(at t(e ty$(oon i# t(e $ro:i!ate an' on+y "a*#e of t(e +o## of t(e &oo'#% an' t(at it (a# e:er"i#e' '*e 'i+i&en"e )efore%
'*rin& an' after t(e o""*rren"e of t(e ty$(oon to $re-ent or !ini!i/e t(e +o##.
J3;K
T(e e-i'en"e #(o, t(at% e-en )efore t(e
to,in& )it# of t(e )ar&e )ro6e% it (a' a+rea'y $re-io*#+y #*#taine' 'a!a&e ,(en it (it a #*n6en o)5e"t ,(i+e 'o"6e' at t(e
En&ineerin& I#+an'. It e-en #*ffere' a (o+e. C+ear+y% t(i# "o*+' not )e #o+e+y attri)*te' to t(e ty$(oon. T(e $art+y0#*)!er&e'
-e##e+ ,a# ref+oate' )*t it# (o+e ,a# $at"(e' ,it( on+y "+ay an' "e!ent. T(e $at"( ,or6 ,a# !ere+y a $ro-i#iona+ re!e'y%
not eno*&( for t(e )ar&e to #ai+ #afe+y. T(*#% ,(en $etitioner $er#i#te' to $ro"ee' ,it( t(e -oya&e% it re"6+e##+y e:$o#e' t(e
"ar&o to f*rt(er 'a!a&e. A $ortion of t(e "ro##0e:a!ination of A+fre'o C*nanan% "ar&o0#*r-eyor of Tan0.at*e A'5*#t!ent
Co.% In".% #tate#A
CROSS0EVAMINATION EC ATTC. DONN LEEA
J31K
: : : : : : : : :
8 0 Can yo* te++ *# ,(at e+#e tran#$ire' after t(at in"i'entD
a 0 After t(e fir#t a""i'ent% t(ro*&( t(e initiati-e of t(e )ar&e o,ner#% t(ey trie' to $*++ o*t t(e )ar&e fro! t(e $+a"e of t(e
a""i'ent% an' )rin& it to t(e an"(or ter!ina+ for #afety% t(en after 'e"i'in& if t(e -e##e+ i# #ta)i+i/e'% t(ey trie' to $*++ it to
t(e "on#i&neeL# ,are(o*#e% no, ,(i+e on ro*te anot(er a""i'ent o""*rre'% no, t(i# ti!e t(e )ar&e tota++y (ittin&
#o!et(in& in t(e "o*r#e.
8 0 Co* #ai' t(ere ,a# anot(er a""i'ent% "an yo* te++ t(e "o*rt t(e nat*re of t(e #e"on' a""i'entD
a 0 T(e #in6in&% #ir.
8 0 Can yo* te++ t(e nat*re . . . "an yo* te++ t(e "o*rt% if yo* 6no, ,(at "a*#e' t(e #in6in&D
a 0 Mo#t+y it ,a# re+ate' to t(e fir#t a""i'ent )e"a*#e t(ere ,a# a+rea'y a ,(o+e <sic> on t(e )otto! $art of t(e )ar&e.
: : : : : : : : :
T(i# i# not a++. Petitioner #ti++ (ea'e' to t(e "on#i&neeL# ,(arf 'e#$ite 6no,+e'&e of an in"o!in& ty$(oon. D*rin& t(e ti!e
t(at t(e )ar&e ,a# (ea'in& to,ar'# t(e "on#i&nee=# ,(arf on Se$te!)er <% 133;% ty$(oon MLo+en&N (a# a+rea'y entere' t(e
P(i+i$$ine area of re#$on#i)i+ity.
J32K
A $art of t(e te#ti!ony of Ro)ert Eoy'% Car&o O$eration# S*$er-i#or of t(e $etitioner%
re-ea+#A
DIRECT0EVAMINATION EC ATTC. LEEA
J33K
: : : : : : : : :
8 0 No,% Mr. Witne##% 'i' it not o""*r to yo* it !i&(t )e #afer to 5*#t a++o, t(e Ear&e to +ie ,(ere #(e ,a# in#tea' of
to,in& itD
a 0 Sin"e t(at ti!e t(at t(e Ear&e ,a# ref+oate'% .MC (.enera+ Mi++in& Cor$oration% t(e "on#i&nee a# I (a-e #ai' ,a#
in a (*rry for t(eir &oo'# to )e 'e+i-ere' at t(eir W(arf #in"e t(ey nee'e' )a'+y t(e ,(eat t(at ,a# +oa'e' in PSTSI03. It
,a# nee'e' )a'+y )y t(e "on#i&nee.
8 0 An' t(i# i# t(e rea#on ,(y yo* to,e' t(e Ear&e a# yo* 'i'D
a 0 Ce#% #ir.
: : : : : : : : :
13
CROSS0EVAMINATION EC ATTC. I.NACIOA
J31K
: : : : : : : : :
8 0 An' t(en fro! ISLOFF Ter!ina+ yo* $ro"ee'e' to t(e $re!i#e# of t(e .MCD A! I "orre"tD
a 0 T(e ne:t 'ay% in t(e !ornin&% ,e (ire' for a''itiona+ t,o (2 t*&)oat# a# I (a-e #tate'.
8 0 De#$ite of t(e t(reat# of an in"o!in& ty$(oon a# yo* te#tifie' a ,(i+e a&oD
a 0 It i# a+rea'y in an inner $ortion of Pa#i& Ri-er. T(e ty$(oon ,o*+' )e "o!in& an' it ,o*+' )e 'an&ero*# if ,e are in t(e
-i"inity of Mani+a Eay.
8 0 E*t t(e fa"t i#% t(e ty$(oon ,a# in"o!in&D Ce# or noD
a 0 Ce#.
8 0 An' yet a# a #tan'ar' o$eratin& $ro"e'*re of yo*r Co!$any% yo* (a-e to #e"*re a #ort of Certifi"ation to 'eter!ine t(e
,eat(er "on'ition% a! I "orre"tD
a 0 Ce#% #ir.
8 0 So% !ore or +e##% yo* (a' t(e 6no,+e'&e of t(e in"o!in& ty$(oon% ri&(tD
a 0 Ce#% #ir.
8 0 An' yet yo* $ro"ee'e' to t(e $re!i#e# of t(e .MCD
a 0 ISLOFF Ter!ina+ i# far fro! Mani+a Eay an' anyti!e e-en ,it( t(e ty$(oon if yo* are a+rea'y in#i'e t(e -i"inity or in#i'e
Pa#i& entran"e% it i# a #afe $+a"e to to, *$#trea!.
A""or'in&+y% t(e $etitioner "annot in-o6e t(e o""*rren"e of t(e ty$(oon a# for"e !a5e*re to e#"a$e +ia)i+ity for t(e +o##
#*#taine' )y t(e $ri-ate re#$on'ent. S*re+y% !eetin& a ty$(oon (ea'0on fa++# #(ort of '*e 'i+i&en"e re8*ire' fro! a "o!!on
"arrier. More i!$ortant+y% t(e offi"er#Fe!$+oyee# t(e!#e+-e# of $etitioner a'!itte' t(at ,(en t(e to,in& )it# of t(e -e##e+
)ro6e t(at "a*#e' it# #in6in& an' t(e tota+ +o## of t(e "ar&o *$on rea"(in& t(e Pa#i& Ri-er% it ,a# no +on&er affe"te' )y t(e
ty$(oon. T(e ty$(oon t(en i# not t(e $ro:i!ate "a*#e of t(e +o## of t(e "ar&oB a (*!an fa"tor% i)e)% ne&+i&en"e (a'
inter-ene'.
I5 VIEW THEREOF% t(e $etition i# DENIED. T(e De"i#ion of t(e Co*rt of A$$ea+# in CA0..R. CH No. 1313< 'ate' May 11%
2;;; an' it# Re#o+*tion 'ate' Fe)r*ary 21% 2;;1 are (ere)y AFFIRMED. Co#t# a&ain#t $etitioner.
0O OR8ERE8;
S$o*#e# Cr*/ -. S*n 9o+i'ay#% In".% ..R. No. 124312% >*ne 23% 2;1;
S$o*#e# Dante an' Leonora Cr*/ ($etitioner# +o'&e' a Co!$+aint on >an*ary 2<% 2;;1
J1K
a&ain#t S*n 9o+i'ay#% In".
(re#$on'ent ,it( t(e Re&iona+ Tria+ Co*rt (RTC of Pa#i& City for 'a!a&e# ari#in& fro! t(e 'eat( of t(eir #on R*e+ito C. Cr*/
(R*e+ito ,(o $eri#(e' ,it( (i# ,ife on Se$te!)er 11% 2;;; on )oar' t(e )oat $?9 !oco 9each t(at "a$#i/e' en ro*te to
Eatan&a# fro! P*erto .a+era% Orienta+ Min'oro ,(ere t(e "o*$+e (a' #taye' at Co"o Eea"( I#+an' Re#ort (Re#ort o,ne'
an' o$erate' )y re#$on'ent.
T(e #tay of t(e ne,+y ,e' R*e+ito an' (i# ,ife at t(e Re#ort fro! Se$te!)er 3 to 11% 2;;; ,a# )y -irt*e of a to*r $a"6a&e0
"ontra"t ,it( re#$on'ent t(at in"+*'e' tran#$ortation to an' fro! t(e Re#ort an' t(e $oint of 'e$art*re in Eatan&a#.
Mi&*e+ C. Mat*te (Mat*te%
J2K
a #"*)a 'i-in& in#tr*"tor an' one of t(e #*r-i-or#% &a-e (i# a""o*nt of t(e in"i'ent t(at +e' to t(e
fi+in& of t(e "o!$+aint a# fo++o,#A
Mat*te #taye' at t(e Re#ort fro! Se$te!)er 2 to 11% 2;;;. 9e ,a# ori&ina++y #"(e'*+e' to +ea-e t(e Re#ort in t(e afternoon
of Se$te!)er 1;% 2;;;% )*t ,a# a'-i#e' to #tay for anot(er ni&(t )e"a*#e of #tron& ,in'# an' (ea-y rain#.
On Se$te!)er 11% 2;;;% a# it ,a# #ti++ ,in'y% Mat*te an' 2< ot(er Re#ort &*e#t# in"+*'in& $etitioner#L #on an' (i# ,ife tre66e'
to t(e ot(er #i'e of t(e Co"o Eea"(!o*ntain t(at ,a# #(e+tere' fro! t(e ,in' ,(ere t(ey )oar'e' $?9 !oco 9each % ,(i"(
,a# to ferry t(e! to Eatan&a#.
S(ort+y after t(e )oat #ai+e'% it #tarte' to rain. A# it !o-e' fart(er a,ay fro! P*erto .a+era an' into t(e o$en #ea#% t(e rain
an' ,in' &ot #tron&er% "a*#in& t(e )oat to ti+t fro! #i'e to #i'e an' t(e "a$tain to #te$ for,ar' to t(e front% +ea-in& t(e ,(ee+ to
one of t(e "re, !e!)er#.
T(e ,a-e# &ot !ore *n,ie+'y. After &ettin& (it )y t,o )i& ,a-e# ,(i"( "a!e one after t(e ot(er% $?9 !oco 9each
"a$#i/e' $*ttin& a++ $a##en&er# *n'er,ater.
2;
T(e $a##en&er#% ,(o (a' $*t on t(eir +ife 5a"6et#% #tr*&&+e' to &et o*t of t(e )oat. 7$on #eein& t(e "a$tain% Mat*te an' t(e
ot(er $a##en&er# ,(o rea"(e' t(e #*rfa"e a#6e' (i! ,(at t(ey "o*+' 'o to #a-e t(e $eo$+e ,(o ,ere #ti++ tra$$e' *n'er t(e
)oat. T(e "a$tain re$+ie' Mligtas niyo na lang ang sarili niyoN (>*#t #a-e yo*r#e+-e#.
9e+$ "a!e after a)o*t 1< !in*te# ,(en t,o )oat# o,ne' )y A#ia Di-er# in Sa)an&% P*erto .a+era $a##e' )y t(e
"a$#i/e' $?9 !oco 9each . Eoar'e' on t(o#e t,o )oat# ,ere 22 $er#on#% "on#i#tin& of 12 $a##en&er# an' fo*r "re,
!e!)er#% ,(o ,ere )ro*&(t to Pi#a I#+an'. Ei&(t $a##en&er#% in"+*'in& $etitioner#L #on an' (i# ,ife% 'ie' '*rin& t(e in"i'ent.
At t(e ti!e of R*e+itoL# 'eat(% (e ,a# 22 year# o+' an' e!$+oye' a# a "ontra"t*a+ ,or6er for Mit#*i En&ineerin& O
S(i$)*i+'in& Ara)ia% Lt'. in Sa*'i Ara)ia% ,it( a )a#i" !ont(+y #a+ary of U3;;.
J3K
Petitioner#% )y +etter of O"to)er 24% 2;;;%
J1K
'e!an'e' in'e!nifi"ation fro! re#$on'ent for t(e 'eat( of t(eir #on in t(e a!o*nt
of at +ea#t P1%;;;%;;;.
Re$+yin&% re#$on'ent% )y +etter 'ate' No-e!)er 7% 2;;;%
J<K
'enie' any re#$on#i)i+ity for t(e in"i'ent ,(i"( it "on#i'ere' to )e a
fort*ito*# e-ent. It ne-ert(e+e## offere'% a# an a"t of "o!!i#eration% t(e a!o*nt of P1;%;;; to $etitioner# *$on t(eir #i&nin&
of a ,ai-er.
A# $etitioner# 'e"+ine' re#$on'entL# offer% t(ey fi+e' t(e Co!$+aint% a# ear+ier ref+e"te'% a++e&in& t(at re#$on'ent% a# a "o!!on
"arrier% ,a# &*i+ty of ne&+i&en"e in a++o,in&$?9 !oco 9each to #ai+ not,it(#tan'in& #tor! ,arnin& )*++etin# i##*e' )y t(e
P(i+i$$ine At!o#$(eri"% .eo$(y#i"a+ an' A#trono!i"a+ Ser-i"e# A'!ini#tration (PA.ASA a# ear+y a# <A;; a.!. of Se$te!)er
11% 2;;;.
J4K
In it# An#,er%
J7K
re#$on'ent 'enie' )ein& a "o!!on "arrier% a++e&in& t(at it# )oat# are not a-ai+a)+e to t(e &enera+ $*)+i" a#
t(ey on+y ferry Re#ort &*e#t# an' "re, !e!)er#. Nonet(e+e##% it "+ai!e' t(at it e:er"i#e' t(e *t!o#t 'i+i&en"e in en#*rin& t(e
#afety of it# $a##en&er#B "ontrary to $etitioner#L a++e&ation% t(ere ,a# no #tor! onSe$te!)er 11% 2;;; a# t(e Coa#t .*ar' in
fa"t "+eare' t(e -oya&eB an' $?9 !oco 9each ,a# not fi++e' to "a$a"ity an' (a' #*ffi"ient +ife 5a"6et# for it# $a##en&er#. Ey
,ay of Co*nter"+ai!% re#$on'ent a++e&e' t(at it i# entit+e' to an a,ar' for attorneyL# fee# an' +iti&ation e:$en#e# a!o*ntin& to
not +e## t(an P3;;%;;;.
Car+o# Eon8*in% "a$tain of $?9 !oco 9each % a-erre' t(at t(e Re#ort "*#to!ari+y re8*ire# fo*r "on'ition# to )e !et )efore a
)oat i# a++o,e' to #ai+% to ,itA (1 t(e #ea i# "a+!% (2 t(ere i# "+earan"e fro! t(e Coa#t .*ar'% (3 t(ere i# "+earan"e fro! t(e
"a$tain an' (1 t(ere i# "+earan"e fro! t(e Re#ortL# a##i#tant !ana&er.
J2K
9e a''e' t(at $?9 !oco 9each !et a++ fo*r
"on'ition# on Se$te!)er 11% 2;;;%
J3K
)*t a subasco or #8*a++% "(ara"teri/e' )y #tron& ,in'# an' )i& ,a-e#% #*''en+y
o""*rre'% "a*#in& t(e )oat to "a$#i/e.
J1;K

Ey De"i#ion of Fe)r*ary 14% 2;;<%
J11K
Eran"( 247 of t(e Pa#i& RTC 'i#!i##e' $etitioner#L Co!$+aint an' re#$on'entL#
Co*nter"+ai!.
Petitioner#L Motion for Re"on#i'eration (a-in& )een 'enie' )y Or'er 'ate' Se$te!)er 2% 2;;<%
J12K
t(ey a$$ea+e' to t(e Co*rt
of A$$ea+#.
Ey De"i#ion of A*&*#t 13% 2;;2%
J13K
t(e a$$e++ate "o*rt 'enie' $etitioner#L a$$ea+% (o+'in&% a!on& ot(er t(in&#% t(at t(e tria+
"o*rt "orre"t+y r*+e' t(at re#$on'ent i# a $ri-ate "arrier ,(i"( i# on+y re8*ire' to o)#er-e or'inary 'i+i&en"eB t(at re#$on'ent in
fa"t o)#er-e' e:traor'inary 'i+i&en"e in tran#$ortin& it# &*e#t# on )oar' $?9 !oco 9each B an' t(at t(e $ro:i!ate "a*#e of
t(e in"i'ent ,a# a #8*a++% a fort*ito*# e-ent.
21
Petitioner#L Motion for Re"on#i'eration (a-in& )een 'enie' )y Re#o+*tion 'ate' >an*ary 14% 2;;3%
J11K
t(ey fi+e' t(e $re#ent
Petition for Re-ie,.
J1<K

Petitioner# !aintain t(e $o#ition t(ey too6 )efore t(e tria+ "o*rt% a''in& t(at re#$on'ent i# a "o!!on "arrier #in"e )y it# to*r
$a"6a&e% t(e tran#$ortin& of it# &*e#t# i# an inte&ra+ $art of it# re#ort )*#ine##. T(ey infor! t(at anot(er 'i-i#ion of t(e
a$$e++ate "o*rt in fa"t (e+' re#$on'ent +ia)+e for 'a!a&e# to t(e ot(er #*r-i-or# of t(e in"i'ent.
7$on t(e ot(er (an'% re#$on'ent "onten'# t(at $etitioner# fai+e' to $re#ent e-i'en"e to $ro-e t(at it i# a "o!!on "arrierB t(at
t(e Re#ortL# ferry #er-i"e# for &*e#t# "annot )e "on#i'ere' a# an"i++ary to it# )*#ine## a# no in"o!e i# 'eri-e' t(erefro!B t(at
it e:er"i#e' e:traor'inary 'i+i&en"e a# #(o,n )y t(e "on'ition# it (a' i!$o#e' )efore a++o,in&$?9 !oco 9each to #ai+B t(at
t(e in"i'ent ,a# "a*#e' )y a fort*ito*# e-ent ,it(o*t any "ontri)*tory ne&+i&en"e on it# $artB an' t(at t(e ot(er "a#e ,(erein
t(e a$$e++ate "o*rt (e+' it +ia)+e for 'a!a&e# in-o+-e' 'ifferent $+aintiff#% i##*e# an' e-i'en"e.
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T(e $etition i# i!$re##e' ,it( !erit.
Petitioner# "orre"t+y re+y on &e 2u/man v) !ourt of Appeals
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in "(ara"teri/in& re#$on'ent a# a "o!!on "arrier.
Arti"+e 1732. Co!!on "arrier# are $er#on#% "or$oration#% fir!# or a##o"iation# en&a&e' in t(e )*#ine## of
"arryin& or tran#$ortin& $a##en&er# or &oo'# or )ot(% )y +an'% ,ater% or air for "o!$en#ation% offerin& t(eir
#er-i"e# to t(e $*)+i".
T(e a)o-e arti"+e !a6e# "! 3st"ct!" 2et%ee" !"e %h!se 1&"c1a( 2us"ess act4t, s the ca&&,") !#
1e&s!"s !& )!!3s !& 2!th, a"3 !"e %h! 3!es such ca&&,") !"(, as a" a"c((a&, act4t, (in +o"a+ i'io!% a# Ma
#i'e+ineN. :&tc(e 1732 a(s! ca&e#u((, a4!3s +a>") a", 3st"ct!" 2et%ee" a $er#on or enter$ri#e offerin&
tran#$ortation #er-i"e on a &e)u(a& !& sche3u(e3 2ass a"3one offerin& #*"( #er-i"e on an !ccas!"a(, e1s!3c
!& u"sche3u(e3 2ass. 5ethe& 3!es :&tc(e 1732 3st")ush 2et%ee" a "arrier offerin& it# #er-i"e# to
t(e )e"e&a( 1u2(c,9 i.e.% t(e &enera+ "o!!*nity or $o$*+ation% a"3 one ,(o offer# #er-i"e# or #o+i"it# )*#ine## on+y
fro! a "a&&!% se)+e"t !# the )e"e&a( 1!1u(at!". We t(in6 t(at Arti"+e 1733 'e+i)erate+y refraine' fro! !a6in&
#*"( 'i#tin"tion#.
So *n'er#too'% t(e "on"e$t of M"o!!on "arrierN *n'er Arti"+e 1732 !ay )e #een to "oin"i'e neat+y ,it( t(e notion of
M$*)+i" #er-i"e%N *n'er t(e P*)+i" Ser-i"e A"t (Co!!on,ea+t( A"t No. 1114% a# a!en'e' ,(i"( at +ea#t $artia++y
#*$$+e!ent# t(e +a, on "o!!on "arrier# #et fort( in t(e Ci-i+ Co'e. 7n'er Se"tion 13% $ara&ra$( () of t(e P*)+i"
Ser-i"e A"t% M$*)+i" #er-i"eN in"+*'e#A
. . . e-ery $er#on t(at no, or (ereafter !ay o,n% o$erate% !ana&e% or "ontro+ in t(e P(i+i$$ine#% for (ire or
"o!$en#ation% ,it( &enera+ or +i!ite' "+iente+e% ,(et(er $er!anent% o""a#iona+ or a""i'enta+% an' 'one for
&enera+ )*#ine## $*r$o#e#% any "o!!on "arrier% rai+roa'% #treet rai+,ay% tra"tion rai+,ay% #*),ay !otor
-e(i"+e% eit(er for frei&(t or $a##en&er% or )ot(% ,it( or ,it(o*t fi:e' ro*te an' ,(ate-er !ay )e it#
"+a##ifi"ation% frei&(t or "arrier #er-i"e of any "+a##% e:$re## #er-i"e% #tea!)oat% or #tea!#(i$ +ine% $ontine#%
ferrie# an' ,ater "raft% en&a&e' in t(e tran#$ortation of $a##en&er# or frei&(t or )ot(% #(i$yar'% !arine
re$air #(o$% ,(arf or 'o"6% i"e $+ant% i"e0refri&eration $+ant% "ana+% irri&ation #y#te!% &a#% e+e"tri" +i&(t% (eat
an' $o,er% ,ater #*$$+y an' $o,er $etro+e*!% #e,era&e #y#te!% ,ire or ,ire+e## "o!!*ni"ation#
#y#te!#% ,ire or ,ire+e## )roa'"a#tin& #tation# an' ot(er #i!i+ar $*)+i" #er-i"e# . . .
J12K
(e!$(a#i# an'
*n'er#"orin& #*$$+ie'.
In'ee'% re#$on'ent i# a "o!!on "arrier. It# ferry #er-i"e# are #o intert,ine' ,it( it# !ain )*#ine## a# to )e $ro$er+y
"on#i'ere' an"i++ary t(ereto. T(e "on#tan"y of re#$on'entL# ferry #er-i"e# in it# re#ort o$eration# i# *n'er#"ore' )y it# (a-in&
it# o,n !oco 9each )oat#. An' t(e to*r $a"6a&e# it offer#% ,(i"( in"+*'e t(e ferry #er-i"e#% !ay )e a-ai+e' of )y anyone
,(o "an affor' to $ay t(e #a!e. T(e#e #er-i"e# are t(*# a-ai+a)+e to t(e $*)+i".
T(at re#$on'ent 'oe# not "(ar&e a #e$arate fee or fare for it# ferry #er-i"e# i# of no !o!ent. It ,o*+' )e i!$r*'ent to
#*$$o#e t(at it $ro-i'e# #ai' #er-i"e# at a +o##. T(e Co*rt i# a,are of t(e $ra"ti"e of )ea"( re#ort o$erator# offerin& to*r
22
$a"6a&e# to fa"tor t(e tran#$ortation fee in arri-in& at t(e to*r $a"6a&e $ri"e. T(at &*e#t# ,(o o$t not to a-ai+ of
re#$on'entL# ferry #er-i"e# $ay t(e #a!e a!o*nt i# +i6e,i#e in"on#e8*entia+. T(e#e &*e#t# !ay on+y )e 'ee!e' to (a-e
o-er$ai'.
A# &e 2u/man in#tr*"t#% Arti"+e 1732 of t(e Ci-i+ Co'e 'efinin& M"o!!on "arrier#N (a# 'e+i)erate+y refraine' fro! !a6in&
'i#tin"tion# on ,(et(er t(e "arryin& of $er#on# or &oo'# i# t(e "arrierL# $rin"i$a+ )*#ine##% ,(et(er it i# offere' on a re&*+ar
)a#i#% or ,(et(er it i# offere' to t(e &enera+ $*)+i". T(e intent of t(e +a, i# t(*# to not "on#i'er #*"( 'i#tin"tion#. Ot(er,i#e%
t(ere i# no te++in& (o, !any ot(er 'i#tin"tion# !ay )e "on"o"te' )y *n#"r*$*+o*# )*#ine##!en en&a&e' in t(e "arryin& of
$er#on# or &oo'# in or'er to a-oi' t(e +e&a+ o)+i&ation# an' +ia)i+itie# of "o!!on "arrier#.
7n'er t(e Ci-i+ Co'e% "o!!on "arrier#% fro! t(e nat*re of t(eir )*#ine## an' for rea#on# of $*)+i" $o+i"y% are )o*n' to
o)#er-e e:traor'inary 'i+i&en"e for t(e #afety of t(e $a##en&er# tran#$orte' )y t(e!% a""or'in& to a++ t(e "ir"*!#tan"e# of
ea"( "a#e.
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T(ey are )o*n' to "arry t(e $a##en&er# #afe+y a# far a# (*!an "are an' fore#i&(t "an $ro-i'e% *#in& t(e
*t!o#t 'i+i&en"e of -ery "a*tio*# $er#on#% ,it( '*e re&ar' for a++ t(e "ir"*!#tan"e#.
J2;K
W(en a $a##en&er 'ie# or i# in5*re' in t(e 'i#"(ar&e of a "ontra"t of "arria&e% it i# $re#*!e' t(at t(e "o!!on "arrier i# at fa*+t
or ne&+i&ent. In fa"t% t(ere i# e-en no nee' for t(e "o*rt to !a6e an e:$re## fin'in& of fa*+t or ne&+i&en"e on t(e $art of t(e
"o!!on "arrier. T(i# #tat*tory $re#*!$tion !ay on+y )e o-er"o!e )y e-i'en"e t(at t(e "arrier e:er"i#e' e:traor'inary
'i+i&en"e.
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Re#$on'ent ne-ert(e+e## (ar$# on it# #tri"t "o!$+ian"e ,it( t(e ear+ier !entione' "on'ition# of -oya&e )efore it a++o,e' $?9
!oco 9each to #ai+ on Se$te!)er 11% 2;;;. Re#$on'entL# $o#ition 'oe# not i!$re##.
T(e e-i'en"e #(o,# t(at PA.ASA i##*e' 210(o*r $*)+i" ,eat(er fore"a#t# an' tro$i"a+ "y"+one ,arnin&# for #(i$$in& on
Se$te!)er 1; an' 11% 2;;; a'-i#in& of tro$i"a+ 'e$re##ion# in Nort(ern L*/on ,(i"( ,o*+' a+#o affe"t
t(e $ro-in"e of Min'oro.
J22K
Ey t(e te#ti!ony of Dr. Fri#"o Ni+o% #*$er-i#in& ,eat(er #$e"ia+i#t of PA.ASA% #8*a++# are to )e
e:$e"te' *n'er #*"( ,eat(er "on'ition.
J23K

A -ery "a*tio*# $er#on e:er"i#in& t(e *t!o#t 'i+i&en"e ,o*+' t(*# not )ra-e #*"( #tor!y ,eat(er an' $*t ot(er $eo$+eL# +i-e#
at ri#6. T(e e:traor'inary 'i+i&en"e re8*ire' of "o!!on "arrier# 'e!an'# t(at t(ey ta6e "are of t(e &oo'# or +i-e# entr*#te'
to t(eir (an'# a# if t(ey ,ere t(eir o,n. T(i# re#$on'ent fai+e' to 'o.

Re#$on'entL# in#i#ten"e t(at t(e in"i'ent ,a# "a*#e' )y a fort*ito*# e-ent 'oe# not i!$re## eit(er.
T(e e+e!ent# of a ?fort*ito*# e-ent? areA (a t(e "a*#e of t(e *nfore#een an' *ne:$e"te' o""*rren"e% or t(e fai+*re of t(e
'e)tor# to "o!$+y ,it( t(eir o)+i&ation#% !*#t (a-e )een in'e$en'ent of (*!an ,i++B () t(e e-ent t(at "on#tit*te' t(e caso
fortuito !*#t (a-e )een i!$o##i)+e to fore#ee or% if fore#eea)+e% i!$o##i)+e to a-oi'B (" t(e o""*rren"e !*#t (a-e )een #*"(
a# to ren'er it i!$o##i)+e for t(e 'e)tor# to f*+fi++ t(eir o)+i&ation in a nor!a+ !annerB an' (' t(e o)+i&or !*#t (a-e )een free
fro! any $arti"i$ation in t(e a&&ra-ation of t(e re#*+tin& in5*ry to t(e "re'itor.
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To f*++y free a "o!!on "arrier fro! any +ia)i+ity% t(e fort*ito*# e-ent !*#t (a-e )een t(e 1&!/+ate a"3 !"(, cause of t(e
+o##. An' it #(o*+' (a-e e:er"i#e' '*e 'i+i&en"e to $re-ent or !ini!i/e t(e +o## )efore% '*rin& an' after t(e o""*rren"e of t(e
fort*ito*# e-ent.
J2<K
Re#$on'ent "ite# t(e #8*a++ t(at o""*rre' '*rin& t(e -oya&e a# t(e fort*ito*# e-ent t(at o-ert*rne' $?9 !oco 9each . A#
ref+e"te' a)o-e% (o,e-er% t(e o""*rren"e of #8*a++# ,a# e:$e"te' *n'er t(e ,eat(er "on'ition of Se$te!)er 11%
23
2;;;. Moreo-er% e-i'en"e #(o,# t(at $?9 !oco 9each #*ffere' en&ine tro*)+e )efore it "a$#i/e' an' #an6.
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T(e
in"i'ent ,a#% t(erefore% not "o!$+ete+y free fro! (*!an inter-ention.
T(e Co*rt nee' not )e+a)or (o, re#$on'entL# e-i'en"e +i6e,i#e fai+# to 'e!on#trate t(at it e:er"i#e' '*e 'i+i&en"e to $re-ent
or !ini!i/e t(e +o## )efore% '*rin& an' after t(e o""*rren"e of t(e #8*a++.
Arti"+e 1741
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vis#@#vis Arti"+e 22;4
J22K
of t(e Ci-i+ Co'e (o+'# t(e "o!!on "arrier in )rea"( of it# "ontra"t of "arria&e t(at
re#*+t# in t(e 'eat( of a $a##en&er +ia)+e to $ay t(e fo++o,in&A (1 in'e!nity for 'eat(% (2 in'e!nity for +o## of earnin& "a$a"ity
an' (3 !ora+ 'a!a&e#.
Petitioner# are entit+e' to in'e!nity for t(e 'eat( of R*e+ito ,(i"( i# fi:e' at P<;%;;;.
J23K

A# for 'a!a&e# re$re#entin& *nearne' in"o!e% t(e for!*+a for it# "o!$*tation i#A
Net Earnin& Ca$a"ity X +ife e:$e"tan"y : (&ro## ann*a+ in"o!e 0 rea#ona)+e an' ne"e##ary +i-in&
e:$en#e#.
Life e:$e"tan"y i# 'eter!ine' in a""or'an"e ,it( t(e for!*+aA
2 F 3 : J2; @ a&e of 'e"ea#e' at t(e ti!e of 'eat(K
J3;K
T(e fir#t fa"tor% i)e)% +ife e:$e"tan"y% i# "o!$*te' )y a$$+yin& t(e for!*+a (2F3 : J2; @ a&e at 'eat(K a'o$te' in t(e A!eri"an
E:$e"tan"y Ta)+e of Morta+ity or t(e A"t*aria+ of Co!)ine' E:$erien"e Ta)+e of Morta+ity.
J31K
T(e #e"on' fa"tor i# "o!$*te' )y !*+ti$+yin& t(e +ife e:$e"tan"y )y t(e net earnin&# of t(e 'e"ea#e'% i)e)% t(e tota+ earnin&#
+e## e:$en#e# ne"e##ary in t(e "reation of #*"( earnin&# or in"o!e an' +e## +i-in& an' ot(er in"i'enta+ e:$en#e#.
J32K
T(e +o##
i# not e8*i-a+ent to t(e entire earnin&# of t(e 'e"ea#e'% )*t on+y #*"( $ortion a# (e ,o*+' (a-e *#e' to #*$$ort (i#
'e$en'ent# or (eir#. 9en"e% to )e 'e'*"te' fro! (i# &ro## earnin&# are t(e ne"e##ary e:$en#e# #*$$o#e' to )e *#e' )y t(e
'e"ea#e' for (i# o,n nee'#.
J33K

In "o!$*tin& t(e t(ir' fa"tor P ne"e##ary +i-in& e:$en#e% "mith 9ell &odwell "hipping Agency !orp) v) 9orja
J31K
tea"(e# t(at
,(en% a# in t(i# "a#e% t(ere i# no #(o,in& t(at t(e +i-in& e:$en#e# "on#tit*te' t(e #!a++er $er"enta&e of t(e &ro## in"o!e% t(e
+i-in& e:$en#e# are fi:e' at (a+f of t(e &ro## in"o!e.
A$$+yin& t(e a)o-e &*i'e+ine#% t(e Co*rt 'eter!ine# R*e+ito=# +ife e:$e"tan"y a# fo++o,#A
Life e:$e"tan"y X 2F3 : J2; 0 a&e of 'e"ea#e' at t(e ti!e of 'eat(K
2F3 : J2; 0 22K
2F3 : J<2K
Life e:$e"tan"y X 3<
Do"*!entary e-i'en"e #(o,# t(at R*e+ito ,a# earnin& a )a#i" !ont(+y #a+ary of U3;;
J3<K
,(i"(% ,(en "on-erte' to P(i+i$$ine
$e#o a$$+yin& t(e ann*a+ a-era&e e:"(an&e rate of U1 X P11 in 2;;;%
J34K
a!o*nt# to P33%4;;. R*e+itoL# net earnin& "a$a"ity
i# t(*# "o!$*te' a# fo++o,#A
Net Earnin& Ca$a"ity X +ife e:$e"tan"y : (&ro## ann*a+ in"o!e 0
rea#ona)+e an' ne"e##ary +i-in& e:$en#e#.
X 3< : (P17<%2;; 0 P237%4;;
X 3< : (P237%4;;
Net Earnin& Ca$a"ity X P2%314%;;;
Re#$e"tin& t(e a,ar' of !ora+ 'a!a&e#% #in"e re#$on'ent "o!!on "arrierL# )rea"( of "ontra"t of "arria&e re#*+te' in t(e
'eat( of $etitioner#L #on% fo++o,in& Arti"+e 1741vis#@#vis Arti"+e 22;4 of t(e Ci-i+ Co'e% $etitioner# are entit+e' to !ora+
'a!a&e#.
21
Sin"e re#$on'ent fai+e' to $ro-e t(at it e:er"i#e' t(e e:traor'inary 'i+i&en"e re8*ire' of "o!!on "arrier#% it i# $re#*!e' to
(a-e a"te' re"6+e##+y% t(*# ,arrantin& t(e a,ar' too of e:e!$+ary 'a!a&e#% ,(i"( are &rante' in "ontra"t*a+ o)+i&ation# if t(e
'efen'ant a"te' in a ,anton% fra*'*+ent% re"6+e##% o$$re##i-e or !a+e-o+ent !anner.
J37K

7n'er t(e "ir"*!#tan"e#% it i# rea#ona)+e to a,ar' $etitioner# t(e a!o*nt of P1;;%;;; a# !ora+ 'a!a&e# an' P1;;%;;; a#
e:e!$+ary 'a!a&e#.
J32K
P*r#*ant to Arti"+e 22;2
J33K
of t(e Ci-i+ Co'e% attorney=# fee# !ay a+#o )e a,ar'e' ,(ere e:e!$+ary 'a!a&e# are a,ar'e'.
T(e Co*rt fin'# t(at 1;G of t(e tota+ a!o*nt a'5*'&e' a&ain#t re#$on'ent i# rea#ona)+e for t(e $*r$o#e.
Fina++y% 'astern "hipping 8ines, nc) v) !ourt of Appeals
J1;K
tea"(e# t(at ,(en an o)+i&ation% re&ar'+e## of it# #o*r"e% i)e)% +a,%
"ontra"t#% 8*a#i0"ontra"t#% 'e+i"t# or 8*a#i0'e+i"t# i# )rea"(e'% t(e "ontra-enor "an )e (e+' +ia)+e for $ay!ent of intere#t in t(e
"on"e$t of a"t*a+ an' "o!$en#atory 'a!a&e#% #*)5e"t to t(e fo++o,in& r*+e#% to ,it @
W(en t(e o)+i&ation i# )rea"(e'% an' it "on#i#t# in t(e $ay!ent of a #*! of !oney% i.e.% a +oan or for)earan"e of
!oney% t(e intere#t '*e #(o*+' )e t(at ,(i"( !ay (a-e )een #ti$*+ate' in ,ritin&. F*rt(er!ore% t(e intere#t '*e #(a++
it#e+f earn +e&a+ intere#t fro! t(e ti!e it i# 5*'i"ia++y 'e!an'e'. In t(e a)#en"e of #ti$*+ation% t(e rate of intere#t #(a++
)e 12G $er ann*! to )e "o!$*te' fro! 'efa*+t% i.e.% fro! 5*'i"ia+ or e:tra5*'i"ia+ 'e!an' *n'er an' #*)5e"t to t(e
$ro-i#ion# of Arti"+e 1143 of t(e Ci-i+ Co'e.
W(en an o)+i&ation% not "on#tit*tin& a +oan or for)earan"e of !oney% i# )rea"(e'% an intere#t on t(e a!o*nt of
'a!a&e# a,ar'e' !ay )e i!$o#e' at t(e 'i#"retion of t(e "o*rt at t(e rate of 4G $er ann*!. No intere#t% (o,e-er%
#(a++ )e a'5*'&e' on *n+i8*i'ate' "+ai!# or 'a!a&e# e:"e$t ,(en or *nti+ t(e 'e!an' "an )e e#ta)+i#(e' ,it(
rea#ona)+e "ertainty. A""or'in&+y% ,(ere t(e 'e!an' i# e#ta)+i#(e' ,it( rea#ona)+e "ertainty% t(e intere#t #(a++ )e&in
to r*n fro! t(e ti!e t(e "+ai! i# !a'e 5*'i"ia++y or e:tra5*'i"ia++y (Art. 1143% Ci-i+ Co'e )*t ,(en #*"( "ertainty
"annot )e #o rea#ona)+y e#ta)+i#(e' at t(e ti!e t(e 'e!an' i# !a'e% t(e intere#t #(a++ )e&in to r*n on+y fro! t(e
'ate t(e 5*'&!ent of t(e "o*rt i# !a'e (at ,(i"( ti!e t(e 8*antifi"ation of 'a!a&e# !ay )e 'ee!e' to (a-e )een
rea#ona)+y a#"ertaine'. T(e a"t*a+ )a#e for t(e "o!$*tation of +e&a+ intere#t #(a++% in any "a#e% )e on t(e a!o*nt
fina++y a'5*'&e'.
W(en t(e 5*'&!ent of t(e "o*rt a,ar'in& a #*! of !oney )e"o!e# fina+ an' e:e"*tory% t(e rate of +e&a+ intere#t%
,(et(er t(e "a#e fa++# *n'er $ara&ra$( 1 or $ara&ra$( 2% a)o-e% #(a++ )e 12G $er ann*! fro! #*"( fina+ity *nti+ it#
#ati#fa"tion% t(i# interi! $erio' )ein& 'ee!e' to )e )y t(en an e8*i-a+ent to a for)earan"e of "re'it. (e!$(a#i#
#*$$+ie'.
Sin"e t(e a!o*nt# $aya)+e )y re#$on'ent (a-e )een 'eter!ine' ,it( "ertainty on+y in t(e $re#ent $etition% t(e intere#t '*e
#(a++ )e "o!$*te' *$on t(e fina+ity of t(i# 'e"i#ion at t(e rate of 12G $er ann*! *nti+ #ati#fa"tion% in a""or'an"e ,it(
$ara&ra$( n*!)er 3 of t(e i!!e'iate+y "ite' &*i'e+ine in 'aster "hipping 8ines, nc)
WHEREFORE, t(e Co*rt of A$$ea+# De"i#ion of A*&*#t 13% 2;;2 i# REVER0E8 an' 0ET :0I8E. >*'&!ent i# ren'ere' in
fa-or of $etitioner# or'erin& re#$on'ent to $ay $etitioner# t(e fo++o,in&A (1 P<;%;;; a# in'e!nity for t(e 'eat( of R*e+ito Cr*/B
(2 P2%314%;;; a# in'e!nity for R*e+itoL# +o## of earnin& "a$a"ityB (3 P1;;%;;; a# !ora+ 'a!a&e#B (1 P1;;%;;; a#
e:e!$+ary 'a!a&e#B (< 1;G of t(e tota+ a!o*nt a'5*'&e' a&ain#t re#$on'ent a# attorney# fee#B an' (4 t(e "o#t# of #*it.
T(e tota+ a!o*nt a'5*'&e' a&ain#t re#$on'ent #(a++ earn intere#t at t(e rate of 12G $er ann*! "o!$*te' fro! t(e fina+ity of
t(i# 'e"i#ion *nti+ f*++ $ay!ent.
SO ORDERED.
Di#tin&*i#(e' fro! $ri-ate "arrier
9o!e In#*ran"e Co. -. A!eri"an Stea!#(i$% 23 SCRA 21 (1342
?Con#or"io Pe#8*ero 'e+ Per* of So*t( A!eri"a? #(i$$e' frei&(t $re0$ai' at C(i!)ate% Per*% 21%71; 5*te )a&# of Per*-ian fi#(
!ea+ t(ro*&( SS Cro,)oro*&(% "o-ere' )y "+ean )i++# of +a'in& N*!)er# 1 an' 2% )ot( 'ate' >an*ary 17% 1343. T(e "ar&o%
"on#i&ne' to San Mi&*e+ Ere,ery% In".% no, San Mi&*e+ Cor$oration% an' in#*re' )y 9o!e In#*ran"e Co!$any for U2;2%<;<%
arri-e' in Mani+a on Mar"( 7% 1343 an' ,a# 'i#"(ar&e' into t(e +i&(ter# of L*/on Ste-e'orin& Co!$any. W(en t(e "ar&o ,a#
'e+i-ere' to "on#i&nee San Mi&*e+ Ere,ery In".% t(ere ,ere #(orta&e# a!o*ntin& to P12%;33.2<% "a*#in& t(e +atter to +ay
2<
"+ai!# a&ain#t L*/on Ste-e'orin& Cor$oration% 9o!e In#*ran"e Co!$any an' t(e A!eri"an Stea!#(i$ A&en"ie#% o,ner an'
o$erator of SS Cro,)oro*&(.
Ee"a*#e t(e ot(er# 'enie' +ia)i+ity% 9o!e In#*ran"e Co!$any $ai' t(e "on#i&nee P11%27;.71 @ t(e in#*ran"e -a+*e of t(e
+o##% a# f*++ #ett+e!ent of t(e "+ai!. 9a-in& )een ref*#e' rei!)*r#e!ent )y )ot( t(e L*/on Ste-e'orin& Cor$oration an'
A!eri"an Stea!#(i$ A&en"ie#% 9o!e In#*ran"e Co!$any% a# #*)ro&ee to t(e "on#i&nee% fi+e' a&ain#t t(e! on Mar"( 4%
1341 )efore t(e Co*rt of Fir#t In#tan"e of Mani+a a "o!$+aint for re"o-ery of P11%27;.71 ,it( +e&a+ intere#t% $+*# attorney=#
fee#.
In an#,er% L*/on Ste-e'orin& Cor$oration a++e&e' t(at it 'e+i-ere' ,it( '*e 'i+i&en"e t(e &oo'# in t(e #a!e 8*antity an'
8*a+ity t(at it (a' re"ei-e' t(e #a!e fro! t(e "arrier. It a+#o "+ai!e' t(at $+aintiff=# "+ai! (a' $re#"ri)e' *n'er Arti"+e 344 of
t(e Co'e of Co!!er"e #tatin& t(at t(e "+ai! !*#t )e !a'e ,it(in 21 (o*r# fro! re"ei$t of t(e "ar&o.
A!eri"an Stea!#(i$ A&en"ie# 'enie' +ia)i+ity )y a++e&in& t(at *n'er t(e $ro-i#ion# of t(e C(arter $arty referre' to in t(e )i++#
of +a'in&% t(e "(arterer% not t(e #(i$o,ner% ,a# re#$on#i)+e for any +o## or 'a!a&e of t(e "ar&o. F*rt(er!ore% it "+ai!e' to
(a-e e:er"i#e' '*e 'i+i&en"e in #to,in& t(e &oo'# an' t(at a# a !ere for,ar'in& a&ent% it ,a# not re#$on#i)+e for +o##e# or
'a!a&e# to t(e "ar&o.
On No-e!)er 17% 134<% t(e Co*rt of Fir#t In#tan"e% after tria+% a)#o+-e' L*/on Ste-e'orin& Cor$oration% (a-in& fo*n' t(e
+atter to (a-e !ere+y 'e+i-ere' ,(at it re"ei-e' fro! t(e "arrier in t(e #a!e "on'ition an' 8*a+ity% an' or'ere' A!eri"an
Stea!#(i$ A&en"ie# to $ay $+aintiff P11%27;.71 ,it( +e&a+ intere#t $+*# P1%;;; attorney=# fee#. Sai' "o*rt "ite' t(e fo++o,in&
&ro*n'#A
(a T(e non0+ia)i+ity "+ai! of A!eri"an Stea!#(i$ A&en"ie# *n'er t(e "(arter $arty "ontra"t i# not tena)+e )e"a*#e Arti"+e <27
of t(e Co'e of Co!!er"e !a6e# t(e #(i$ a&ent a+#o "i-i++y +ia)+e for 'a!a&e# in fa-or of t(ir' $er#on# '*e to t(e "on'*"t of
t(e "a$tain of t(e "arrierB
() T(e #ti$*+ation in t(e "(arter $arty "ontra"t e:e!$tin& t(e o,ner fro! +ia)i+ity i# a&ain#t $*)+i" $o+i"y *n'er Arti"+e 1711 of
t(e Ci-i+ Co'eB
(" In "a#e of +o##% 'e#tr*"tion or 'eterioration of &oo'#% "o!!on "arrier# are $re#*!e' at fa*+t or ne&+i&ent *n'er Arti"+e
173< of t(e Ci-i+ Co'e *n+e## t(ey $ro-e e:traor'inary 'i+i&en"e% an' t(ey "annot )y "ontra"t e:e!$t t(e!#e+-e# fro! +ia)i+ity
re#*+tin& fro! t(eir ne&+i&en"e or t(at of t(eir #er-ant#B an'
(' W(en &oo'# are 'e+i-ere' to t(e "arrier in &oo' or'er an' t(e #a!e are in )a' or'er at t(e $+a"e of 'e#tination% t(e "arrier
i# prima facie +ia)+e.
Di#a&reein& ,it( #*"( 5*'&!ent% A!eri"an Stea!#(i$ A&en"ie# a$$ea+e' 'ire"t+y to 7#. T(e a$$ea+ )rin&# fort( for
'eter!ination t(i# +e&a+ i##*eA I# t(e #ti$*+ation in t(e "(arter $arty of t(e o,ner=# non0+ia)i+ity -a+i' #o a# to a)#o+-e t(e
A!eri"an Stea!#(i$ A&en"ie# fro! +ia)i+ity for +o##D
T(e )i++# of +a'in&%
JJ
1
KK
"o-erin& t(e #(i$!ent of Per*-ian fi#( !ea+ $ro-i'e at t(e )a"6 t(ereof t(at t(e )i++# of +a'in& #(a++ )e
&o-erne' )y an' #*)5e"t to t(e ter!# an' "on'ition# of t(e "(arter $arty% if any% ot(er,i#e% t(e )i++# of +a'in& $re-ai+ o-er a++
t(e a&ree!ent#.
JJ
2
KK
On t(e of t(e )i++# are #ta!$e' ?Frei&(t $re$ai' a# $er "(arter $arty. S*)5e"t to a++ ter!#% "on'ition# an'
e:"e$tion# of "(arter $arty 'ate' Lon'on% De". 13% 1342.?
A $er*#a+ of t(e "(arter $arty
JJ
3
KK
referre' to #(o,# t(at ,(i+e t(e $o##e##ion an' "ontro+ of t(e #(i$ ,ere not entire+y
tran#ferre' to t(e "(arterer%
JJ
1
KK
t(e -e##e+ ,a# "(artere' to it# f*++ an' "o!$+ete "a$a"ity (E:(. 3. F*rt(er!ore% t(e% "(arter
(a' t(e o$tion to &o nort( or #o*t( or vice#versa%
JJ
<
KK
+oa'in&% #to,in& an' 'i#"(ar&in& at it# ri#6 an' e:$en#e.
JJ
4
KK
A""or'in&+y%
t(e "(arter $arty "ontra"t i# one of affrei&(t!ent o-er t(e ,(o+e -e##e+ rat(er t(an a 'e!i#e. A# #*"(% t(e +ia)i+ity of t(e
#(i$o,ner for a"t# or ne&+i&en"e of it# "a$tain an' "re,% ,o*+' re!ain in t(e a)#en"e of #ti$*+ation.
24
Se"tion 2% $ara&ra$( 2 of t(e "(arter $arty% $ro-i'e# t(at t(e o,ner i# +ia)+e for +o## or 'a!a&e to t(e &oo'# "a*#e' )y
$er#ona+ ,ant of '*e 'i+i&en"e on it# $art or it# !ana&er to !a6e t(e -e##e+ in a++ re#$e"t# #ea,ort(y an' to #e"*re t(at #(e
)e $ro$er+y !anne'% e8*i$$e' an' #*$$+ie' or )y t(e $er#ona+ a"t or 'efa*+t of t(e o,ner or it# !ana&er. Sai' $ara&ra$(%
(o,e-er% e:e!$t# t(e o,ner of t(e -e##e+ fro! any +o## or 'a!a&e or 'e+ay ari#in& fro! any ot(er #o*r"e% e-en fro! t(e
ne&+e"t or fa*+t of t(e "a$tain or "re, or #o!e ot(er $er#on e!$+oye' )y t(e o,ner on )oar'% for ,(o#e a"t# t(e o,ner ,o*+'
or'inari+y )e +ia)+e e:"e$t for #ai' $ara&ra$(.
Re&ar'in& t(e #ti$*+ation% t(e Co*rt of Fir#t In#tan"e 'e"+are' t(e "ontra"t a# "ontrary to Arti"+e <27 of t(e Co'e of Co!!er"e
!a6in& t(e #(i$ a&ent "i-i++y +ia)+e for in'e!nitie# #*ffere' )y t(ir' $er#on# ari#in& fro! a"t# or o!i##ion# of t(e "a$tain in t(e
"are of t(e &oo'# an' Arti"+e 1711 of t(e Ci-i+ Co'e *n'er ,(i"( a #ti$*+ation )et,een t(e "o!!on "arrier an' t(e #(i$$er or
o,ner +i!itin& t(e +ia)i+ity of t(e for!er for +o## or 'e#tr*"tion of t(e &oo'# to a 'e&ree +e## t(an e:traor'inary 'i+i&en"e i# -a+i'
$ro-i'e' it )e rea#ona)+e% 5*#t an' not "ontrary to $*)+i" $o+i"y. T(e re+ea#e fro! +ia)i+ity in t(i# "a#e ,a# (e+' *nrea#ona)+e
an' "ontrary to t(e $*)+i" $o+i"y on "o!!on "arrier#.
T(e $ro-i#ion# of o*r Ci-i+ Co'e on "o!!on "arrier# ,ere ta6en fro! An&+o0A!eri"an +a,.
JJ
7
KK
7n'er A!eri"an 5*ri#$r*'en"e%
a "o!!on "arrier *n'erta6in& to "arry a #$e"ia+ "ar&o or "(artere' to a #$e"ia+ $er#on on+y% )e"o!e# a $ri-ate "arrier.
JJ
2
KK
A# a
$ri-ate "arrier% a #ti$*+ation e:e!$tin& t(e o,ner fro! +ia)i+ity for t(e ne&+i&en"e of it# a&ent i# not a&ain#t $*)+i" $o+i"y%
JJ
3
KK
an'
i# 'ee!e' -a+i'.
S*"( 'o"trine We fin' rea#ona)+e. T(e Ci-i+ Co'e $ro-i#ion# on "o!!on "arrier# #(o*+' not )e a$$+ie' ,(ere t(e "arrier i#
not a"tin& a# #*"( )*t a# a $ri-ate "arrier. T(e #ti$*+ation in t(e "(arter $arty a)#o+-in& t(e o,ner fro! +ia)i+ity for +o## '*e to
t(e ne&+i&en"e of it# a&ent ,o*+' )e -oi' on+y if t(e #tri"t $*)+i" $o+i"y &o-ernin& "o!!on "arrier# i# a$$+ie'. S*"( $o+i"y (a#
no for"e ,(ere t(e $*)+i" at +ar&e i# not in-o+-e'% a# in t(e "a#e of a #(i$ tota++y "(artere' for t(e *#e of a #in&+e $arty.
An' f*rt(er!ore% in a "(arter of t(e entire -e##e+% t(e )i++ of +a'in& i##*e' )y t(e !a#ter to t(e "(arterer% a# #(i$$er% i# in fa"t
an' +e&a+ "onte!$+ation !ere+y a re"ei$t an' a 'o"*!ent of tit+e not a "ontra"t% for t(e "ontra"t i# t(e "(arter $arty.
JJ
1;
KK
T(e
"on#i&nee !ay not "+ai! i&noran"e of #ai' "(arter $arty )e"a*#e t(e )i++# of +a'in& e:$re##+y referre' to t(e #a!e.
A""or'in&+y% t(e "on#i&nee# *n'er t(e )i++# of +a'in& !*#t +i6e,i#e a)i'e )y t(e ter!# of t(e "(arter $arty. An' a# #tate'%
re"o-ery "annot )e (a' t(ere*n'er% for +o## or 'a!a&e to t(e "ar&o% a&ain#t t(e #(i$o,ner#% *n+e## t(e #a!e i# '*e to
$er#ona+ a"t# or ne&+i&en"e of #ai' o,ner or it# !ana&er% a# 'i#tin&*i#(e' fro! it# ot(er a&ent# or e!$+oyee#. In t(i# "a#e% no
#*"( $er#ona+ a"t or ne&+i&en"e (a# )een $ro-e'.
W9EREFORE% t(e 5*'&!ent a$$ea+e' fro! i# (ere)y re-er#e' an' a$$e++ant i# a)#o+-e' fro! +ia)i+ity to $+aintiff. No "o#t#. So
or'ere'.
San Pa)+o -. Pantran"o% 1<3 SCRA 133 (1327
T(e 8*e#tion t(at i# $o#e' in t(e#e $etition# for re-ie, i# ,(et(er t(e #ea "an )e "on#i'ere' a# a "ontin*ation of t(e (i&(,ay.
T(e "oro++ary i##*e i# ,(et(er a +an' tran#$ortation "o!$any "an )e a*t(ori/e' to o$erate a ferry #er-i"e or "oa#t,i#e or
interi#+an' #(i$$in& #er-i"e a+on& it# a*t(ori/e' ro*te a# an in"i'ent to it# fran"(i#e ,it(o*t t(e nee' of fi+in& a #e$arate
a$$+i"ation for t(e #a!e.
T(e Pantran"o So*t( E:$re##% In".% (ereinafter referre' to a# PANTRANCO i# a 'o!e#ti" "or$oration en&a&e' in t(e +an'
tran#$ortation )*#ine## ,it( P7E #er-i"e for $a##en&er# an' frei&(t an' -ario*# "ertifi"ate# for $*)+i" "on-enien"e# CPC to
o$erate $a##en&er )*#e# fro! Metro Mani+a to Ei"o+ Re&ion an' Ea#tern Sa!ar. On Mar"( 27%132; PANTRANCO t(ro*&( it#
"o*n#e+ ,rote to Mariti!e In'*#try A*t(ority (MARINA re8*e#tin& a*t(ority to +ea#eF$*r"(a#e a -e##e+ na!e' MFH ?E+a"6
Do*)+e? ?to )e *#e' for it# $ro5e"t to o$erate a ferry)oat #er-i"e fro! Matno&% Sor#o&on an' A++en% Sa!ar t(at ,i++ $ro-i'e
#er-i"e to "o!$any )*#e# an' frei&(t tr*"6# t(at (a-e to "ro## San Eernar'o Strait. 1 In a re$+y of A$ri+ 23%1321
PANTRANCO ,a# infor!e' )y MARINA t(at it "annot &i-e '*e "o*r#e to t(e re8*e#t on t(e )a#i# of t(e fo++o,in&
o)#er-ation#A
1. T(e Matno&0A++en r*n i# a'e8*ate+y #er-i"e' )y Car'ina+ S(i$$in& Cor$. an' E$ita"io San Pa)+oB MARINA $o+i"ie# on
interi#+an' #(i$$in& re#tri"t t(e entry of ne, o$erator# to Liner tra'e ro*te# ,(ere t(e#e are a'e8*ate+y #er-i"e' )y
e:i#tin&Fa*t(ori/e' o$erator#.
2. Mar6et "on'ition# in t(e $ro$o#e' ro*te "annot #*$$ort t(e entry of a''itiona+ tonna&eB -e##e+ a"8*i#ition# inten'e' for
o$eration# t(erein are ne"e##ari+y +i!ite' to t(o#e inten'e' for re$+a"e!ent $*r$o#e# on+y.
2
27
PANTRANCO ne-ert(e+e## a"8*ire' t(e -e##e+ MH ?E+a"6 Do*)+e? on May 27% 1321 for P3 Mi++ion $e#o#. It ,rote t(e
C(air!an of t(e Eoar' of Tran#$ortation (EOT t(ro*&( it# "o*n#e+% t(at it $ro$o#e# to o$erate a ferry #er-i"e to "arry it#
$a##en&er )*#e# an' frei&(t tr*"6# )et,een A++en an' Matno& in "onne"tion ,it( it# tri$# to Ta"+o)an City in-o6in& t(e "a#e of
>a-e++ana -#. P*)+i" Ser-i"e Co!!i##ion.
3
PANTRANCO "+ai!# t(at it "an o$erate a ferry #er-i"e in "onne"tion ,it( it#
fran"(i#e for )*# o$eration in t(e (i&(,ay fro! Pa#ay City to Ta"+o)an City ?for t(e $*r$o#e of "ontin*in& t(e (i&(,ay% ,(i"(
i# interr*$te' )y a #!a++ )o'y of ,ater% t(e #ai' $ro$o#e' ferry o$eration i# !ere+y a ne"e##ary an' in"i'enta+ #er-i"e to it#
!ain #er-i"e an' o)+i&ation of tran#$ortin& it# $a##en&er# fro! Pa#ay City to Ta"+o)an City. S*"( )ein& t(e "a#e ... t(ere i#
no nee' ... to o)tain a #e$arate "ertifi"ate for $*)+i" "on-enien"e to o$erate a ferry #er-i"e )et,een A++en an' Matno& to "ater
e:"+*#i-e+y to it# $a##en&er )*#e# an' frei&(t tr*"6#.
4
Wit(o*t a,aitin& a"tion on it# re8*e#t PANTRANCO #tarte' to o$erate #ai' ferry #er-i"e. A"tin& C(air!an >o#e C. Ca!$o#%
>r. of EOT or'ere' PANTRANCO not to o$erate it# -e##e+ *nti+ t(e a$$+i"ation for (earin& on O"t. 1% 1321 at 1;A;; A.M.
5
In
anot(er or'er EOT en5oine' PANTRANCO fro! o$eratin& t(e MH ?E+a"6 Do*)+e? ot(er,i#e it ,i++ )e "ite' to #(o, "a*#e ,(y
it# CPC #(o*+' not )e #*#$en'e' or t(e $en'in& a$$+i"ation 'enie'.
6
E$ita"io San Pa)+o (no, re$re#ente' )y (i# (eir# an' Car'ina+ S(i$$in& Cor$oration ,(o are fran"(i#e (o+'er# of t(e ferry
#er-i"e in t(i# area inter$o#e' t(eir o$$o#ition. T(ey "+ai! t(ey a'e8*ate+y #er-i"e t(e PANTRANCO )y ferryin& it# )*#e#%
tr*"6# an' $a##en&er#. EOT t(en a#6e' t(e +e&a+ o$inion fro! t(e Mini#ter of >*#ti"e ,(et(er or not a )*# "o!$any ,it( an
e:i#tin& CPC )et,een Pa#ay City an' Ta"+o)an City !ay #ti++ )e re8*ire' to #e"*re anot(er "ertifi"ate in or'er to o$erate a
ferry #er-i"e )et,een two terminals of a small body of water. On O"to)er 2;% 1321 t(en Mini#ter of >*#ti"e Ri"ar'o P*no
ren'ere' an o$inion to t(e effe"t t(at t(ere i# no nee' for )*# o$erator# to #e"*re a #e$arate CPC to o$erate a ferry)oat
#er-i"e (o+'in& a# fo++o,#A
F*rt(er% a "o!!on "arrier ,(i"( (a# )een &rante' a "ertifi"ate of $*)+i" "on-enien"e i# e:$e"te' to $ro-i'e effi"ient%
"on-enient an' a'e8*ate #er-i"e to t(e ri'in& $*)+i". (9o"6in& Ha++ey Rai+roa' Co. -#. P*)+i" 7ti+itie# Co!!i##ion% 1 1; NE
<21B Lo*i#e-i++e an' NR Co. -#. Rai+roa' Co!!i##ioner#% <2 SO <13 It i# t(e ri&(t of t(e $*)+i" ,(i"( (a# a""e$te' t(e
#er-i"e of a $*)+i" *ti+ity o$erator to 'e!an' t(at t(e #er-i"e #(o*+' )e "on'*"te' ,it( rea#ona)+e effi"ien"y. (A+!ario% #*$ra%
"itin& 73 C.>.S. 33;0331 T(*#% ,(en t(e )*# "o!$any in t(e "a#e at )ar $ro$o#e# to a'' a ferry #er-i"e to it# Pa#ay
Ta"+o)an ro*te% it !ere+y 'oe# #o in t(e 'i#"(ar&e of it# '*ty *n'er it# "*rrent "ertifi"ate of $*)+i" "on-enien"e to $ro-i'e
a'e8*ate an' "on-enient #er-i"e to it# ri'er#. Re8*irin& #ai' )*# "o!$any to o)tain anot(er "ertifi"ate to o$erate #*"( ferry
#er-i"e ,(en it !ere+y for!# a $art @ an' "on#tit*te# an i!$ro-e!ent @ of it# e:i#tin& tran#$ortation #er-i"e ,o*+' #i!$+y )e
'*$+i"ito*# an' #*$erf+*o*#.
7
T(*# on O"to)er 23% 1321 t(e EOT ren'ere' it# 'e"i#ion (o+'in& t(at t(e ferry )oat #er-i"e i# $art of it# CPC to o$erate fro!
Pa#ay to Sa!arFLeyte )y a!en'in& PANTRANCO=# CPC #o a# to ref+e"t t(e #a!e in t(i# ,i#eA
Let t(e ori&ina+ Certifi"ate of $*)+i" "on-enien"e &rante' to Pantran"o So*t( E:$re## Co.% In". )e a!en'e' to e!)o'y t(e
&rant of a*t(ority to o$erate a $ri-ate ferry )oat #er-i"e a# one of t(e "on'ition# for t(e &rant of t(e "ertifi"ate #*)5e"t to t(e
"on'ition t(at t(e ferry)oat #(a++ )e for t(e e:"+*#i-e *#e of Pantran"o )*#e#% it# $a##en&er# an' frei&(t tr*"6#% an' #(o*+' it
offer it#e+f to t(e $*)+i" for (ire ot(er t(an it# o,n $a##en&er#% it !*#t a$$+y for a #e$arate "ertifi"ate of $*)+i" "on-enien"e a#
a $*)+i" ferry )oat #er-i"e% #e$arate an' 'i#tin"t fro! it# +an' tran#$ort #y#te!#.
8
Car'ina+ S(i$$in& Cor$oration an' t(e (eir# of San Pa)+o fi+e' #e$arate !otion# for re"on#i'eration of #ai' 'e"i#ion an' San
Pa)+o fi+e' a #*$$+e!enta+ !otion for re"on#i'eration t(at ,ere 'enie' )y t(e EOT on >*+y 21% 1321.
9
9en"e% San Pa)+o fi+e' t(e (erein $etition for re-ie, on "ertiorari ,it( $rayer for $re+i!inary in5*n"tion 10 #ee6in& t(e
re-o"ation of #ai' 'e"i#ion% an' $en'in& "on#i'eration of t(e $etition% t(e i##*an"e of a re#trainin& or'er or $re+i!inary
in5*n"tion a&ain#t t(e o$eration )y PANTRANCO of #ai' ferry #er-i"e. San Pa)+o rai#e' t(e fo++o,in& i##*e#A
A. DID T9E RESPONDENT EOARD HIOLATE PETITIONERS= RI.9T TO D7E PROCESS% T9E R7LES OF PROCED7RE
AND SECTION 14 (! OF T9E P7ELIC SERHICE ACT% W9EN IT ISS7ED IN A COMPLAINT CASE T9E DECISION DATED
OCTOEER 23% 1321 W9IC9 $7T- *%7*7 AMENDED RESPONDENT PANTRANCO=S P7E CERTIFICATE TO INCL7DE
AND A7T9ORISE OPERATION OF A S9IPPIN. SERHICE ON T9E RO7TE MATNO.% SORSO.ON @ ALLEN% SAMAR @
EHEN AS T9ERE M7ST EE A FORMAL APPLICATION FOR AMENDMENT AND SEPARATE PROCEEDIN.S 9ELD
T9EREFORE% ASS7MIN. AMENDMENT IS PROPERD
E. DID T9E RESPONDENT EOARD ERR IN FINDIN. IN ITS DECISION OF OCTOEER 23% 1321% T9AT T9E SEA FROM
T9E PORT OF MATNO.% SORSO.ON% L7SON ISLAND TO T9E PORT OF ALLEN% SAMAR ISLAND% OR FROM L7SON
ISLAND TO SAMAR ISLAND IS A MERE FERRC OR CONTIN7ATION OF T9E 9I.9WAC @ IT EEIN. 23 IILOMETERS
OF RO7.9 AND OPEN SEA AND AEO7T 2 9O7RS TRAHEL TIME REQ7IRIN. EI. INTER0ISLAND HESSELS% NOT
MERE EAR.ES% RAFTS OR SMALL EOATS 7TILISED IN FERRC SERHICED
C. DID T9E RESPONDENT EOARD ERR W9EN IT R7LED T9AT RESPONDENT PANTRANCO=S HESSEL MFH ELACI
DO7ELE IS MERELC A PRIHATE CARRIER% NOT A P7ELIC FERRC OPERATIN. FOR P7ELIC SERHICE (ASS7MIN.
T9AT T9E MATNO.0ALLEN SEA RO7TE IS A MERE FERRC OR CONTIN7ATION OF 9I.9WAC EHEN IF SAID HESSEL
IS FOR 9IRE AND COLLECTS SEPARATE FARES AND CATERS TO T9E P7ELIC EHEN FOR A LIMITED CLIENTELED
D. DID T9E RESPONDENT EOARD ERR W9EN IT .RANTED RESPONDENT PANTRANCO A7T9ORITC TO OPERATE A
S9IPPIN. SERHICE IN T9E FACE OF T9E LATTER=S CONTENTION AS AN AFTER T9O7.9 T9AT IT NEED NOT
APPLC T9EREFOR% AND IN SPITE OF ITS FAIL7RE TO SEC7RE T9E PRE0REQ7ISITE MARITIME IND7STRC
A7T9ORITC (MARINA APPROHAL TO ACQ7IRE A HESSEL 7NDER ITS MEMORAND7M CIRC7LAR NO. 20A AS WELL
AS ITS PRIOR FAHORAELE ENDORSEMENT EEFORE ANC S9IPPIN. A7T9ORISATION MAC EE .RANTED 7NDER
EOT @ MARINA A.REEMENT OF A7.7ST 1;% 1374 AND FEER7ARC 24% 1322D
E. DID RESPONDENT EOARD ERR W9EN IT .RANTED RESPONDENT PANTRANCO A7T9ORITC TO OPERATE A
S9IPPIN. SERHICE ON A RO7TE ADEQ7ATELC SERHICED IF NOT ALREADC ?SAT7RATED? WIT9 T9E SERHICES OF
TWO 12 EVISTIN. OPERATORS PETITIONERS AND CARDINAL S9IPPIN. CORP. IN HIOLATION OF T9E PRINCIPLE
OF PRIOR OPERATOR R7LE=D 11
Ey t(e #a!e to6en Car'ina+ S(i$$in& Cor$oration fi+e' a #e$arate $etition rai#in& #i!i+ar i##*e#% na!e+yA
a. t(e 'e"i#ion 'i' not "onfor! to t(e $ro"e'*re# +ai' 'o,n )y +a, for an a!en'!ent of t(e ori&ina+ "ertifi"ate of $*)+i"
"on-enien"e% an' t(e a*t(ority to o$erate a $ri-ate ferry )oat #er-i"e to PANTRANCO ,a# i##*e' ,it(o*t a#"ertainin& t(e
e#ta)+i#(e' e##entia+ re8*i#ite# for #*"( &rant% (en"e% -io+ati-e of '*e $ro"e## re8*ire!ent#B
). t(e &rant to PANTRANCO of a*t(ority to o$erate a ferry)oat #er-i"e a# a $ri-ate "arrier on #ai' ro*te "ontra-ene# e:i#tin&
&o-ern!ent $o+i"ie# re+ati-e to t(e rationa+i/ation of o$eration# of a++ ,ater tran#$ort *ti+itie#B
". it "ontra-ene# t(e !e!oran'*! of a&ree!ent )et,een MARINA an' t(e Eoar' of Tran#$ortationB '. t(e &rant of a*t(ority
to o$erate a ferry #er-i"e a# a $ri-ate "arrier i# not fea#i)+eB it +e##en# PANTRANCO=# +ia)i+ity to $a##en&er# an' "ar&o to a
'e&ree +e## t(an e:traor'inary 'i+i&en"eD
e. PANTRANCO i# not a $ri-ate "arrier ,(en it o$erate# it# ferry #er-i"eB
22
f. it r*n# "o*nter to t(e ?o+' o$erator? 'o"trineB an'
&. t(e o$eration )y PANTRANCO of t(e ferry #er-i"e " n#tit*te# *n'*e "o!$etition.
T(e fore&oin& "on#i'eration# "on#tit*te# t(e #*)#tantia+ error# "o!!itte' )y t(e re#$on'ent Eoar' ,(i"( ,o*+' !ore t(an
a!$+y 5*#tify re-ie, of t(e 8*e#tione' 'e"i#ion )y t(i# 9onora)+e Co*rt.12
Eot( "a#e# ,ere "on#o+i'ate' an' are no, a'!itte' for 'e"i#ion.
T(e re#o+*tion of a++ #ai' i##*e# rai#e' re-o+-e# on t(e -a+i'ity of t(e 8*e#tione' EOT 'e"i#ion.
T(e EOT re#o+-e' t(e i##*e of ,(et(er a ferry #er-i"e i# an e:ten#ion of t(e (i&(,ay an' t(*# i# a $art of t(e a*t(ority
ori&ina++y &rante' PANTRANCO in t(e fo++o,in& !annerA
A ferry #er-i"e% in +a,% i# treate' a# a "ontin*ation of t(e (i&(,ay fro! one #i'e of t(e ,ater o-er ,(i"( $a##e# to t(e ot(er
#i'e for tran#$ortation of $a##en&er# or of tra-e++er# ,it( t(eir tea!# -e(i"+e# an' #*"( ot(er $ro$erty a#% t(ey !ay "arry or
(a-e ,it( t(e!. (7.S. -#. P*'&et So*n' Ne-. Co. DC Wa#(in&ton% 21 F. S*$$. 131. It !ay)e #ai' to )e a ne"e##ary #er-i"e
of a #$e"ia++y "on#tr*"te' )oat to "arry $a##en&er# an' $ro$erty a"ro## ri-er# or )o'ie# of ,ater fro! a $+a"e in one #(ore to
a $oint "on-enient+y o$$o#ite on t(e ot(er #(ore an' "ontin*ation of t(e (i&(,ay !a6in& a "onne"tion ,it( t(e t(oro*&(fare at
ea"( ter!ina+ (7.S. -#. Cana'ian Pa". N.C. Co. 1 P. S*$$% 2<. It "o!$ri#e# not !ere+y t(e $ri-i+e&e of tran#$ortation )*t a+#o
t(e *#e for t(at $*r$o#e of t(e re#$e"ti-e +an'in&# ,it( o*t+et# t(erefro!. (No+e -#. Re"or'% 71 OIL. 77B 174 Pa". 7<4. A ferry
#er-i"e !ay)e a $*)+i" ferry or a $ri-ate ferry. A $*)+i" ferry #er-i"e i# one ,(i"( a++ t(e $*)+i" (a-e t(e ri&(t to re#ort to an'
for ,(i"( a re&*+ar fare i# e#ta)+i#(e' an' t(e ferry!an i# a "o!!on "arrier )e in)o*n' to ta6e an ,(o a$$+y an' )o*n' to
6ee$ (i# ferry in o$eration an' &oo' re$air. (9*'#$et( -. 9a++% 11 Oa. <1;B 34 SE 77;. A ferry ($ri-ate #er-i"e i# !ain+y for
t(e *#e of t(e o,ner an' t(o*&( (e !ay ta6e $ay for ferria&e% (e 'oe# not fo++o, it a# a )*#ine##. 9i# ferry i# not o$en to t(e
$*)+i" at it# 'e!an' an' (e !ay or !ay not 6ee$ it in o$eration (9*'#$et( -#. 9a++% supra% St. Pa*+ Fire an' Marine In#. 434%
9arri#on% 11; Ar6 1<2B 21< S.W. 432.
T(e ferry )oat #er-i"e of Pantran"o i# a "ontin*ation of t(e (i&(,ay tra-er#e' )y it# )*#e# fro! Pa#ay City to Sa!ar% Leyte
$a##in& t(ro*&( Matno& (Sor#o&on t(ro*&( San Eernar'ino Strait to A+ien (Sa!ar. It i# a $ri-ate "arrier )e"a*#e it ,i++ )e
*#e' e:"+*#i-e+y to tran#$ort it# o,n )*#e#% $a##en&er# an' frei&(t tr*"6# tra-er#in& t(e #ai' ro*te. It ,i++ "ater e:"+*#i-e+y to
t(e nee'# of it# o,n "+iente+e ($a##en&er# on )oar'0 Pantran"o )*#e# an' ,i++ not offer it#e+f in'i#"ri!inate+y for (ire or for
"o!$en#ation to t(e &enera+ $*)+i". Le&a++y t(erefore% Pantran"o (a# t(e ri&(t to o$erate t(e ferry )oat MFH ELACI DO7ELE%
a+on& t(e ro*te fro! Matno& (Sor#o&on to A++en (Sa!ar an' -i"e -er#a for t(e e:"+*#i-e *#e of it# o,n )*#e#% $a##en&er#
an' frei&(t tr*"6# ,it(o*t t(e nee' of a$$+yin& for a #e$arate "ertifi"ate of $*)+i" "on-enien"e or $ro-i#iona+ a*t(ority. Sin"e it#
o$eration i# an inte&ra+ $art of it# +an' tran#$ort #y#te!% it# ori&ina+ "ertifi"ate of $*)+i" "on-enien"e #(o*+' )e a!en'e' to
in"+*'e t(e o$eration of #*"( ferry)oat for it# o,n e:"+*#i-e *#e
In >a-e++ana 14 t(i# Co*rt re"ite' t(e fo++o,in& 'efinition of ferry A
T(e ter! AferryA implied the continuation by means of boats, barges, or rafts, of a highway or the connection of highways
located on the opposite banks of a stream or other body of water) The term necessarily implies transportation for a short
distance, almost invariably between two points, which is unrelated to other transportation )(E!$(a#i# #*$$+ie'
T(e ter! ?ferry? i# often e!$+oye' to 'enote t(e ri&(t or fran"(i#e &rante' )y t(e #tate or it# a*t(ori/e' !an'atorie# to
"ontin*e )y !ean# of )oat#% an interr*$te' +an' (i&(,ay o-er t(e interr*$tin& ,ater# an' to "(ar&e to++ for t(e *#e t(ereof )y
t(e $*)+i". In t(i# #en#e it (a# a+#o )een 'efine' a# a $ri-i+e&e% a +i)erty% to ta6e to++# for transporting passengers and goods
across a lake or stream or some other body of water, with no essential difference from a bridge franchise except as to the
mode of transportation% 22 A!. >*r. <<3.
A AferryA has been defined by many courts as Aa public highway or thoroughfare across a stream of water or river by boat
instead of a bridge.? (St. C+are Co*ntry -. Inter#tate Car an' San' Tran#fer Co.% 132 7.S. 1<1% 12 L. e'. <12B et".
T(e ter! ferry i# often e!$+oye' to 'enote t(e ri&(t or fran"(i#e &rante' )y t(e #tate or it# a*t(ori/e' !an'atorie# to "ontin*e
)y !ean# of )oat#% an interr*$te' +an' (i&(,ay o-er t(e interr*$tin& ,ater# an' to "(ar&e to++ for t(e *#e t(ereof )y t(e $*)+i".
(Ha++e5o Ferry Co. -#. So+ano A8*ati" C+*)% 14< Ca+. 2<<% 131 P. 241% Ann. Ca#. 1311C 1173B et". (E!$(a#i# #*$$+ie'
A(erryA is service necessity for common good to reach point across a stream lagoon, lake, or bay) (7.S. -#. Cana'ian Pa". Ry.
Co. DC Wa#.% 1 S*$$. 2<1%2<3=
?Ferry? $ro$er+y !ean# a $+a"e of tran#it a"ro## a ri-er or ar! of t(e #ea% )*t in +a, it i# treate' a# a fran"(i#e% an' 'efine' a#
t(e e:"+*#i-e ri&(t to "arry $a##en&er# a"ro## a ri-er% or ar! of t(e #ea% fro! one -i++ to anot(er% or to "onne"t a "ontin*o*#
+ine of roa' +ea'in& fro! to,n#(i$ or -i++ to anot(er. (Cana'ian Pa". Ry. Co. -#. C.C. A. Wa#(. 73 F. 2'. 231% 232=
In"+*'e# -ario*# ,ater#A (1 E*t an ar! of t(e #ea !ay in"+*'e -ario*# #*)or'inate 'e#"ri$tion# of ,ater#% ,(ere t(e ti'e e))#
an' f+o,#. It !ay )e a ri-er% (ar)or% "ree6% )a#in% or )ayB an' it i# #o!eti!e# *#e' to 'e#i&nate -ery e:ten#i-e rea"(e# of
,ater# ,it(in t(e $ro5e"tin& "a$e# or $oint# or a "o*ntry. (See Re: -#. Er*"e% Dea"( C.C. 1;33. (2 In an ear+y "a#e t(e "o*rt
#ai'A ?T(e 'i#tin"tion )et,een ri-er# na-i&a)+e an' not na-i&a)+e% t(at i#% ,(ere t(e #ea 'oe#% or 'oe# not% e)) an' f+o,% i#
-ery an"ient. Re: -#. S!it(% 2 Do*&+. 111% 33 Re$rint 223. T(e for!er are "a++e' ar!# of t(e #ea% ,(i+e t(e +atter $a## *n'er
t(e 'eno!ination of $ri-ate or in+an' ri-er#? A'a!# -#. Pea#e 2 Conn. 121% 121. (E!$(a#i# #*$$+ie'
In t(e "a#e# of !ababa vs) *ublic "ervice !ommission% 16 !ababa vs) %emigio + !arillo an' $unicipality of 2attaran vs)
'li/aga 17t(i# Co*rt "on#i'ere' a# ferry #er-i"e #*"( ,ater #er-i"e t(at "ro##e# ri-er#.
9o,e-er% in 5avellana We !a'e "+ear 'i#tin"tion )et,een a ferry #er-i"e an' "oa#t,i#e or interi#+an' #er-i"e )y (o+'in& t(atA
We are not *n!in'f*+ of t(e rea#on# a''*"e' )y t(e Co!!i##ion in "on#i'erin& t(e !otor)oat #er-i"e )et,een Ca+a$an an'
Eatan&a# a# ferryB )*t fro! o*r "on#i'eration of t(e +a, a# it #tan'#% $arti"*+ar+y Co!!on,ea+t( A"t No. 114% 6no,n a# t(e
P*)+i" Ser-i"e A"t an' t(e $ro-i#ion# of t(e Re-i#e' A'!ini#trati-e Co'e re&ar'in& !*ni"i$a+ ferrie# an' t(o#e re&ar'in& t(e
5*ri#'i"tion of t(e E*rea* of C*#to!# o-er 'o"*!entation% re&i#tration% +i"en#in&% in#$e"tion% et". of #tea!)oat#% !otor)oat# or
!otor -e##e+#% an' t(e 'efinition of ferry a# a)o-e 8*ote' ,e (a-e t(e i!$re##ion an'we are inclined to believe that the
8egislature intended ferry to mean the service either by barges or rafts, even by motor or steam vessels, between the banks of
a river or stream to continue the highway which is interrupted by the body of water, or in some cases to connect two points on
opposite shores of an arm of the sea such as bay or lake which does not involve too great a distance or too long a time to
navigate 9ut where the line or service involves crossing the open sea like the body of water between the province of 9atangas
and the island of $indoro ,(i"( t(e o$$o#itor# 'e#"ri)e t(*# ?the intervening waters between !alapan and 9atangas are wide
and dangerous with big waves where small boat barge, or raft are not adapted to the service%? t(en it i# !ore rea#ona)+e to
re&ar' said line or service as more properly belonging to interisland or coastwise trade. A""or'in& to t(e fin'in& of t(e
Co!!i##ion it#e+f t(e 'i#tan"e )et,een Ca+a$an i# a)o*t 21 na*ti"a+ !i+e# or a)o*t 11.< 6i+o!eter#. We 'o not )e+ie-e t(at
t(i# i# t(e #(ort 'i#tan"e "onte!$+ate' )y t(e Le&i#+at*re in referrin& to ferrie# ,(et(er ,it(in t(e 5*ri#'i"tion of a #in&+e
!*ni"i$a+ity or ferrie# )et,een t,o !*ni"i$a+itie# or $ro-in"e#. If ,e are to &rant t(at ,ater tran#$ortation )et,een Ca+a$an
an' Eatan&a# i# ferry #er-i"e% t(en t(ere ,o*+' )e no rea#on for not "on#i'erin& t(e #a!e #er-i"e )et,een t(e 'ifferent
i#+an'# of t(e P(i+i$$ine#% #*"( a# Eoa" Marin'*8*e an' Eatan&a#B Ro:a# City of Ca$i/ an' Ro!)+onB Ce)* City% Ce)* an'
Or!o"% LeyteB .*ian% Sa!ar an' S*ri&ao% S*ri&aoB an' D*!a&*ete% Ne&ro# Orienta+ an' Oro8*ieta or Ca&ayan 'e Oro.
23
T(e Co!!i##ion !a6e# t(e 'i#tin"tion )et,een ferry #er-i"e an' !otor#(i$ in t(e "oa#t,i#e tra'e% t(*#A
A ferry #er-i"e i# 'i#tin&*i#(e' fro! a !otor#(i$ or !otor)oat #er-i"e en&a&e' in t(e "oa#t,i#e tra'e in t(at t(e +atter i#
inten'e' for t(e tran#$ortation of $a##en&er# an'For frei&(t for (ire or "o!$en#ation )et,een $ort# or $+a"e# in t(e P(i+i$$ine#
,it(o*t 'efinite ro*te# or +ine# of #er-i"e.
We "annot a&ree. T(e 'efinitene## of t(e ro*te of a )oat i# not t(e 'e"i'in& fa"tor. A )oat of #ay t(e Wi++ia! Line#% In". &oe#
fro! Mani+a to Da-ao City -ia Ce)*% Ta&)i+aran% D*!a&*ete% Sa!)oan&a% e-ery ,ee6. It (a# a 'efinite ro*te% an' yet it !ay
not for t(at rea#on )e re&ar'e' a# en&a&e' in ferry #er-i"e. A&ain% a -e##e+ of t(e Co!$ania Mariti!a !a6e# t(e tri$ fro!
Mani+a to Ta"+o)an an' )a"6% t,i"e a ,ee6. Certain+y% it (a# a 'efinite ro*te. E*t t(at #er-i"e i# not ferry #er-i"e% )*t rat(er
interi#+an' or "oa#t,i#e tra'e.
Be believe that it will be more in consonance with the spirit of the law to consider steamboat or motorboat service between
the different islands, involving more or less great distance and over more or less turbulent and dangerous waters of the open
sea, to be coastwise or inter#island service. Any,ay% ,(et(er #ai' #er-i"e )et,een t(e 'ifferent i#+an'# i# re&ar'e' a# ferry
#er-i"e or "oa#t,i#e tra'e #er-i"e% a# +on& a# t(e ,ater "raft *#e' are #tea!)oat#% !otor)oat# or !otor -e##e+#% t(e re#*+t ,i++
)e t(e #a!e a# far a# t(e Co!!i##ion i# "on"erne'. ? 18 (E!$(a#i# #*$$+ie'
T(i# Co*rt ta6e# 5*'i"ia+ noti"e of t(e fa"t% an' a# #(o,n )y an e:a!ination of t(e !a$ of t(e P(i+i$$ine#% t(at Matno& ,(i"( i#
on t(e #o*t(ern ti$ of t(e i#+an' of L*/on an' ,it(in t(e $ro-in"e of Sor#o&on an' A++en ,(i"( i# on t(e nort(ea#tern ti$ of t(e
i#+an' of Sa!ar% i# tra-er#e' )y t(e San Eernar'ino Strait ,(i"( +ea'# to,ar'# t(e Pa"ifi" O"ean. T(e $artie# a'!it t(at t(e
'i#tan"e )et,een Matno& an' A++en i# a)o*t 23 6i+o!eter# ,(i"( !ay)e ne&otiate' )y !otor)oat or -e##e+ in a)o*t 101F2
(o*r# a# "+ai!e' )y re#$on'ent PANTRANCO to 2 (o*r# a""or'in& to $etitioner#. A# t(e San Eernar'ino Strait ,(i"(
#e$arate# Matno& an' A++en +ea'# to t(e o"ean it !*#t at ti!e# )e "(o$$y an' ro*&( #o t(at it ,i++ not )e #afe to na-i&ate t(e
#a!e )y #!a++ )oat# or )ar&e# )*t on+y )y #*"( #tea!)oat# or -e##e+# a# t(e MH ?E+a"6 Do*)+e. 19
Con#i'erin& t(e en-iron!enta+ "ir"*!#tan"e# of t(e "a#e% t(e "on-eyan"e of $a##en&er#% tr*"6# an' "ar&o fro! Matno& to
A++en i# "ertain+y not a ferry )oat #er-i"e )*t a "oa#t,i#e or interi#+an' #(i$$in& #er-i"e. 7n'er no "ir"*!#tan"e "an t(e #ea
)et,een Matno& an' A++en )e "on#i'ere' a "ontin*ation of t(e (i&(,ay. W(i+e a ferry )oat #er-i"e (a# )een "on#i'ere' a# a
"ontin*ation of t(e (i&(,ay ,(en "ro##in& ri-er# or e-en +a6e#% ,(i"( are #!a++ )o'y of ,ater# 0 #e$aratin& t(e +an'% (o,e-er%
,(en a# in t(i# "a#e t(e t,o ter!ina+#% Matno& an' A++en are #e$arate' )y an o$en #ea it "an not )e "on#i'ere' a# a
"ontin*ation of t(e (i&(,ay. Re#$on'ent PANTRANCO #(o*+' #e"*re a #e$arate CPC for t(e o$eration of an interi#+an' or
"oa#t,i#e #(i$$in& #er-i"e in a""or'an"e ,it( t(e $ro-i#ion# of +a,. It# CPC a# a )*# tran#$ortation "annot )e !ere+y
a!en'e' to in"+*'e t(i# ,ater #er-i"e *n'er t(e &*i#e t(at it i# a !ere $ri-ate ferry #er-i"e.
T(e "ontention of $ri-ate re#$on'ent PANTRANCO t(at it# ferry #er-i"e o$eration i# a# a $ri-ate "arrier% not a# a "o!!on
"arrier for it# e:"+*#i-e *#e in t(e ferryin& of it# $a##en&er )*#e# an' "ar&o tr*"6# i# a)#*r'. PANTRANCO 'oe# not 'eny t(at
it "(ar&e# it# $a##en&er# #e$arate+y fro! t(e "(ar&e# for t(e )*# tri$# an' i##*e# #e$arate ti"6et# ,(ene-er t(ey )oar' t(e
MH ?E+a"6 Do*)+e? t(at "ro##e# Matno& to A++en%
20
PANTRANCO "annot $reten' t(at in i##*in& ti"6et# to it# $a##en&er# it 'i'
#o a# a $ri-ate "arrier an' not a# a "o!!on "arrier. T(e Co*rt 'oe# not #ee any rea#on ,(y in#$ite of it# a!en'e' fran"(i#e
to o$erate a $ri-ate ferry )oat #er-i"e it "annot a""e$t ,a+60in $a##en&er# 5*#t for t(e $*r$o#e of "ro##in& t(e #ea )et,een
Matno& an' A++en. In'ee' e-i'en"e to t(i# effe"t (a# )een #*)!itte'.
21
W(at i# e-en !ore 'iffi"*+t to "o!$re(en' i# t(at
,(i+e in one )reat( re#$on'ent PANTRANCO "+ai!# t(at it i# a $ri-ate "arrier in#ofar a# t(e ferry)oat #er-i"e i# "on"erne'% in
anot(er )reat( it #tate# t(at it 'oe# not t(ere)y a)'i"ate fro! it# o)+i&ation a# a "o!!on "arrier to o)#er-e e:traor'inary
'i+i&en"e an' -i&i+an"e in t(e tran#$ortation of it# $a##en&er# an' &oo'#. Ne-ert(e+e##% "on#i'erin& t(at t(e a*t(ority &rante'
to PANTRANCO i# to o$erate a $ri-ate ferry% it "an #ti++ a##ert t(at it "annot )e (e+' to a""o*nt a# a "o!!on "arrier to,ar'#
it# $a##en&er# an' "ar&o. S*"( an ano!a+o*# #it*ation t(at ,i++ 5eo$ar'i/e t(e #afety an' intere#t# of it# $a##en&er# an' t(e
"ar&o o,ner# "annot )e a++o,e'.
W(at a$$ear# "+ear fro! t(e re"or' i# t(at at t(e )e&innin& PANTRANCO $+anne' to o$erate #*"( ferry )oat #er-i"e )et,een
Matno& an' A+ien a# a "o!!on "arrier #o it re8*e#te' a*t(ority fro! MARINA to $*r"(a#e t(e -e##e+ MFH ?E+a"6 Do*)+e
22
in
a""or'an"e ,it( t(e $ro"e'*re $ro-i'e' for )y +a, for #*"( a$$+i"ation for a "ertifi"ate of $*)+i" "on-enien"e.
23
9o,e-er
,(en it# re8*e#t ,a# 'enie' a# t(e #ai' ro*te# ?are a'e8*ate+y #er-i"e' )y e:i#tin&Fa*t(ori/e' o$erator#%
24
it ne-ert(e+e##
$*r"(a#e' t(e -e##e+ an' #tarte' o$eratin& t(e #a!e. O)-io*#+y to &o a)o*t t(i# o)#ta"+e to it# o$eration% it t(en "ontri-e' a
no-e+ t(eory t(at ,(at it $ro$o#e# to o$erate i# a $ri-ate ferry)oat #er-i"e a"ro## a small body of water for t(e e:"+*#i-e *#e of
it# )*#e#% tr*"6# an' $a##en&er# a# an in"i'ent to it# fran"(i#e to "on-ey $a##en&er# an' "ar&o on +an' fro! Pa#ay City to
Ta"+o)an #o t(at it )e+ie-e# it nee' not #e"*re a #e$arate "ertifi"ate of $*)+i" "on-enien"e.
25
Ea#e' on t(i# re$re#entation% no
+e## t(an t(e Se"retary of >*#ti"e ,a# +e' to ren'er an affir!ati-e o$inion on O"to)er 2;% 1321%
26
fo++o,e' a fe, 'ay# +ater )y
t(e 8*e#tione' 'e"i#ion of $*)+i" re#$on'ent of O"to)er 23% 1321.
27
Certain+y t(e Co*rt "annot &i-e it# imprimatur to #*"( a
#it*ation.
T(*# t(e Co*rt (o+'# t(at t(e ,ater tran#$ort #er-i"e )et,een Matno& an' A++en i# not a ferry )oat #er-i"e )*t a "oa#t,i#e or
interi#+an' #(i$$in& #er-i"e. Eefore $ri-ate re#$on'ent !ay )e i##*e' a fran"(i#e or CPC for t(e o$eration of t(e #ai' #er-i"e
a# a "o!!on "arrier% it !*#t "o!$+y ,it( t(e *#*a+ re8*ire!ent# of fi+in& an a$$+i"ation% $ay!ent of t(e fee#% $*)+i"ation%
a''*"in& e-i'en"e at a (earin& an' affor'in& t(e o$$o#itor# t(e o$$ort*nity to )e (ear'% a!on& ot(er#% a# $ro-i'e' )y +a,.
28
W9EREFORE% t(e $etition# are (ere)y .RANTED an' t(e De"i#ion of t(e re#$on'ent Eoar' of Tran#$ortation (EOT of
O"to)er 23% 1321 in EOT Ca#e No. 2103120C an' it# Or'er of >*+y 21% 1322 in t(e #a!e "a#e 'enyin& t(e !otion# for
re"on#i'eration fi+e' )y $etitioner# are (ere)y Re-er#e' an' #et a#i'e an' 'e"+are' n*++ an' -oi'. Re#$on'ent PANTRANCO
i# (ere)y $er!anent+y en5oine' fro! o$eratin& t(e ferry)oat #er-i"e an'For "oa#t,i#eFinteri#+an' #er-i"e# )et,een Matno&
an' A++en *nti+ it #(a++ (a-e #e"*re' t(e a$$ro$riate Certifi"ate of P*)+i" Con-enien"e (CPC in a""or'an"e ,it( t(e
re8*ire!ent# of t(e +a,% ,it( "o#t# a&ain#t re#$on'ent PANTRANCO.
Nationa+ Stee+ Cor$. -. Co*rt of A$$ea+#% 223 SCRA 1< (1337
.o-ern!ent re&*+ation
IM7 La)or Center -. .ar"ia% >r.% 233 SCRA 324 (1331
?:*@5:5, #$%
P*)+i" *ti+itie# are $ri-ate+y o,ne' an' o$erate' )*#ine##e# ,(o#e #er-i"e are e##entia+ to t(e &enera+ $*)+i". T(ey are
enter$ri#e# ,(i"( #$e"ia++y "ater to t(e nee'# of t(e $*)+i" an' "on'*"e to t(eir "o!fort an' "on-enien"e. A# #*"(% $*)+i"
*ti+ity #er-i"e# are i!$re##e' ,it( $*)+i" intere#t an' "on"ern. T(e #a!e i# tr*e ,it( re#$e"t to t(e )*#ine## of "o!!on
"arrier ,(i"( (o+'# #*"( a $e"*+iar re+ation to t(e $*)+i" intere#t t(at t(ere i# #*$erin'*"e' *$on it t(e ri&(t of $*)+i" re&*+ation
3;
,(en $ri-ate $ro$ertie# are affe"te' ,it( $*)+i" intere#t% (en"e% t(ey "ea#e to )e juris privati on+y. W(en% t(erefore% one
'e-ote# (i# $ro$erty to a *#e in ,(i"( t(e $*)+i" (a# an intere#t% (e% in effe"t &rant# to t(e $*)+i" an intere#t in t(at *#e% an'
!*#t #*)!it to t(e "ontro+ )y t(e $*)+i" for t(e "o!!on &oo'% to t(e e:tent of t(e intere#t (e (a# t(*# "reate'.
1
An a)'i"ation of t(e +i"en#in& an' re&*+atory &o-ern!ent a&en"ie# of t(eir f*n"tion# a# t(e in#tant $etition #ee6# to #(o,% i#
in'ee' +a!enta)+e. Not on+y i# it an *n#o*n' a'!ini#trati-e $o+i"y )*t it i# ini!i"a+ to $*)+i" tr*#t an' $*)+i" intere#t a# ,e++.
T(e in#tant $etition for certiorari a##ai+# t(e "on#tit*tiona+ity an' -a+i'ity of "ertain !e!oran'a% "ir"*+ar# an'For or'er# of t(e
De$art!ent of Tran#$ortation an' Co!!*ni"ation# (DOTC an' t(e Lan' Tran#$ortation Fran"(i#in& an' Re&*+atory Eoar'
LTFRE
2
,(i"(% a!on& ot(er#% (a a*t(ori/e $ro-in"ia+ )*# an' 5ee$ney o$erator# to in"rea#e or 'e"rea#e t(e $re#"ri)e'
tran#$ortation fare# ,it(o*t a$$+i"ation t(erefor ,it( t(e LTFRE an' ,it(o*t (earin& an' a$$ro-a+ t(ereof )y #ai' a&en"y in
-io+ation of Se". 14(" of Co!!on,ea+t( A"t No. 114% a# a!en'e'% ot(er,i#e 6no,n a# t(e P*)+i" Ser-i"e A"t% an' in
'ero&ation of LTFRE=# '*ty to fi: an' 'eter!ine 5*#t an' rea#ona)+e fare# )y 'e+e&atin& t(at f*n"tion to )*# o$erator#% an' ()
e#ta)+i#( a $re#*!$tion of $*)+i" nee' in fa-or of a$$+i"ant# for "ertifi"ate# of $*)+i" "on-enien"e (CPC an' $+a"e on t(e
o$$o#itor t(e )*r'en of $ro-in& t(at t(ere i# no nee' for t(e $ro$o#e' #er-i"e% in $atent -io+ation not on+y of Se". 14(" of CA
114% a# a!en'e'% )*t a+#o of Se". 2;(a of t(e #a!e A"t !an'atin& t(at fare# #(o*+' )e ?5*#t an' rea#ona)+e.? It i#% +i6e,i#e%
-io+ati-e of t(e R*+e# of Co*rt ,(i"( $+a"e# *$on ea"( $arty t(e )*r'en to $ro-e (i# o,n affir!ati-e a++e&ation#.
3
T(e
offen'in& $ro-i#ion# "ontaine' in t(e 8*e#tione' i##*an"e# $ointe' o*t )y $etitioner% (a-e re#*+te' in t(e intro'*"tion into o*r
(i&(,ay# an' t(oro*&(fare# t(o*#an'# of o+' an' #!o6e0)e+"(in& )*#e#% !any of ,(i"( are ri&(t0(an' 'ri-en% an' (a-e
e:$o#e' o*r "on#*!er# to t(e )*r'en of #$ira+in& "o#t# of $*)+i" tran#$ortation ,it(o*t (earin& an' '*e $ro"e##.
T(e fo++o,in& !e!oran'a% "ir"*+ar# an'For or'er# are #o*&(t to )e n*++ifie' )y t(e in#tant $etition% vi/A (a DOTC
Me!oran'*! Or'er 3;033<% 'ate' >*ne 24% 133; re+ati-e to t(e i!$+e!entation of a fare ran&e #"(e!e for $ro-in"ia+ )*#
#er-i"e# in t(e "o*ntryB () DOTC De$art!ent Or'er No.
320<27% 'ate' Mar"( 3;% 1332% 'efinin& t(e $o+i"y fra!e,or6 on t(e re&*+ation of tran#$ort #er-i"e#B (" DOTC Me!oran'*!
'ate' O"to)er 2% 1332% +ayin& 'o,n r*+e# an' $ro"e'*re# to i!$+e!ent De$art!ent Or'er No. 320<27B (' LTFRE
Me!oran'*! Cir"*+ar No. 320;;3% $ro-i'in& i!$+e!entin& &*i'e+ine# on t(e DOTC De$art!ent Or'er No. 320<27B an' (e
LTFRE Or'er 'ate' Mar"( 21% 1331 in Ca#e No. 3103112.
T(e re+e-ant ante"e'ent# are a# fo++o,#A
On >*ne 24% 133;B t(en Se"retary of DOTC% O#"ar M. Or)o#% i##*e' Me!oran'*! Cir"*+ar No. 3;033< to t(en LTFRE
C(air!an% Re!e'io# A.S. Fernan'o a++o,in& $ro-in"ia+ )*# o$erator# to "(ar&e $a##en&er# rate# ,it(in a ran&e of 1<G
a)o-e an' 1<G )e+o, t(e LTFRE offi"ia+ rate for a $erio' of one (1 year. T(e te:t of t(e !e!oran'*! or'er rea'# in f*++A
One of t(e $o+i"y refor!# an' !ea#*re# t(at i# in +ine ,it( t(e t(r*#t# an' t(e $rioritie# #et o*t in t(e Me'i*!0Ter! P(i+i$$ine
De-e+o$!ent P+an (MTPDP 1327 @ 1332 i# t(e +i)era+i/ation of re&*+ation# in t(e tran#$ort #e"tor. A+on& t(i# +ine% t(e
.o-ern!ent inten'# to !o-e a,ay &ra'*a++y fro! re&*+atory $o+i"ie# an' !a6e $ro&re## to,ar'# &reater re+ian"e on free
!ar6et for"e#.
Ea#e' on #e-era+ #*r-ey# an' o)#er-ation#% )*# "o!$anie# are a+rea'y "(ar&in& $a##en&er rate# a)o-e an' )e+o, t(e
offi"ia+ fare 'e"+are' )y LTFRE on !any $ro-in"ia+ ro*te#. It i# in t(i# "onte:t t(at #o!e for! of +i)era+i/ation on $*)+i"
tran#$ort fare# i# to )e te#te' on a $i+ot )a#i#.
In -ie, t(ereof% t(e LTFRE i# (ere)y 'ire"te' to i!!e'iate+y $*)+i"i/e a fare ran&e #"(e!e for a++ $ro-in"ia+ )*# ro*te# in
"o*ntry (e:"e$t t(o#e o$eratin& ,it(in Metro Mani+a. Transport 7perators shall be allowed to charge passengers within a
range of fifteen percent <C=D> above and fifteen percent <C=D> below the 8T(%9 official rate for a period of one year.
.*i'e+ine# an' $ro"e'*re# for t(e #ai' #"(e!e #(a++ )e $re$are' )y LTFRE in "oor'ination ,it( t(e DOTC P+annin& Ser-i"e.
T(e i!$+e!entation of t(e #ai' fare ran&e #"(e!e #(a++ #tart on 4 A*&*#t 133;.
For "o!$+ian"e. (E!$(a#i# o*r#.
Fin'in& t(e i!$+e!entation of t(e fare ran&e #"(e!e ?not +e&a++y fea#i)+e%? Re!e'io# A.S. Fernan'o #*)!itte' t(e fo++o,in&
!e!oran'*! to O#"ar M. Or)o# on >*+y 21% 133;% to ,itA
Wit( referen"e to DOTC Me!oran'*! Or'er No. 3;033< 'ate' 24 >*ne 133; ,(i"( t(e LTFRE re"ei-e' on 13 >*+y 133;%
'ire"tin& t(e Eoar' ?to i!!e'iate+y $*)+i"i/e a fare ran&e #"(e!e for a++ $ro-in"ia+ )*# ro*te# in t(e "o*ntry (e:"e$t t(o#e
o$eratin& ,it(in Metro Mani+a? t(at ,i++ a++o, o$erator# ?to "(ar&e $a##en&er# ,it(in a ran&e of fifteen $er"ent (1<G a)o-e
an' fifteen $er"ent (1<G )e+o, t(e LTFRE offi"ia+ rate for a $erio' of one year? t(e *n'er#i&ne' i# re#$e"tf*++y a'-ertin& t(e
Se"retary=# attention to t(e fo++o,in& for (i# "on#i'erationA
1. Se"tion 14(" of t(e P*)+i" Ser-i"e A"t $re#"ri)e# t(e fo++o,in& for t(e fi:in& an' 'eter!ination of rate# @ (a t(e rate# to )e
a$$ro-e' #(o*+' )e $ro$o#e' )y $*)+i" #er-i"e o$erator#B () t(ere #(o*+' )e a $*)+i"ation an' noti"e to "on"erne' or
affe"te' $artie# in t(e territory affe"te'B (" a $*)+i" (earin& #(o*+' )e (e+' for t(e fi:in& of t(e rate#B (en"e% i!$+e!entation of
t(e $ro$o#e' fare ran&e #"(e!e on A*&*#t 4 ,it(o*t "o!$+yin& ,it( t(e re8*ire!ent# of t(e P*)+i" Ser-i"e A"t !ay not )e
+e&a++y fea#i)+e.
2. To a++o, )*# o$erator# in t(e "o*ntry to "(ar&e fare# fifteen (1<G a)o-e t(e $re#ent LTFRE fare# in t(e ,a6e of t(e
'e-a#tation% 'eat( an' #*fferin& "a*#e' )y t(e >*+y 14 eart(8*a6e ,i++ not )e #o"ia++y ,arrante' an' ,i++ )e $o+iti"a++y
*n#o*n'B !o#t +i6e+y $*)+i" "riti"i#! a&ain#t t(e DOTC an' t(e LTFRE ,i++ )e tri&&ere' )y t(e *nti!e+ymotu
propio i!$+e!entation of t(e $ro$o#a+ )y t(e !ere e:$e'ient of $*)+i"i/in& t(e fare ran&e #"(e!e ,it(o*t "a++in& a $*)+i"
(earin&% ,(i"( #"(e!e !any a# ear+y a# '*rin& t(e Se"retary=# $re'e"e##or 6no, t(ro*&( ne,#$a$er re$ort# an' "o+*!ni#t#=
"o!!ent# to )e A#ian De-e+o$!ent Ean6 an' Wor+' Ean6 in#$ire'.
3. More t(an in'*"in& a re'*"tion in )*# fare# )y fifteen $er"ent (1<G t(e i!$+e!entation of t(e $ro$o#a+ ,i++ in#tea' tri&&er
an *$,ar' a'5*#t!ent in )*# fare# )y fifteen $er"ent (1<G at a ti!e ,(en (*n're'# of t(o*#an'# of $eo$+e in Centra+ an'
Nort(ern L*/on% $arti"*+ar+y in Centra+ Pan&a#inan% La 7nion% Ea&*io City% N*e-a E"i5a% an' t(e Ca&ayan Ha++ey are #*fferin&
fro! t(e 'e-a#tation an' (a-o" "a*#e' )y t(e re"ent eart(8*a6e.
1. In +ie* of t(e #ai' $ro$o#a+% t(e DOTC ,it( it# a&en"ie# in-o+-e' in $*)+i" tran#$ortation "an "on#i'er !ea#*re# an' refor!#
in t(e in'*#try t(at ,i++ )e #o"ia++y *$+iftin&% e#$e"ia++y for t(e $eo$+e in t(e area# 'e-a#tate' )y t(e re"ent eart(8*a6e.
In -ie, of t(e fore&oin& "on#i'eration#% t(e *n'er#i&ne' re#$e"tf*++y #*&&e#t# t(at t(e i!$+e!entation of t(e $ro$o#e' fare
ran&e #"(e!e t(i# year )e f*rt(er #t*'ie' an' e-a+*ate'.
On De"e!)er <% 133;% $ri-ate re#$on'ent Pro-in"ia+ E*# O$erator# A##o"iation of t(e P(i+i$$ine#% In". (PEOAP fi+e' an
a$$+i"ation for fare rate in"rea#e. An a"ro##0t(e0)oar' in"rea#e of ei&(t an' a (a+f "enta-o# (P;.;2< $er 6i+o!eter for a++
ty$e# of $ro-in"ia+ )*#e# ,it( a !ini!*!0!a:i!*! fare ran&e of fifteen (1<G $er"ent o-er an' )e+o, t(e $ro$o#e' )a#i" $er
6i+o!eter fare rate% ,it( t(e #ai' !ini!*!0!a:i!*! fare ran&e a$$+yin& on+y to or'inary% fir#t "+a## an' $re!i*! "+a## )*#e#
an' a fifty0"enta-o (P;.<; !ini!*! $er 6i+o!eter fare for air"on )*#e#% ,a# #o*&(t.
On De"e!)er 4% 133;% $ri-ate re#$on'ent PEOAP re'*"e' it# a$$+ie' $ro$o#e' fare to an a"ro##0t(e0)oar' in"rea#e of #i:
an' a (a+f (P;.;4< "enta-o# $er 6i+o!eter for or'inary )*#e#. T(e 'e"rea#e ,a# '*e to t(e 'ro$ in t(e e:$e"te' $ri"e of
'ie#e+.
31
T(e a$$+i"ation ,a# o$$o#e' )y t(e P(i+i$$ine Con#*!er# Fo*n'ation% In". an' Per+a C. Ea*ti#ta a++e&in& t(at t(e $ro$o#e'
rate# ,ere e:or)itant an' *nrea#ona)+e an' t(at t(e a$$+i"ation "ontaine' no a++e&ation on t(e rate of ret*rn of t(e $ro$o#e'
in"rea#e in rate#.
On De"e!)er 11% 133;% $*)+i" re#$on'ent LTFRE ren'ere' a 'e"i#ion &rantin& t(e fare rate in"rea#e in a""or'an"e ,it( t(e
fo++o,in& #"(e'*+e of fare# on a #trai&(t "o!$*tation !et(o'% -i/A
A-TH7%E'& (A%'"
L7SON
MIN. OF < IMS. S7CCEEDIN. IM.
RE.7LAR P1.<; P;.37
ST7DENT P1.1< P;.22
HISACASFMINDANAO
RE.7LAR P1.4; P;.37<
ST7DENT P1.2; P;.22<
FIRST CLASS (PER IM.
L7SON P;.32<
HISACASF
MINDANAO P;.33<
PREMIERE CLASS (PER IM.
L7SON P;.33<
HISACASF
MINDANAO P;.1;<
AIRCON (PER IM. P;.11<.
4
On Mar"( 3;% 1332% t(en Se"retary of t(e De$art!ent of Tran#$ortation an' Co!!*ni"ation# Pete Ni"o!e'e# Pra'o i##*e'
De$art!ent Or'er No.
320<27 'efinin& t(e $o+i"y fra!e,or6 on t(e re&*+ation of tran#$ort #er-i"e#. T(e f*++ te:t of t(e #ai' or'er i# re$ro'*"e' )e+o,
in -ie, of t(e i!$ortan"e of t(e $ro-i#ion# "ontaine' t(ereinA
W9EREAS% E:e"*ti-e Or'er No. 12< a# a!en'e'% 'e#i&nate# t(e De$art!ent of Tran#$ortation an' Co!!*ni"ation#
(DOTC a# t(e $ri!ary $o+i"y% $+annin&% re&*+atin& an' i!$+e!entin& a&en"y on tran#$ortationB
W9EREAS% to a"(ie-e t(e o)5e"ti-e of a -ia)+e% effi"ient% an' 'e$en'a)+e tran#$ortation #y#te!% t(e tran#$ortation re&*+atory
a&en"ie# *n'er or atta"(e' to t(e DOTC (a-e to (ar!oni/e t(eir 'e"i#ion# an' a'o$t a "o!!on $(i+o#o$(y an' 'ire"tionB
W9EREAS% t(e &o-ern!ent $ro$o#e# to )*i+' on t(e #*""e##f*+ +i)era+i/ation !ea#*re# $*r#*e' o-er t(e +a#t fi-e year# an'
)rin& t(e tran#$ort #e"tor nearer to a )a+an"e' +on&er ter! re&*+atory fra!e,or6B
NOW% T9EREFORE% $*r#*ant to t(e $o,er# &rante' )y +a,# to t(e DOTC% t(e fo++o,in& $o+i"ie# an' $rin"i$+e# in t(e
e"ono!i" re&*+ation of +an'% air% an' ,ater tran#$ortation #er-i"e# are (ere)y a'o$te'A
1. Entry into an' e:it o*t of t(e in'*#try. Fo++o,in& t(e Con#tit*tiona+ 'i"t*! a&ain#t !ono$o+y% no fran"(i#e (o+'er #(a++ )e
$er!itte' to !aintain a !ono$o+y on any ro*te. A !ini!*! of t,o fran"(i#e (o+'er# #(a++ )e $er!itte' to o$erate on any
ro*te.
T(e re8*ire!ent# to &rant a "ertifi"ate to o$erate% or "ertifi"ate of $*)+i" "on-enien"e% #(a++ )eA $roof of Fi+i$ino "iti/en#(i$%
finan"ia+ "a$a)i+ity% $*)+i" nee'% an' #*ffi"ient in#*ran"e "o-er to $rote"t t(e ri'in& $*)+i".
n determining public need, the presumption of need for a service shall be deemed in favor of the applicant) The burden of
proving that there is no need for a proposed service shall be with the oppositor<s>.
In t(e intere#t of $ro-i'in& effi"ient $*)+i" tran#$ort #er-i"e#% t(e *#e of t(e ?$rior o$erator? an' t(e ?$riority of fi+in&? r*+e# #(a++
)e 'i#"ontin*e'. T(e ro*te !ea#*re' "a$a"ity te#t or ot(er #i!i+ar te#t# of 'e!an' for -e(i"+eF-e##e+ f+eet on any ro*te #(a++
)e *#e' on+y a# a &*i'e in ,ei&(in& t(e !erit# of ea"( fran"(i#e a$$+i"ation an' not a# a +i!it to t(e #er-i"e# offere'.
W(ere t(ere are +i!itation# in fa"i+itie#% #*"( a# "on&e#te' roa' #$a"e in *r)an area#% or at air$ort# an' $ort#% t(e *#e of
'e!an' !ana&e!ent !ea#*re# in "onfor!ity ,it( !ar6et $rin"i$+e# !ay )e "on#i'ere'.
T(e ri&(t of an o$erator to +ea-e t(e in'*#try i# re"o&ni/e' a# a )*#ine## 'e"i#ion% #*)5e"t on+y to t(e fi+in& of a$$ro$riate
noti"e an' fo++o,in& a $(a#e0o*t $erio'% to infor! t(e $*)+i" an' to !ini!i/e 'i#r*$tion of #er-i"e#.
2. Rate an' Fare Settin&. Frei&(t rate# #(a++ )e free' &ra'*a++y fro! &o-ern!ent "ontro+#.*assenger fares shall also be
deregulated, except for the lowest class of passenger service <normally third class passenger transport> for which the
government will fix indicative or reference fares) 7perators of particular services may fix their own fares within a range C=D
above and below the indicative or reference rate)
W(ere t(ere i# +a"6 of effe"ti-e "o!$etition for #er-i"e#% or on #$e"ifi" ro*te#% or for t(e tran#$ort of $arti"*+ar "o!!o'itie#%
!a:i!*! !an'atory frei&(t rate# or $a##en&er fare# #(a++ )e #et te!$orari+y )y t(e &o-ern!ent $en'in& a"tion# to in"rea#e
t(e +e-e+ of "o!$etition.
For *n#er-e' or #in&+e o$erator ro*te#% t(e &o-ern!ent #(a++ "ontra"t #*"( #er-i"e# in t(e !o#t a'-anta&eo*# ter!# to t(e
$*)+i" an' t(e &o-ern!ent% fo++o,in& $*)+i" )i'# for t(e #er-i"e#. T(e a'-i#a)i+ity of )i''in& o*t t(e #er-i"e# or *#in& ot(er
6in'# of in"enti-e# on #*"( ro*te# #(a++ )e #t*'ie' )y t(e &o-ern!ent.
3. S$e"ia+ In"enti-e# an' Finan"in& for F+eet A"8*i#ition. A# a !atter of $o+i"y% t(e &o-ern!ent #(a++ not en&a&e in #$e"ia+
finan"in& an' in"enti-e $ro&ra!#% in"+*'in& 'ire"t #*)#i'ie# for f+eet a"8*i#ition an' e:$an#ion. On+y ,(en t(e !ar6et
#it*ation ,arrant# &o-ern!ent inter-ention #(a++ $ro&ra!# of t(i# ty$e )e "on#i'ere'. E:i#tin& $ro&ra!# #(a++ )e $(a#e' o*t
&ra'*a++y.
T(e Lan' Tran#$ortation Fran"(i#in& an' Re&*+atory Eoar'% t(e Ci-i+ Aerona*ti"# Eoar'% t(e Mariti!e In'*#try A*t(ority are
(ere)y 'ire"te' to #*)!it to t(e Offi"e of t(e Se"retary% ,it(in forty0fi-e (1< 'ay# of t(i# Or'er% t(e 'etai+e' r*+e# an'
$ro"e'*re# for t(e I!$+e!entation of t(e $o+i"ie# (erein #et fort(. In t(e for!*+ation of #*"( r*+e#% t(e "on"erne' a&en"ie#
#(a++ )e &*i'e' )y t(e !o#t re"ent #t*'ie# on t(e #*)5e"t#% #*"( a# t(e Pro-in"ia+ Roa' Pa##en&er Tran#$ort St*'y% t(e Ci-i+
A-iation Ma#ter P+an% t(e Pre#i'entia+ Ta#6 For"e on t(e Inter0i#+an' S(i$$in& In'*#try% an' t(e Inter0i#+an' Liner S(i$$in&
Rate Rationa+i/ation St*'y.
For t(e "o!$+ian"e of a++ "on"erne'. (E!$(a#i# o*r#
On O"to)er 2% 1332% $*)+i" re#$on'ent Se"retary of t(e De$art!ent of Tran#$ortation an' Co!!*ni"ation# >e#*# E. .ar"ia%
>r. i##*e' a !e!oran'*! to t(e A"tin& C(air!an of t(e LTFRE #*&&e#tin& #,ift a"tion on t(e a'o$tion of r*+e# an'
$ro"e'*re# to i!$+e!ent a)o-e08*ote' De$art!ent Or'er No. 320<27 t(at +ai' 'o,n 'ere&*+ation an' ot(er +i)era+i/ation
$o+i"ie# for t(e tran#$ort #e"tor. Atta"(e' to t(e #ai' !e!oran'*! ,a# a re-i#e' 'raft of t(e re8*ire' r*+e# an' $ro"e'*re#
"o-erin& (i Entry Into an' E:it O*t of t(e In'*#try an' (ii Rate an' Fare Settin&% ,it( "o!!ent# an' #*&&e#tion# fro! t(e
Wor+' Ean6 in"or$orate' t(erein. Li6e,i#e% re#$+en'ent fro! t(e #ai' !e!oran'*! i# t(e #tate!ent of t(e DOTC Se"retary
32
t(at t(e a'o$tion of t(e r*+e# an' $ro"e'*re# i# a $re0re8*i#ite to t(e a$$ro-a+ of t(e E"ono!i" Inte&ration Loan fro! t(e
Wor+' Ean6.
5
On Fe)r*ary 17% 1333% t(e LTFRE i##*e' Me!oran'*! Cir"*+ar
No. 320;;3 $ro!*+&atin& t(e &*i'e+ine# for t(e i!$+e!entation of DOTC De$art!ent Or'er No. 320<27. T(e Cir"*+ar $ro-i'e#%
a!on& ot(er#% t(e fo++o,in& "(a++en&e' $ortion#A
::: ::: :::
IH. Po+i"y .*i'e+ine# on t(e I##*an"e of Certifi"ate of P*)+i" Con-enien"e.
T(e i##*an"e of a Certifi"ate of P*)+i" Con-enien"e i# 'eter!ine' )y $*)+i" nee'. The presumption of public need for a
service shall be deemed in favor of the applicant, while burden of proving that there is no need for the proposed service shall
be the oppositor'<s>.
::: ::: :::
H. Rate an' Fare Settin&
T(e "ontro+ in $ri"in& #(a++ )e +i)era+i/e' to intro'*"e $ri"e "o!$etition "o!$+e!entary ,it( t(e 8*a+ity of #er-i"e% #*)5e"t to
$rior noti"e an' $*)+i" (earin&. Fare# #(a++ not )e $ro-i#iona++y a*t(ori/e' ,it(o*t $*)+i" (earin&.
A. On t(e .enera+ Str*"t*re of Rate#
1. The existing authori/ed fare range system of plus or minus C= per cent for provincial buses and jeepneys shall be widened
to FGD and #F=D limit in CHHI with the authori/ed fare to be replaced by an indicative or reference rate as the basis for the
expanded fare range.
2. Fare #y#te!# for air"on )*#e# are +i)era+i/e' to "o-er fir#t "+a## an' $re!ier #er-i"e#.
::: ::: :::
(E!$(a#i# o*r#.
So!eti!e in Mar"(% 1331% $ri-ate re#$on'ent PEOAP% a-ai+in& it#e+f of t(e 'ere&*+ation $o+i"y of t(e DOTC a++o,in& $ro-in"ia+
)*# o$erator# to "o++e"t $+*# 2;G an' !in*# 2<G of t(e $re#"ri)e' fare ,it(o*t fir#t (a-in& fi+e' a $etition for t(e $*r$o#e an'
,it(o*t t(e )enefit of a $*)+i" (earin&% anno*n"e' a fare in"rea#e of t,enty (2;G $er"ent of t(e e:i#tin& fare#. Sai' in"rea#e'
fare# ,ere to )e !a'e effe"ti-e on Mar"( 14% 1331.
On Mar"( 14% 1331% $etitioner IM7 fi+e' a $etition )efore t(e LTFRE o$$o#in& t(e *$,ar' a'5*#t!ent of )*# fare#.
On Mar"( 21% 1331% t(e LTFRE i##*e' one of t(e a##ai+e' or'er# 'i#!i##in& t(e $etition for +a"6 of !erit. T(e 'i#$o#iti-e
$ortion rea'#A
PREMISES CONSIDERED% t(i# Eoar' after "on#i'erin& t(e ar&*!ent# of t(e $artie#% (ere)y DISMISSES FOR LACI OF
MERIT t(e $etition fi+e' in t(e a)o-e0entit+e' "a#e. T(i# $etition in t(i# "a#e ,a# re#o+-e' ,it( 'i#$at"( at t(e re8*e#t of
$etitioner to ena)+e it to i!!e'iate+y a-ai+ of t(e +e&a+ re!e'ie# or o$tion# it i# entit+e' *n'er e:i#tin& +a,#.
SO ORDERED.
6
9en"e% t(e in#tant $etition for certiorari ,it( an *r&ent $rayer for i##*an"e of a te!$orary re#trainin& or'er.
T(e Co*rt% on >*ne 2;% 1331% i##*e' a te!$orary re#trainin& or'er en5oinin&% $ro(i)itin& an' $re-entin& re#$on'ent# fro!
i!$+e!entin& t(e )*# fare rate in"rea#e a# ,e++ a# t(e 8*e#tione' or'er# an' !e!oran'*! "ir"*+ar#. T(i# !eant t(at
$ro-in"ia+ )*# fare# ,ere ro++e' )a"6 to t(e +e-e+# '*+y a*t(ori/e' )y t(e LTFRE $rior to Mar"( 14% 1331. A !oratori*! ,a#
+i6e,i#e enfor"e' on t(e i##*an"e of fran"(i#e# for t(e o$eration of )*#e#% 5ee$ney#% an' ta:i"a)#.
Petitioner IM7 an"(or# it# "+ai! on t,o (2 &ro*n'#. Fir#t% t(e a*t(ority &i-en )y re#$on'ent LTFRE to $ro-in"ia+ )*#
o$erator# to #et a fare ran&e of $+*# or !in*# fifteen (1<G $er"ent% +ater in"rea#e' to $+*# t,enty (2;G an' !in*# t,enty0fi-e
(02<G $er"ent% o-er an' a)o-e t(e e:i#tin& a*t(ori/e' fare ,it(o*t (a-in& to fi+e a $etition for t(e $*r$o#e% i# *n"on#tit*tiona+%
in-a+i' an' i++e&a+. Se"on'% t(e e#ta)+i#(!ent of a $re#*!$tion of $*)+i" nee' in fa-or of an a$$+i"ant for a $ro$o#e' tran#$ort
#er-i"e ,it(o*t (a-in& to $ro-e $*)+i" ne"e##ity% i# i++e&a+ for )ein& -io+ati-e of t(e P*)+i" Ser-i"e A"t an' t(e R*+e# of Co*rt.
In it# Co!!ent% $ri-ate re#$on'ent PEOAP% ,(i+e not a"t*a++y to*"(in& *$on t(e i##*e# rai#e' )y t(e $etitioner% 8*e#tion# t(e
,i#'o! an' t(e !anner )y ,(i"( t(e in#tant $etition ,a# fi+e'. It a##ert# t(at t(e $etitioner (a# no +e&a+ #tan'in& to #*e or (a#
no rea+ intere#t in t(e "a#e at )en"( an' in o)tainin& t(e re+ief# $raye' for.
In t(eir Co!!ent fi+e' )y t(e Offi"e of t(e So+i"itor .enera+% $*)+i" re#$on'ent# DOTC Se"retary >e#*# E. .ar"ia% >r. an' t(e
LTFRE a##e-erate t(at t(e $etitioner 'oe# not (a-e t(e #tan'in& to !aintain t(e in#tant #*it. T(ey f*rt(er "+ai! t(at it i# ,it(in
DOTC an' LTFRE=# a*t(ority to #et a fare ran&e #"(e!e an' e#ta)+i#( a $re#*!$tion of $*)+i" nee' in a$$+i"ation# for
"ertifi"ate# of $*)+i" "on-enien"e.
We fin' t(e in#tant $etition i!$re##e' ,it( !erit.
At t(e o*t#et% t(e t(re#(o+' i##*e of locus standi !*#t )e #tr*"6. Petitioner IM7 (a# t(e #tan'in& to #*e.
T(e re8*ire!ent of locus standi in(ere# fro! t(e 'efinition of 5*'i"ia+ $o,er. Se"tion 1 of Arti"+e HIII of t(e Con#tit*tion
$ro-i'e#A
::: ::: :::
>*'i"ia+ $o,er in"+*'e# t(e '*ty of t(e "o*rt# of 5*#ti"e to #ett+e a"t*a+ "ontro-er#ie# in-o+-in& ri&(t# ,(i"( are +e&a++y
'e!an'a)+e an' enfor"ea)+e% an' to 'eter!ine ,(et(er or not t(ere (a# )een a &ra-e a)*#e of 'i#"retion a!o*ntin& to +a"6
or e:"e## of 5*ri#'i"tion on t(e $art of any )ran"( or in#tr*!enta+ity of t(e .o-ern!ent.
In 8amb v) *hipps%
7
,e r*+e' t(at 5*'i"ia+ $o,er i# t(e $o,er to (ear an' 'e"i'e "a*#e# $en'in& )et,een $artie# ,(o (a-e
t(e ri&(t to #*e in t(e "o*rt# of +a, an' e8*ity. Coro++ary to t(i# $ro-i#ion i# t(e $rin"i$+e of locus standi of a $arty +iti&ant. One
,(o i# 'ire"t+y affe"te' )y an' ,(o#e intere#t i# i!!e'iate an' #*)#tantia+ in t(e "ontro-er#y (a# t(e #tan'in& to #*e. T(e
r*+e t(erefore re8*ire# t(at a $arty !*#t #(o, a $er#ona+ #ta6e in t(e o*t"o!e of t(e "a#e or an in5*ry to (i!#e+f t(at "an )e
re're##e' )y a fa-ora)+e 'e"i#ion #o a# to ,arrant an in-o"ation of t(e "o*rt=# 5*ri#'i"tion an' to 5*#tify t(e e:er"i#e of t(e
"o*rt=# re!e'ia+ $o,er# in (i# )e(a+f.
8
In t(e "a#e at )en"(% $etitioner% ,(o#e !e!)er# (a' #*ffere' an' "ontin*e to #*ffer &ra-e an' irre$ara)+e in5*ry an' 'a!a&e
fro! t(e i!$+e!entation of t(e 8*e#tione' !e!oran'a% "ir"*+ar# an'For or'er#% (a# #(o,n t(at it (a# a "+ear +e&a+ ri&(t t(at
,a# -io+ate' an' "ontin*e# to )e -io+ate' ,it( t(e enfor"e!ent of t(e "(a++en&e' !e!oran'a% "ir"*+ar# an'For or'er#. IM7
!e!)er#% ,(o a-ai+ of t(e *#e of )*#e#% train# an' 5ee$ney# e-ery'ay% are 'ire"t+y affe"te' )y t(e )*r'en#o!e "o#t of
ar)itrary in"rea#e in $a##en&er fare#. T(ey are $art of t(e !i++ion# of "o!!*ter# ,(o "o!$ri#e t(e ri'in& $*)+i". Certain+y%
t(eir ri&(t# !*#t )e $rote"te'% not ne&+e"te' nor i&nore'.
A##*!in& arguendo t(at $etitioner i# not $o##e##e' of t(e #tan'in& to #*e% t(i# "o*rt i# rea'y to )r*#( a#i'e t(i# )arren
$ro"e'*ra+ infir!ity an' re"o&ni/e t(e +e&a+ #tan'in& of t(e $etitioner in -ie, of t(e tran#"en'enta+ i!$ortan"e of t(e i##*e#
rai#e'. An' t(i# a"t of +i)era+ity i# not ,it(o*t 5*'i"ia+ $re"e'ent. A# ear+y a# t(e'mergency *owers !ases% t(i# Co*rt (a'
e:er"i#e' it# 'i#"retion an' ,ai-e' t(e re8*ire!ent of $ro$er $arty. In t(e re"ent "a#e of Jilosbayan, nc), et al) v) Teofisto
2uingona, 5r), et a+.%
9
,e r*+e' in t(e #a!e +ine# an' en*!erate' #o!e of t(e "a#e# ,(ere t(e #a!e $o+i"y ,a# a'o$te'% vi/A
. . . A $arty=# #tan'in& )efore t(i# Co*rt i# a $ro"e'*ra+ te"(ni"a+ity ,(i"( it !ay% in t(e e:er"i#e of it# 'i#"retion% #et a#i'e in
-ie, of t(e i!$ortan"e of t(e i##*e# rai#e'. In t(e +an'!ar6 'mergency *owers !ases% J..R. No. L02;11 (Araneta -.
33
Din&+a#anB ..R. No. L027<4 (Araneta-. An&e+e#B ..R. No. L03;<1 (Ro'ri&*e/ -. Te#orero 'e Fi+i$ina#B ..R. No. L03;<<
(.*errero -. Co!!i##ioner of C*#to!#B an' ..R. No. L03;<4 (Earre'o -. Co!!i##ion on E+e"tion#% 21 P(i+. 342 (1313K% t(i#
Co*rt )r*#(e' a#i'e t(i# te"(ni"a+ity )e"a*#e ?t(e tran#"en'enta+ i!$ortan"e to t(e $*)+i" of t(e#e "a#e# 'e!an'# t(at t(ey
)e #ett+e' $ro!$t+y an' 'efinite+y% )r*#(in& a#i'e% if ,e !*#t% te"(ni"a+itie# of $ro"e'*re. (A-e+ino -#. C*en"o% ..R. No. L0
2421.? In#ofar a# ta:$ayer#= #*it# are "on"erne'% t(i# Co*rt (a' 'e"+are' t(at it ?i# not 'e-oi' of 'i#"retion a# to ,(et(er or
not it #(o*+' )e entertaine'%? (Tan -. Ma"a$a&a+% 13 SCRA 477% 42; J1372K or t(at it ?en5oy# an o$en 'i#"retion to entertain
t(e #a!e or not.? JSani'a' -. COMELEC% 73 SCRA 333 (1374K.
::: ::: :::
In +ine ,it( t(e +i)era+ $o+i"y of t(i# Co*rt on locus standi% or'inary ta:$ayer#% !e!)er# of Con&re##% an' e-en a##o"iation of
$+anter#% an'
non0$rofit "i-i" or&ani/ation# ,ere a++o,e' to initiate an' $ro#e"*te a"tion# )efore t(i# "o*rt to 8*e#tion t(e "on#tit*tiona+ity or
-a+i'ity of +a,#% a"t#% 'e"i#ion#% r*+in&#% or or'er# of -ario*# &o-ern!ent a&en"ie# or in#tr*!enta+itie#. A!on& #*"( "a#e#
,ere t(o#e a##ai+in& t(e "on#tit*tiona+ity of (a R.A. No. 3234 in#ofar a# it a++o,# retire!ent &rat*ity an' "o!!*tation of
-a"ation an' #i"6 +ea-e to Senator# an' Re$re#entati-e# an' to e+e"ti-e offi"ia+# of )ot( 9o*#e# of Con&re## (P(i+i$$ine
Con#tit*tion A##o"iation% In". -. .i!ene/% 1< SCRA 173 J134<KB () E:e"*ti-e Or'er No. 221% i##*e' )y Pre#i'ent Cora/on C.
A8*ino on 2< >*+y 1327% ,(i"( a++o,e' !e!)er# of t(e "a)inet% t(eir *n'er#e"retarie#% an' a##i#tant #e"retarie# to (o+' ot(er
&o-ern!ent offi"e# or $o#ition# (Ci-i+ Li)ertie# 7nion -. E:e"*ti-e Se"retary% 131 SCRA 317 J1331KB (" t(e a*to!ati"
a$$ro$riation for 'e)t #er-i"e in t(e .enera+ A$$ro$riation# A"t (.*in&ona -. Cara&*e% 134 SCRA 221 J1331KB (' R.A. No.
7;<4 on t(e (o+'in& of 'e#yn"(roni/e' e+e"tion# (O#!eWa -. Co!!i##ion on E+e"tion#% 133 SCRA 7<; J1331KB (e P.D. No.
1243 (t(e "(arter of t(e P(i+i$$ine A!*#e!ent an' .a!in& Cor$oration on t(e &ro*n' t(at it i# "ontrary to !ora+#% $*)+i"
$o+i"y% an' or'er (Ea#"o -. P(i+i$$ine A!*#e!ent an' .a!in& Cor$.% 137 SCRA <2 J1331KB an' (f R.A. No. 437<%
e#ta)+i#(in& t(e P(i+i$$ine Nationa+ Po+i"e. (Car$io -. E:e"*ti-e Se"retary% 2;4 SCRA 23; J1332K.
Ot(er "a#e# ,(ere ,e (a-e fo++o,e' a +i)era+ $o+i"y re&ar'in& locus standi in"+*'e t(o#e atta"6in& t(e -a+i'ity or +e&a+ity of (a
an or'er a++o,in& t(e i!$ortation of ri"e in t(e +i&(t of t(e $ro(i)ition i!$o#e' )y R.A. No. 31<2 (I+oi+o Pa+ay an' Corn P+anter#
A##o"iation% In". -. Fe+i"iano% 13 SCRA 377 J134<KB () P.D. No#. 331 an' 1;33 in#ofar a# t(ey $ro$o#e' a!en'!ent# to t(e
Con#tit*tion an' P.D. No. 1;31 in#ofar a# it 'ire"te' t(e COMELEC to #*$er-i#e% "ontro+% (o+'% an' "on'*"t t(e referen'*!0
$+e)i#"ite on 14 O"to)er 1374 (Sani'a' -. Co!!i##ion on E+e"tion#% supraB (" t(e )i''in& for t(e #a+e of t(e 3%173 #8*are
!eter# of +an' at Ro$$on&i% Minato06*% To6yo% >a$an (La*re+ -. .ar"ia% 127 SCRA 737 J133;KB (' t(e a$$ro-a+ ,it(o*t
(earin& )y t(e Eoar' of In-e#t!ent# of t(e a!en'e' a$$+i"ation of t(e Eataan Petro"(e!i"a+ Cor$oration to tran#fer t(e #ite
of it# $+ant fro! Eataan to Eatan&a# an' t(e -a+i'ity of #*"( tran#fer an' t(e #(ift of fee'#to"6 fro! na$(t(a on+y to na$(t(a
an'For +i8*efie' $etro+e*! &a# (.ar"ia -. Eoar' of In-e#t!ent#% 177 SCRA 371 J1323KB .ar"ia -. Eoar' of In-e#t!ent#% 131
SCRA 222 J133;KB (e t(e 'e"i#ion#% or'er#% r*+in&#% an' re#o+*tion# of t(e E:e"*ti-e Se"retary% Se"retary of Finan"e%
Co!!i##ioner of Interna+ Re-en*e% Co!!i##ioner of C*#to!#% an' t(e Fi#"a+ In"enti-e# Re-ie, Eoar' e:e!$tin& t(e
Nationa+ Po,er Cor$oration fro! in'ire"t ta: an' '*tie# (Ma"e'a -. Ma"arai&% 137 SCRA 771 J1331KB (f t(e or'er# of t(e
Ener&y Re&*+atory Eoar' of < an' 4 De"e!)er 133; on t(e &ro*n' t(at t(e (earin&# "on'*"te' on t(e #e"on' $ro-i#iona+
in"rea#e in oi+ $ri"e# 'i' not a++o, t(e $etitioner #*)#tantia+ "ro##0e:a!inationB (Ma"e'a -. Ener&y Re&*+atory Eoar'% 133
SCRA 1<1 J1331KB (& E:e"*ti-e Or'er No. 172 ,(i"( +e-ie' a #$e"ia+ '*ty of P;.3< $er +iter of i!$orte' oi+ $ro'*"t# (.ar"ia
-. E:e"*ti-e Se"retary% 211 SCRA 213 J1332KB (( re#o+*tion# of t(e Co!!i##ion on E+e"tion# "on"ernin& t(e a$$ortion!ent%
)y 'i#tri"t% of t(e n*!)er of e+e"ti-e !e!)er# of San&&*nian# (De .*ia -#. Co!!i##ion on E+e"tion#% 2;2 SCRA 12; J1332KB
an' (i !e!oran'*! or'er# i##*e' )y a Mayor affe"tin& t(e C(ief of Po+i"e of Pa#ay City (Pa#ay La, an' Con#"ien"e 7nion%
In". -. C*neta% 1;1 SCRA 442 J132;K.
In t(e 137< "a#e of Aquino v) !ommission on 'lections (42 SCRA 27< J137<K% t(i# Co*rt% 'e#$ite it# *ne8*i-o"a+ r*+in& t(at
t(e $etitioner# t(erein (a' no $er#ona+ity to fi+e t(e $etition% re#o+-e' ne-ert(e+e## to $a## *$on t(e i##*e# rai#e' )e"a*#e of
t(e far0rea"(in& i!$+i"ation# of t(e $etition. We 'i' no +e## in &e 2uia v) !7$'8'! <"upra> ,(ere% a+t(o*&( ,e 'e"+are' t(at
De .*ia ?'oe# not a$$ear to (a-e locus standi% a #tan'in& in +a,% a $er#ona+ or #*)#tantia+ intere#t%? ,e )r*#(e' a#i'e t(e
$ro"e'*ra+ infir!ity ?"on#i'erin& t(e i!$ortan"e of t(e i##*e in-o+-e'% "on"ernin& a# it 'oe# t(e $o+iti"a+ e:er"i#e of 8*a+ifie'
-oter# affe"te' )y t(e a$$ortion!ent% an' $etitioner a++e&in& a)*#e of 'i#"retion an' -io+ation of t(e Con#tit*tion )y
re#$on'ent.?
No, on t(e !erit# of t(e "a#e.
7n the fare range scheme.
Se"tion 14(" of t(e P*)+i" Ser-i"e A"t% a# a!en'e'% rea'#A
Se". 14. *roceedings of the !ommission, upon notice and hearing. @ T(e Co!!i##ion #(a++ (a-e $o,er% upon proper notice
and hearing in a""or'an"e ,it( t(e r*+e# an' $ro-i#ion# of t(i# A"t% #*)5e"t to t(e +i!itation# an' e:"e$tion# !entione' an'
#a-in& $ro-i#ion# to t(e "ontraryA
::: ::: :::
(" To fi: an' 'eter!ine in'i-i'*a+ or 5oint rate#% to++#% "(ar&e#% "+a##ifi"ation#% or #"(e'*+e# t(ereof% a# ,e++ a# "o!!*tation%
!i+ea&e 6i+o!etra&e% an' ot(er #$e"ia+ rate# ,(i"( #(a++ )e i!$o#e'% o)#er-e'% an' fo++o,e' t(ereafter )y any $*)+i"
#er-i"eA *rovided% T(at t(e Co!!i##ion !ay% in it# 'i#"retion% a$$ro-e rate# $ro$o#e' )y $*)+i" #er-i"e# $ro-i#iona++y an'
,it(o*t ne"e##ity of any (earin&B )*t it #(a++ "a++ a (earin& t(ereon ,it(in t(irty 'ay# t(ereafter% *$on $*)+i"ation an' noti"e to
t(e "on"ern# o$eratin& in t(e territory affe"te'A *rovided, further% T(at in "a#e t(e $*)+i" #er-i"e e8*i$!ent of an o$erator i#
*#e' $rin"i$a++y or #e"on'ari+y for t(e $ro!otion of a $ri-ate )*#ine##% t(e net $rofit# of #ai' $ri-ate )*#ine## #(a++ )e
"on#i'ere' in re+ation ,it( t(e $*)+i" #er-i"e of #*"( o$erator for t(e $*r$o#e of fi:in& t(e rate#. (E!$(a#i# o*r#.
::: ::: :::
7n'er t(e fore&oin& $ro-i#ion% t(e Le&i#+at*re 'e+e&ate' to t(e 'ef*n"t P*)+i" Ser-i"e Co!!i##ion t(e $o,er of fi:in& t(e
rate# of $*)+i" #er-i"e#. Re#$on'ent LTFRE% t(e e:i#tin& re&*+atory )o'y to'ay% i# +i6e,i#e -e#te' ,it( t(e #a!e *n'er
E:e"*ti-e Or'er No. 2;2 'ate' >*ne 13% 1327. Se"tion <(" of t(e #ai' e:e"*ti-e or'er a*t(ori/e# LTFRE ?to 'eter!ine%
$re#"ri)e% a$$ro-e an' $erio'i"a++y re-ie, an' a'5*#t% rea#ona)+e fare#% rate# an' ot(er re+ate' "(ar&e#% re+ati-e to t(e
o$eration of $*)+i" +an' tran#$ortation #er-i"e# $ro-i'e' )y !otori/e' -e(i"+e#.?
S*"( 'e+e&ation of +e&i#+ati-e $o,er to an a'!ini#trati-e a&en"y i# $er!itte' in or'er to a'a$t to t(e in"rea#in& "o!$+e:ity of
!o'ern +ife. A# #*)5e"t# for &o-ern!enta+ re&*+ation !*+ti$+y% #o 'oe# t(e 'iffi"*+ty of a'!ini#terin& t(e +a,#. 9en"e%
#$e"ia+i/ation e-en in +e&i#+ation (a# )e"o!e ne"e##ary. .i-en t(e ta#6 of 'eter!inin& #en#iti-e an' 'e+i"ate !atter# a#
ro*te0fi:in& an' rate0!a6in& for t(e tran#$ort #e"tor% t(e re#$on#i)+e re&*+atory )o'y i# entr*#te' ,it( t(e $o,er of
#*)or'inate +e&i#+ation. Wit( t(i# a*t(ority% an a'!ini#trati-e )o'y an' in t(i# "a#e% t(e LTFRE% !ay i!$+e!ent )roa' $o+i"ie#
+ai' 'o,n in a #tat*te )y ?fi++in& in? t(e 'etai+# ,(i"( t(e Le&i#+at*re !ay neit(er (a-e ti!e or "o!$eten"e to $ro-i'e.
9o,e-er% no,(ere *n'er t(e afore#ai' $ro-i#ion# of +a, are t(e re&*+atory )o'ie#% t(e PSC an' LTFRE a+i6e% a*t(ori/e' to
'e+e&ate t(at $o,er to a "o!!on "arrier% a tran#$ort o$erator% or ot(er $*)+i" #er-i"e.
31
In t(e "a#e at )en"(% t(e a*t(ority &i-en )y t(e LTFRE to t(e $ro-in"ia+ )*# o$erator# to #et a fare ran&e o-er an' a)o-e t(e
a*t(ori/e' e:i#tin& fare% i# i++e&a+ an' in-a+i' a# it i# tanta!o*nt to an *n'*e 'e+e&ation of +e&i#+ati-e a*t(ority. *otestas
delegata non delegari potest. W(at (a# )een 'e+e&ate' "annot )e 'e+e&ate'. T(i# 'o"trine i# )a#e' on t(e et(i"a+ $rin"i$+e
t(at #*"( a 'e+e&ate' $o,er "on#tit*te# not on+y a ri&(t )*t a '*ty to )e $erfor!e' )y t(e 'e+e&ate t(ro*&( t(e in#tr*!enta+ity
of (i# o,n 5*'&!ent an' not t(ro*&( t(e inter-enin& !in' of anot(er.
10
A f*rt(er 'e+e&ation of #*"( $o,er ,o*+' in'ee'
"on#tit*te a ne&ation of t(e '*ty in -io+ation of t(e tr*#t re$o#e' in t(e 'e+e&ate !an'ate' to 'i#"(ar&e it 'ire"t+y.
11
T(e $o+i"y
of a++o,in& t(e $ro-in"ia+ )*# o$erator# to "(an&e an' in"rea#e t(eir fare# at ,i++ ,o*+' re#*+t not on+y to a "(aoti" #it*ation )*t
to an anar"(i" #tate of affair#. T(i# ,o*+' +ea-e t(e ri'in& $*)+i" at t(e !er"y of tran#$ort o$erator# ,(o !ay in"rea#e fare#
e-ery (o*r% e-ery 'ay% e-ery !ont( or e-ery year% ,(ene-er it $+ea#e# t(e! or ,(ene-er t(ey 'ee! it ?ne"e##ary? to 'o #o.
In *anay Autobus !o) v) *hilippine %ailway !o.%
12
,(ere re#$on'ent P(i+i$$ine Rai+,ay Co. ,a# &rante' )y t(e P*)+i" Ser-i"e
Co!!i##ion t(e a*t(ority to "(an&e it# frei&(t rate# at ,i++% t(i# Co*rt "ate&ori"a++y 'e"+are' t(atA
In o*r o$inion% the *ublic "ervice !ommission was not authori/ed by law to delegate to the *hilippine %ailway !o) the power
of altering its freight rates whenever it should find it necessary to do so in order to meet the competition of road trucks and
autobuses, or to change its freight rates at will, or to regard its present rates as maximum rates, and to fix lower rates
whenever in the opinion of the *hilippine %ailway !o) it would be to its advantage to do so)
T(e !ere re"ita+ of t(e +an&*a&e of t(e a$$+i"ation of t(e P(i+i$$ine Rai+,ay Co. i# eno*&( to #(o, t(at it i# *ntena)+e. The
8egislature has delegated to the *ublic "ervice !ommission the power of fixing the rates of public services, but it has not
authori/ed the *ublic "ervice !ommission to delegate that power to a common carrier or other public service. T(e rate# of
$*)+i" #er-i"e# +i6e t(e P(i+i$$ine Rai+,ay Co. (a-e )een a$$ro-e' or fi:e' )y t(e P*)+i" Ser-i"e Co!!i##ion% an' any
"(an&e in #*"( rate# !*#t )e a*t(ori/e' or a$$ro-e' )y t(e P*)+i" Ser-i"e Co!!i##ion after t(ey (a-e )een #(o,n to )e 5*#t
an' rea#ona)+e. T(e $*)+i" #er-i"e !ay% of "o*r#e% $ro$o#e ne, rate#% a# t(e P(i+i$$ine Rai+,ay Co. 'i' in "a#e No. 31227%
)*t it "annot +a,f*++y !a6e #ai' ne, rate# effe"ti-e ,it(o*t t(e a$$ro-a+ of t(e P*)+i" Ser-i"e Co!!i##ion% an' t(e P*)+i"
Ser-i"e Co!!i##ion it#e+f "annot a*t(ori/e a $*)+i" #er-i"e to enfor"e ne, rate# ,it(o*t t(e $rior a$$ro-a+ of #ai' rate# )y t(e
"o!!i##ion. T(e "o!!i##ion !*#t a$$ro-e ne, rate# ,(en t(ey are #*)!itte' to it% if t(e e-i'en"e #(o,# t(e! to )e 5*#t
an' rea#ona)+e% ot(er,i#e it !*#t 'i#a$$ro-e t(e!. C+ear+y% t(e "o!!i##ion "annot 'eter!ine in a'-an"e ,(et(er or not t(e
ne, rate# of t(e P(i+i$$ine Rai+,ay Co. ,i++ )e 5*#t an' rea#ona)+e% )e"a*#e it 'oe# not 6no, ,(at t(o#e rate# ,i++ )e.
In t(e $re#ent "a#e t(e P(i+i$$ine Rai+,ay Co. in effe"t a#6e' for $er!i##ion to "(an&e it# frei&(t rate# at ,i++. It !ay "(an&e
t(e! e-ery 'ay or e-ery (o*r% ,(ene-er it 'ee!# it ne"e##ary to 'o #o in or'er to !eet "o!$etition or ,(ene-er in it# o$inion
it ,o*+' )e to it# a'-anta&e. S*"( a $ro"e'*re ,o*+' "reate a !o#t *n#ati#fa"tory #tate of affair# an' +ar&e+y 'efeat t(e
$*r$o#e# of t(e $*)+i" #er-i"e +a,.
13
(E!$(a#i# o*r#.
One -erita)+e "on#e8*en"e of t(e 'ere&*+ation of tran#$ort fare# i# a compounded fare. If tran#$ort o$erator# ,i++ )e
a*t(ori/e' to i!$o#e an' "o++e"t an a''itiona+ a!o*nt e8*i-a+ent to 2;G o-er an' a)o-e t(e a*t(ori/e' fare o-er a $erio' of
ti!e% t(i# ,i++ *n'*+y $re5*'i"e a "o!!*ter ,(o ,i++ )e !a'e to $ay a fare t(at (a# )een "o!$*te' in a !anner #i!i+ar to
t(o#e of "o!$o*n'e' )an6 intere#t rate#.
Pi"t*re t(i# #it*ation. On De"e!)er 11% 133;% t(e LTFRE a*t(ori/e' $ro-in"ia+ )*# o$erator# to "o++e"t a t(irty0#e-en (P;.37
"enta-o $er 6i+o!eter fare for or'inary )*#e#. At t(e #a!e ti!e% t(ey ,ere a++o,e' to i!$o#e an' "o++e"t a fare ran&e of $+*#
or !in*# 1<G o-er t(e a*t(ori/e' rate. T(*# P;.37 "enta-o $er 6i+o!eter a*t(ori/e' fare $+*# P;.;< "enta-o# (,(i"( i# 1<G
of P;.37 "enta-o# i# e8*i-a+ent to P;.12 "enta-o#% t(e a++o,e' rate in 133;. S*$$o#in& t(e LTFRE &rant# anot(er fi-e
(P;.;< "enta-o in"rea#e $er 6i+o!eter in 1331% t(en% t(e )a#e or referen"e for "o!$*tation ,o*+' (a-e to )e P;.17 "enta-o#
(,(i"( i# P;.12 Y P;.;< "enta-o#. If )*# o$erator# ,i++ e:er"i#e t(eir a*t(ority to i!$o#e an a''itiona+ 2;G o-er an' a)o-e
t(e a*t(ori/e' fare% t(en t(e fare to )e "o++e"te' #(a++ a!o*nt to P;.<4 (t(at i#% P;.17 a*t(ori/e' LTFRE rate $+*# 2;G of
P;.17 ,(i"( i# P;.23. In effe"t% "o!!*ter# ,i++ )e "ontin*o*#+y #*)5e"te'% not on+y to a 'o*)+e fare a'5*#t!ent )*t to a
"o!$o*n'in& fare a# ,e++. On t(eir $art% tran#$ort o$erator# #(a++ en5oy a )i&&er "(*n6 of t(e $ie. A#i'e fro! fare in"rea#e
a$$+ie' for% t(ey "an #ti++ "o++e"t an a''itiona+ a!o*nt )y -irt*e of t(e a*t(ori/e' fare ran&e. Mat(e!ati"a++y% t(e #it*ation
tran#+ate# into t(e fo++o,in&A
CearAA LTFRE a*t(ori/e' Fare Ran&e Fare to )e
rateAAA "o++e"te' $er
6i+o!eter
133; P;.37 1<G (P;.;< P;.12
1331 P;.12 Y ;.;< X ;.17 2;G (P;.;3 P;.<4
1332 P;.<4 Y ;.;< X ;.41 2;G (P;.12 P;.73
2;;2 P;.73 Y ;.;< X ;.72 2;G (P;.14 P;.31
Moreo-er% rate !a6in& or rate fi:in& i# not an ea#y ta#6. It i# a 'e+i"ate an' #en#iti-e &o-ern!ent f*n"tion t(at re8*ire#
'e:terity of 5*'&!ent an' #o*n' 'i#"retion ,it( t(e #ett+e' &oa+ of arri-in& at a 5*#t an' rea#ona)+e rate a""e$ta)+e to )ot( t(e
$*)+i" *ti+ity an' t(e $*)+i". Se-era+ fa"tor#% in fa"t% (a-e to )e ta6en into "on#i'eration )efore a )a+an"e "o*+' )e a"(ie-e'. A
rate #(o*+' not )e "onfi#"atory a# ,o*+' $+a"e an o$erator in a #it*ation ,(ere (e ,i++ "ontin*e to o$erate at a +o##. 9en"e%
t(e rate #(o*+' ena)+e $*)+i" *ti+itie# to &enerate re-en*e# #*ffi"ient to "o-er o$erationa+ "o#t# an' $ro-i'e rea#ona)+e ret*rn
on t(e in-e#t!ent#. On t(e ot(er (an'% a rate ,(i"( i# too (i&( )e"o!e# 'i#"ri!inatory. It i# "ontrary to $*)+i" intere#t. A rate%
t(erefore% !*#t )e rea#ona)+e an' fair an' !*#t )e affordable to t(e en' *#er ,(o ,i++ *ti+i/e t(e #er-i"e#.
.i-en t(e "o!$+e:ity of t(e nat*re of t(e f*n"tion of rate0fi:in& an' it# far0rea"(in& effe"t# on !i++ion# of "o!!*ter#%
&o-ern!ent !*#t not re+in8*i#( t(i# i!$ortant f*n"tion in fa-or of t(o#e ,(o ,o*+' )enefit an' $rofit fro! t(e in'*#try. Neit(er
#(o*+' t(e re8*i#ite noti"e an' (earin& )e 'one a,ay ,it(. T(e $eo$+e% re$re#ente' )y re$*ta)+e o$$o#itor#% 'e#er-e to )e
&i-en f*++ o$$ort*nity to )e (ear' in t(eir o$$o#ition to any fare in"rea#e.
T(e $re#ent a'!ini#trati-e $ro"e'*re%
14
to o*r !in'% a+rea'y !irror# an or'er+y an' #ati#fa"tory arran&e!ent for a++ $artie#
in-o+-e'. To 'o a,ay ,it( #*"( a $ro"e'*re an' a++o, 5*#t one $arty% an intere#te' $arty at t(at% to 'eter!ine ,(at t(e rate
#(o*+' )e% ,i++ *n'er!ine t(e ri&(t of t(e ot(er $artie# to '*e $ro"e##. T(e $*r$o#e of a (earin& i# $re"i#e+y to 'eter!ine ,(at
a 5*#t an' rea#ona)+e rate i#.
15
Di#"ar'in& #*"( $ro"e'*ra+ an' "on#tit*tiona+ ri&(t i# "ertain+y ini!i"a+ to o*r f*n'a!enta+ +a,
an' to $*)+i" intere#t.
7n the presumption of public need.
A "ertifi"ate of $*)+i" "on-enien"e (CPC i# an a*t(ori/ation &rante' )y t(e LTFRE for t(e o$eration of +an' tran#$ortation
#er-i"e# for $*)+i" *#e a# re8*ire' )y +a,. P*r#*ant to Se"tion 14(a of t(e P*)+i" Ser-i"e A"t% a# a!en'e'% t(e fo++o,in&
re8*ire!ent# !*#t )e !et )efore a CPC !ay )e &rante'% to ,itA (i t(e a$$+i"ant !*#t )e a "iti/en of t(e P(i+i$$ine#% or a
"or$oration or "o0$artner#(i$% a##o"iation or 5oint0#to"6 "o!$any "on#tit*te' an' or&ani/e' *n'er t(e +a,# of t(e P(i+i$$ine#%
at +ea#t 4; per centum of it# #to"6 or $ai'0*$ "a$ita+ !*#t )e+on& entire+y to "iti/en# of t(e P(i+i$$ine#B (ii t(e a$$+i"ant !*#t
)e finan"ia++y "a$a)+e of *n'erta6in& t(e $ro$o#e' #er-i"e an' !eetin& t(e re#$on#i)i+itie# in"i'ent to it# o$erationB an'
(iii the applicant must prove that the operation of the public service proposed and the authori/ation to do business will
3<
promote the public interest in a proper and suitable manner. It i# *n'er#too' t(at t(ere !*#t )e $ro$er noti"e an' (earin&
)efore t(e PSC "an e:er"i#e it# $o,er to i##*e a CPC.
W(i+e a'o$tin& in toto t(e fore&oin& re8*i#ite# for t(e i##*an"e of a CPC% LTFRE Me!oran'*! Cir"*+ar No. 320;;3% Part IH%
$ro-i'e# for yet in"on&r*o*# an' "ontra'i"tory $o+i"y &*i'e+ine on t(e i##*an"e of a CPC. T(e &*i'e+ine# #tate#A
T(e i##*an"e of a Certifi"ate of P*)+i" Con-enien"e i# 'eter!ine' )y $*)+i" nee'. The presumption of public need for a
service shall be deemed in favor of the applicant, while the burden of proving that there is no need for the proposed service
shall be the oppositor's) (E!$(a#i# o*r#.
T(e a)o-e08*ote' $ro-i#ion i# entire+y in"o!$ati)+e an' in"on#i#tent ,it( Se"tion 14("(iii of t(e P*)+i" Ser-i"e A"t ,(i"(
re8*ire# t(at )efore a CPC ,i++ )e i##*e'% t(e a$$+i"ant !*#t $ro-e )y $ro$er noti"e an' (earin& t(at t(e o$eration of t(e
$*)+i" #er-i"e $ro$o#e' ,i++ $ro!ote $*)+i" intere#t in a $ro$er an' #*ita)+e !anner. On t(e "ontrary% t(e $o+i"y &*i'e+ine
#tate# t(at t(e $re#*!$tion of $*)+i" nee' for a $*)+i" #er-i"e #(a++ )e 'ee!e' in fa-or of t(e a$$+i"ant. In "a#e of "onf+i"t
)et,een a #tat*te an' an a'!ini#trati-e or'er% t(e for!er !*#t $re-ai+.
Ey it# ter!#% $*)+i" "on-enien"e or ne"e##ity &enera++y !ean# #o!et(in& fittin& or #*ite' to t(e $*)+i" nee'.
16
A# one of t(e
)a#i" re8*ire!ent# for t(e &rant of a CPC% $*)+i" "on-enien"e an' ne"e##ity e:i#t# ,(en t(e $ro$o#e' fa"i+ity or #er-i"e
!eet# a rea#ona)+e ,ant of t(e $*)+i" an' #*$$+y a nee' ,(i"( t(e e:i#tin& fa"i+itie# 'o not a'e8*ate+y #*$$+y. T(e e:i#ten"e
or
non0e:i#ten"e of $*)+i" "on-enien"e an' ne"e##ity i# t(erefore a 8*e#tion of fa"t t(at !*#t )e e#ta)+i#(e' )y e-i'en"e% rea+
an'For te#ti!onia+B e!$iri"a+ 'ataB #tati#ti"# an' #*"( ot(er !ean# ne"e##ary% in a $*)+i" (earin& "on'*"te' for t(at $*r$o#e.
T(e o)5e"t an' $*r$o#e of #*"( $ro"e'*re% a!on& ot(er t(in&#% i# to +oo6 o*t for% an' $rote"t% t(e intere#t# of )ot( t(e $*)+i"
an' t(e e:i#tin& tran#$ort o$erator#.
Heri+y% t(e $o,er of a re&*+atory )o'y to i##*e a CPC i# fo*n'e' on t(e "on'ition t(at after f*++0're## (earin& an' in-e#ti&ation%
it #(a++ fin'% a# a fa"t% t(at t(e $ro$o#e' o$eration i# for t(e "on-enien"e of t(e $*)+i".
17
Ea#i" "on-enien"e i# t(e $ri!ary
"on#i'eration for ,(i"( a CPC i# i##*e'% an' t(at fa"t a+one !*#t )e "on#i#tent+y )orne in !in'. A+#o% e:i#tin& o$erator# in
#*)5e"t ro*te# !*#t )e &i-en an o$$ort*nity to offer $roof an' o$$o#e t(e a$$+i"ation. T(erefore% an a$$+i"ant !*#t% at a++
ti!e#% )e re8*ire' to $ro-e (i# "a$a"ity an' "a$a)i+ity to f*rni#( t(e #er-i"e ,(i"( (e (a# *n'erta6en to
ren'er.
18
An' a++ t(i# ,i++ )e $o##i)+e on+y if a $*)+i" (earin& ,ere "on'*"te' for t(at $*r$o#e.
Ot(er,i#e #tate'% t(e e#ta)+i#(!ent of $*)+i" nee' in fa-or of an a$$+i"ant re-er#e# ,e++0#ett+e' an' in#tit*tiona+i/e' 5*'i"ia+%
8*a#i05*'i"ia+ an' a'!ini#trati-e $ro"e'*re#. It a++o,# t(e $arty ,(o initiate# t(e $ro"ee'in&# to $ro-e% )y !ere a$$+i"ation% (i#
affir!ati-e a++e&ation#. Moreo-er% t(e offen'in& $ro-i#ion# of t(e LTFRE !e!oran'*! "ir"*+ar in 8*e#tion ,o*+' in effe"t
a!en' t(e R*+e# of Co*rt )y a''in& anot(er 'i#$*ta)+e $re#*!$tion in t(e en*!eration of 37 $re#*!$tion# *n'er R*+e 131%
Se"tion < of t(e R*+e# of Co*rt. S*"( *#*r$ation of t(i# Co*rt=# a*t(ority "annot )e "o*ntenan"e' a# on+y t(i# Co*rt i#
!an'ate' )y +a, to $ro!*+&ate r*+e# "on"ernin& $+ea'in&% $ra"ti"e an' $ro"e'*re.
19
Dere&*+ation% ,(i+e it !ay )e i'ea+ in "ertain #it*ation#% !ay not )e i'ea+ at a++ in o*r "o*ntry &i-en t(e $re#ent "ir"*!#tan"e#.
A'-o"a"y of +i)era+i/e' fran"(i#in& an' re&*+atory $ro"e## i# tanta!o*nt to an a)'i"ation )y t(e &o-ern!ent of it# in(erent
ri&(t to e:er"i#e $o+i"e $o,er% t(at i#% t(e ri&(t of &o-ern!ent to re&*+ate $*)+i" *ti+itie# for $rote"tion of t(e $*)+i" an' t(e
*ti+itie# t(e!#e+-e#.
W(i+e ,e re"o&ni/e t(e a*t(ority of t(e DOTC an' t(e LTFRE to i##*e a'!ini#trati-e or'er# to re&*+ate t(e tran#$ort #e"tor%
,e fin' t(at t(ey "o!!itte' &ra-e a)*#e of 'i#"retion in i##*in& DOTC De$art!ent Or'er
No. 320<27 'efinin& t(e $o+i"y fra!e,or6 on t(e re&*+ation of tran#$ort #er-i"e# an' LTFRE Me!oran'*! Cir"*+ar No. 320;;3
$ro!*+&atin& t(e i!$+e!entin& &*i'e+ine# on DOTC De$art!ent Or'er No. 320<27% t(e #ai' a'!ini#trati-e i##*an"e# )ein&
a!en'atory an' -io+ati-e of t(e P*)+i" Ser-i"e A"t an' t(e R*+e# of Co*rt. Con#e8*ent+y% ,e r*+e t(at t(e t,enty (2;G per
centum fare in"rea#e i!$o#e' )y re#$on'ent PEOAP on Mar"( 14% 1331 ,it(o*t t(e )enefit of a $etition an' a $*)+i" (earin&
i# n*++ an' -oi' an' of no for"e an' effe"t. No &ra-e a)*#e of 'i#"retion (o,e-er ,a# "o!!itte' in t(e i##*an"e of DOTC
Me!oran'*! Or'er No. 3;033< an' DOTC Me!oran'*! 'ate' O"to)er 2% 1332% t(e #a!e )ein& !ere+y interna+
"o!!*ni"ation# )et,een a'!ini#trati-e offi"er#.
W9EREFORE% in -ie, of t(e fore&oin&% t(e in#tant $etition i# (ere)y .RANTED an' t(e "(a++en&e' a'!ini#trati-e i##*an"e#
an' or'er#% na!e+yA DOTC De$art!ent Or'er No. 320<27% LTFRE Me!oran'*! Cir"*+ar
No. 320;;3% an' t(e or'er 'ate' Mar"( 21% 1331 i##*e' )y re#$on'ent LTFRE are (ere)y DECLARED "ontrary to +a, an'
in-a+i' in#ofar a# t(ey affe"t $ro-i#ion# t(erein (a 'e+e&atin& to $ro-in"ia+ )*# an' 5ee$ney o$erator# t(e a*t(ority to in"rea#e
or 'e"rea#e t(e '*+y $re#"ri)e' tran#$ortation fare#B an' () "reatin& a $re#*!$tion of $*)+i" nee' for a #er-i"e in fa-or of t(e
a$$+i"ant for a "ertifi"ate of $*)+i" "on-enien"e an' $+a"in& t(e )*r'en of $ro-in& t(at t(ere i# no nee' for t(e $ro$o#e'
#er-i"e to t(e o$$o#itor.
T(e Te!$orary Re#trainin& Or'er i##*e' on >*ne 2;% 1331 i# (ere)y MADE PERMANENT in#ofar a# it en5oine' t(e )*# fare
rate in"rea#e &rante' *n'er t(e $ro-i#ion# of t(e afore!entione' a'!ini#trati-e "ir"*+ar#% !e!oran'a an'For or'er# 'e"+are'
in-a+i'.
No $rono*n"e!ent a# to "o#t#.
Tata' -. .ar"ia% >r.% 211 SCRA 331 (1337
T(i# i# a $etition *n'er R*+e 4< of t(e Re-i#e' R*+e# of Co*rt to $ro(i)it re#$on'ent# fro! f*rt(er i!$+e!entin& an' enfor"in&
t(e ?Re-i#e' an' Re#tate' A&ree!ent to E*i+'% Lea#e an' Tran#fer a Li&(t Rai+ Tran#it Sy#te! for EDSA? 'ate' A$ri+ 22%
1332% an' t(e ?S*$$+e!enta+ A&ree!ent to t(e 22 A$ri+ 1332 Re-i#e' an' Re#tate' A&ree!ent To E*i+'% Lea#e an' Tran#fer
a Li&(t Rai+ Tran#it Sy#te! for EDSA? 'ate' May 4% 1333.
Petitioner# Fran"i#"o S. Tata'% >o(n 9. O#!ena an' Ro'o+fo .. Eia/on are !e!)er# of t(e P(i+i$$ine Senate an' are #*in&
in t(eir "a$a"itie# a# Senator# an' a# ta:$ayer#. Re#$on'ent >e#*# E. .ar"ia% >r. i# t(e in"*!)ent Se"retary of t(e
De$art!ent of Tran#$ortation an' Co!!*ni"ation# (DOTC% ,(i+e $ri-ate re#$on'ent EDSA LRT Cor$oration% Lt'. i# a $ri-ate
"or$oration or&ani/e' *n'er t(e +a,# of 9on&6on&.
In 1323% DOTC $+anne' to "on#tr*"t a +i&(t rai+,ay tran#it +ine a+on& EDSA% a !a5or t(oro*&(fare in Metro$o+itan Mani+a% ,(i"(
#(a++ tra-er#e t(e "itie# of Pa#ay% Q*e/on% Man'a+*yon& an' Ma6ati. T(e $+an% referre' to a# EDSA Li&(t Rai+ Tran#it III
(EDSA LRT III% ,a# inten'e' to $ro-i'e a !a## tran#it #y#te! a+on& EDSA an' a++e-iate t(e "on&e#tion an' &ro,in&
tran#$ortation $ro)+e! in t(e !etro$o+i#.
On Mar"( 3% 133;% a +etter of intent ,a# #ent )y t(e E+i Le-in Enter$ri#e#% In".% re$re#ente' )y E+i5a(* Le-in to DOTC
Se"retary O#"ar Or)o#% $ro$o#in& to "on#tr*"t t(e EDSA LRT III on a E*i+'0O$erate0Tran#fer (EOT )a#i#.
On Mar"( 1<% 133;% Se"retary Or)o# in-ite' Le-in to #en' a te"(ni"a+ tea! to 'i#"*## t(e $ro5e"t ,it( DOTC.
34
On >*+y 3% 133;% Re$*)+i" A"t No. 43<7 entit+e' ?An A"t A*t(ori/in& t(e Finan"in&% Con#tr*"tion% O$eration an' Maintenan"e
of Infra#tr*"t*re Pro5e"t# )y t(e Pri-ate Se"tor% an' For Ot(er P*r$o#e#%? ,a# #i&ne' )y Pre#i'ent Cora/on C. A8*ino.
Referre' to a# t(e E*i+'0O$erate0Tran#fer (EOT La,% it too6 effe"t on O"to)er 3% 133;.
Re$*)+i" A"t No. 43<7 $ro-i'e# for t,o #"(e!e# for t(e finan"in&% "on#tr*"tion an' o$eration of &o-ern!ent $ro5e"t# t(ro*&(
$ri-ate initiati-e an' in-e#t!entA E*i+'0O$erate0Tran#fer (EOT or E*i+'0Tran#fer (ET.
In a""or'an"e ,it( t(e $ro-i#ion# of R.A. No. 43<7 an' to #et t(e EDSA LRT III $ro5e"t *n'er,ay% DOTC% on >an*ary 22%
1331 an' Mar"( 11% 1331% i##*e' De$art!ent Or'er# No#. 310131 an' 310134% re#$e"ti-e+y "reatin& t(e Pre8*a+ifi"ation Ei'#
an' A,ar'# Co!!ittee (PEAC an' t(e Te"(ni"a+ Co!!ittee.
After it# "on#tit*tion% t(e PEAC i##*e' &*i'e+ine# for t(e $re8*a+ifi"ation of "ontra"tor# for t(e finan"in& an' i!$+e!entation of
t(e $ro5e"t T(e noti"e% a'-erti#in& t(e $re8*a+ifi"ation of )i''er#% ,a# $*)+i#(e' in t(ree ne,#$a$er# of &enera+ "ir"*+ation
on"e a ,ee6 for t(ree "on#e"*ti-e ,ee6# #tartin& Fe)r*ary 21% 1331.
T(e 'ea'+ine #et for #*)!i##ion of $re8*a+ifi"ation 'o"*!ent# ,a# Mar"( 21% 1331% +ater e:ten'e' to A$ri+ 1% 1331. Fi-e
&ro*$# re#$on'e' to t(e in-itation na!e+y% AEE Tra/ione of Ita+y% 9o$e,e++ 9o+'in&# Lt'. of 9on&6on&% Man#tee+ Internationa+
of Man'a*e% Ce)*% Mit#*i O Co.% Lt'. of >a$an% an' EDSA LRT Con#orti*!% "o!$o#e' of ten forei&n an' 'o!e#ti"
"or$oration#A na!e+y% Iai#er En&ineer# Internationa+% In".% ACER Con#*+tant# (Far Ea#t Lt'. an' Free!an Fo:%
Tra'ein-e#tFCID Tatra of t(e C/e"( an' S+o-a6 Fe'era+ Re$*)+i"#% TC.I En&ineerin& A++ A#ia Ca$ita+ an' Lea#in&
Cor$oration% T(e Sa+i! .ro*$ of >a6arta% E. L. Enter$ri#e#% In".% A.M. Oreta O Co. Ca$ito+ In'*#tria+ Con#tr*"tion .ro*$% In"%
an' F. F. Cr*/ O "o.% In".
On t(e +a#t 'ay for #*)!i##ion of $re8*a+ifi"ation 'o"*!ent#% t(e $re8*a+ifi"ation "riteria $ro$o#e' )y t(e Te"(ni"a+
Co!!ittee ,ere a'o$te' )y t(e PEAC. T(e "riteria tota++in& 1;; $er"ent% are a# fo++o,#A (a Le&a+ a#$e"t# @ 1; $er"entB ()
Mana&e!entFOr&ani/ationa+ "a$a)i+ity @ 3; $er"entB an' (" Finan"ia+ "a$a)i+ity @ 3; $er"entB an' (' Te"(ni"a+ "a$a)i+ity @
3; $er"ent (%ollo% $. 122.
On A$ri+ 3% 1331% t(e Co!!ittee% "(ar&e' *n'er t(e EOT La, ,it( t(e for!*+ation of t(e I!$+e!entation R*+e# an'
Re&*+ation# t(ereof% a$$ro-e' t(e #a!e.
After e-a+*atin& t(e $re8*a+ifi"ation% )i'#% t(e PEAC i##*e' a Re#o+*tion on May 3% 1331 'e"+arin& t(at of t(e fi-e a$$+i"ant#%
on+y t(e EDSA LRT Con#orti*! ?!et t(e re8*ire!ent# of &arnerin& at +ea#t 21 $oint# $er "riteria J sicK% e:"e$t for Le&a+
A#$e"t#% an' o)tainin& an o-er0a++ $a##in& !ar6 of at +ea#t 22 $oint#? (%ollo% $. 114. T(e Le&a+ A#$e"t# referre' to $ro-i'e'
t(at t(e EOTFET "ontra"tor0a$$+i"ant !eet t(e re8*ire!ent# #$e"ifie' in t(e Con#tit*tion an' ot(er $ertinent +a,# ( %ollo% $.
111.
S*)#e8*ent+y% Se"retary Or)o# ,a# a$$ointe' E:e"*ti-e Se"retary to t(e Pre#i'ent of t(e P(i+i$$ine# an' ,a# re$+a"e' )y
Se"retary Pete Ni"o!e'e# Pra'o. T(e +atter #ent to Pre#i'ent A8*ino t,o +etter# 'ate' May 31% 1331 an' >*ne 11% 1331%
re#$e"ti-e+y re"o!!en'in& t(e a,ar' of t(e EDSA LRT III $ro5e"t to t(e #o+e "o!$+yin& )i''er% t(e EDSA LRT Con#orti*!%
an' re8*e#tin& for a*t(ority to ne&otiate ,it( t(e #ai' fir! for t(e "ontra"t $*r#*ant to $ara&ra$( 11() of t(e I!$+e!entin&
R*+e# an' Re&*+ation# of t(e EOT La, (%ollo% $$. 23203;2.
In >*+y 1331% E:e"*ti-e Se"retary Or)o#% a"tin& on in#tr*"tion# of t(e Pre#i'ent% i##*e' a 'ire"ti-e to t(e DOTC to $ro"ee'
,it( t(e ne&otiation#. On >*+y 14% 1331% t(e EDSA LRT Con#orti*! #*)!itte' it# )i' $ro$o#a+ to DOTC.
Fin'in& t(i# $ro$o#a+ to )e in "o!$+ian"e ,it( t(e )i' re8*ire!ent#% DOTC an' re#$on'ent EDSA LRT Cor$oration% Lt'.% in
#*)#tit*tion of t(e EDSA LRT Con#orti*!% entere' into an ?A&ree!ent to E*i+'% Lea#e an' Tran#fer a Li&(t Rai+ Tran#it
Sy#te! for EDSA? *n'er t(e ter!# of t(e EOT La, (%ollo% $$. 1170177.
Se"retary Pra'o% t(ereafter% re8*e#te' $re#i'entia+ a$$ro-a+ of t(e "ontra"t.
In a +etter 'ate' Mar"( 13% 1332% E:e"*ti-e Se"retary Fran6+in Dri+on% ,(o re$+a"e' E:e"*ti-e Se"retary Or)o#% infor!e'
Se"retary Pra'o t(at t(e Pre#i'ent "o*+' not &rant t(e re8*e#te' a$$ro-a+ for t(e fo++o,in& rea#on#A (1 t(at DOTC fai+e' to
"on'*"t a"t*a+ $*)+i" )i''in& in "o!$+ian"e ,it( Se"tion < of t(e EOT La,B (2 t(at t(e +a, a*t(ori/e' $*)+i" )i''in& a# t(e
on+y !o'e to a,ar' EOT $ro5e"t#% an' t(e $re8*a+ifi"ation $ro"ee'in&# ,a# not t(e $*)+i" )i''in& "onte!$+ate' *n'er t(e
+a,B (3 t(at Ite! 11 of t(e I!$+e!entin& R*+e# an' Re&*+ation# of t(e EOT La, ,(i"( a*t(ori/e' ne&otiate' a,ar' of
"ontra"t in a''ition to $*)+i" )i''in& ,a# of 'o*)tf*+ +e&a+ityB an' (1 t(at "on&re##iona+ a$$ro-a+ of t(e +i#t of $riority $ro5e"t#
*n'er t(e EOT or ET S"(e!e $ro-i'e' in t(e +a, (a' not yet )een &rante' at t(e ti!e t(e "ontra"t ,a# a,ar'e' (%ollo% $$.
1720173.
In -ie, of t(e "o!!ent# of E:e"*ti-e Se"retary Dri+on% t(e DOTC an' $ri-ate re#$on'ent# re0ne&otiate' t(e a&ree!ent. On
A$ri+ 22% 1332% t(e $artie# entere' into a ?Re-i#e' an' Re#tate' A&ree!ent to E*i+'% Lea#e an' Tran#fer a Li&(t Rai+ Tran#it
Sy#te! for EDSA? (%ollo% $$. 17072 ina#!*"( a# ?t(e $artie# JareK "o&ni/ant of t(e fa"t t(e DOTC (a# f*++ a*t(ority to #i&n
t(e A&ree!ent ,it(o*t nee' of a$$ro-a+ )y t(e Pre#i'ent $*r#*ant to t(e $ro-i#ion# of E:e"*ti-e Or'er No. 32; an' t(at
"ertain e-ent# J(a'K #*$er-ene' #in"e No-e!)er 7% 1331 ,(i"( ne"e##itateJ'K t(e re-i#ion of t(e A&ree!ent? (%ollo% $. <1.
On May 4% 1332% DOTC% re$re#ente' )y Se"retary >e#*# .ar"ia vice Se"retary Pra'o% an' $ri-ate re#$on'ent entere' into a
?S*$$+e!enta+ A&ree!ent to t(e 22 A$ri+ 1332 Re-i#e' an' Re#tate' A&ree!ent to E*i+'% Lea#e an' Tran#fer a Li&(t Rai+
Tran#it Sy#te! for EDSA? #o a# to ?"+arify t(eir re#$e"ti-e ri&(t# an' re#$on#i)i+itie#? an' to #*)!it Jt(eK S*$$+e!enta+
A&ree!ent to t(e Pre#i'ent% of t(e P(i+i$$ine# for (i# a$$ro-a+? (%ollo% $$. 7302;.
Se"retary .ar"ia #*)!itte' t(e t,o A&ree!ent# to Pre#i'ent Fi'e+ H. Ra!o# for (i# "on#i'eration an' a$$ro-a+. In a
Me!oran'*! to Se"retary .ar"ia on May 4% 1333% a$$ro-e' t(e #ai' A&ree!ent#% (%ollo% $. 131.
A""or'in& to t(e a&ree!ent#% t(e EDSA LRT III ,i++ *#e +i&(t rai+ -e(i"+e# fro! t(e C/e"( an' S+o-a6 Fe'era+ Re$*)+i"# an'
,i++ (a-e a !a:i!*! "arryin& "a$a"ity of 1<;%;;; $a##en&er# a 'ay% or 1<; !i++ion a year to )e a"(ie-e'0t(ro*&( <1 #*"(
-e(i"+e# o$eratin& #i!*+taneo*#+y. T(e EDSA LRT III ,i++ r*n at &ra'e% or #treet +e-e+% on t(e !i'0#e"tion of EDSA for a
'i#tan"e of 17.2 6i+o!eter# fro! F.E. 9arri#on% Pa#ay City to Nort( A-en*e% Q*e/on City. T(e #y#te! ,i++ (a-e it# o,n $o,er
fa"i+ity (Re-i#e' an' Re#tate' A&ree!ent% Se". 2.3 (iiB %ollo$. <<. It ,i++ a+#o (a-e t(irteen (13 $a##en&er #tation# an' one
'e$ot in 140(e"tare &o-ern!ent $ro$erty at Nort( A-en*e (S*$$+e!enta+ A&ree!ent% Se". 11B %ollo% $$. 31032.
Pri-ate re#$on'ent# #(a++ *n'erta6e an' finan"e t(e entire $ro5e"t re8*ire' for a "o!$+ete o$erationa+ +i&(t rai+ tran#it #y#te!
(Re-i#e' an' Re#tate' A&ree!ent% Se". 1.1B %ollo% $. <2. Tar&et "o!$+etion 'ate i# 1%;2; 'ay# or a$$ro:i!ate+y t(ree year#
fro! t(e i!$+e!entation 'ate of t(e "ontra"t in"+*#i-e of !o)i+i/ation% #ite ,or6#% initia+ an' fina+ te#tin& of t(e #y#te!
(S*$$+e!enta+ A&ree!ent% Se". <B %ollo% $. 23. 7$on f*++ or $artia+ "o!$+etion an' -ia)i+ity t(ereof% $ri-ate re#$on'ent #(a++
'e+i-er t(e *#e an' $o##e##ion of t(e "o!$+ete' $ortion to DOTC ,(i"( #(a++ o$erate t(e #a!e (S*$$+e!enta+ A&ree!ent%
Se". <B Re-i#e' an' Re#tate' A&ree!ent% Se". <.1B %ollo% $$. 41042% 21. DOTC #(a++ $ay $ri-ate re#$on'ent renta+# on a
!ont(+y )a#i# t(ro*&( an Irre-o"a)+e Letter of Cre'it. T(e renta+# #(a++ )e 'eter!ine' )y an in'e$en'ent an' internationa++y
a""re'ite' in#$e"tion fir! to )e a$$ointe' )y t(e $artie# (S*$$+e!enta+ A&ree!ent% Se". 4B %ollo% $$. 2<024 A# a&ree' *$on%
$ri-ate re#$on'ent=# "a$ita+ #(a++ )e re"o-ere' fro! t(e renta+# to )e $ai' )y t(e DOTC ,(i"(% in t*rn% #(a++ "o!e fro! t(e
earnin&# of t(e EDSA LRT III (Re-i#e' an' Re#tate' A&ree!ent% Se". 1% $. <B %ollo% $. <1. After 2< year# an' DOTC #(a++
37
(a-e "o!$+ete' $ay!ent of t(e renta+#% o,ner#(i$ of t(e $ro5e"t #(a++ )e tran#ferre' to t(e +atter for a "on#i'eration of on+y
7.S. U1.;; (Re-i#e' an' Re#tate' A&ree!ent% Se". 11.1B%ollo% $. 47.
On May <% 1331% R.A. No. 7712% an ?A"t A!en'in& Certain Se"tion# of Re$*)+i" A"t No. 43<7% Entit+e' ?An A"t A*t(ori/in& t(e
Finan"in&% Con#tr*"tion% O$eration an' Maintenan"e of Infra#tr*"t*re Pro5e"t# )y t(e Pri-ate Se"tor% an' for Ot(er P*r$o#e#?
,a# #i&ne' into +a, )y t(e Pre#i'ent. T(e +a, ,a# $*)+i#(e' in t,o ne,#$a$er# of &enera+ "ir"*+ation on May 12% 1331% an'
too6 effe"t 1< 'ay# t(ereafter or on May 22% 1331. T(e +a, e:$re##+y re"o&ni/e# ELT #"(e!e an' a++o,# 'ire"t ne&otiation of
ELT "ontra"t#.
II
In t(eir $etition% $etitioner# ar&*e' t(atA
(1 T9E A.REEMENT OF APRIL 22% 1332% AS AMENDED EC T9E S7PPLEMENTAL A.REEMENT OF MAC 4% 1333%
INSOFAR AS IT .RANTS EDSA LRT CORPORATION% LTD.% A FOREI.N CORPORATION% T9E OWNERS9IP OF EDSA
LRT III% A P7ELIC 7TILITC% HIOLATES T9E CONSTIT7TION AND% 9ENCE% IS 7NCONSTIT7TIONALB
(2 T9E E7ILD0LEASE0TRANSFER SC9EME PROHIDED IN T9E A.REEMENTS IS NOT DEFINED NOR RECO.NISED IN
R.A. NO. 43<7 OR ITS IMPLEMENTIN. R7LES AND RE.7LATIONS AND% 9ENCE% IS ILLE.ALB
(3 T9E AWARD OF T9E CONTRACT ON A NE.OTIATED EASIS HIOLATES RB A. NO. 43<7 AND% 9ENCE% IS
7NLAWF7LB
(1 T9E AWARD OF T9E CONTRACT IN FAHOR OF RESPONDENT EDSA LRT CORPORATION% LTD. HIOLATES T9E
REQ7IREMENTS PROHIDED IN T9E IMPLEMENTIN. R7LES AND RE.7LATIONS OF T9E EOT LAW AND% 9ENCE% IS
ILLE.ALB
(< T9E A.REEMENTS HIOLATE EVEC7TIHE ORDER NO 32; FOR T9EIR FAIL7RE TO EEAR PRESIDENTIAL
APPROHAL AND% 9ENCE% ARE ILLE.AL AND INEFFECTIHEB AND
(4 T9E A.REEMENTS ARE .ROSSLC DISADHANTA.EO7S TO T9E .OHERNMENT (%ollo% $$. 1<014.
Se"retary .ar"ia an' $ri-ate re#$on'ent fi+e' t(eir "o!!ent# #e$arate+y an' "+ai!e' t(atA
(1 Petitioner# are not t(e rea+ $artie#0in0intere#t an' (a-e no +e&a+ #tan'in& to in#tit*te t(e $re#ent $etitionB
(2 T(e ,rit of $ro(i)ition i# not t(e $ro$er re!e'y an' t(e $etition re8*ire# a#"ertain!ent of fa"t#B
(3 T(e #"(e!e a'o$te' in t(e A&ree!ent# i# a"t*a++y a )*i+'0tran#fer #"(e!e a++o,e' )y t(e EOT La,B
(1 T(e nationa+ity re8*ire!ent for $*)+i" *ti+itie# !an'ate' )y t(e Con#tit*tion 'oe# not a$$+y to $ri-ate re#$on'entB
(< T(e A&ree!ent# e:e"*te' )y an' )et,een re#$on'ent# (a-e )een a$$ro-e' )y Pre#i'ent Ra!o# an' are not
'i#a'-anta&eo*# to t(e &o-ern!entB
(4 T(e a,ar' of t(e "ontra"t to $ri-ate re#$on'ent t(ro*&( ne&otiation an' not $*)+i" )i''in& i# a++o,e' )y t(e EOT La,B an'
(7 .rantin& t(at t(e EOT La, re8*ire# $*)+i" )i''in&% t(i# (a# )een a!en'e' )y R.A No. 7712 $a##e' )y t(e Le&i#+at*re On
May 12% 1331% ,(i"( $ro-i'e# for 'ire"t ne&otiation a# a !o'e of a,ar' of infra#tr*"t*re $ro5e"t#.
III
Re#$on'ent# "+ai!e' t(at $etitioner# (a' no +e&a+ #tan'in& to initiate t(e in#tant a"tion. Petitioner#% (o,e-er% "o*ntere' t(at
t(e a"tion ,a# fi+e' )y t(e! in t(eir "a$a"ity a# Senator# an' a# ta:$ayer#.
T(e $re-ai+in& 'o"trine# in ta:$ayer=# #*it# are to a++o, ta:$ayer# to 8*e#tion "ontra"t# entere' into )y t(e nationa+
&o-ern!ent or &o-ern!ent0o,ne' or "ontro++e' "or$oration# a++e&e'+y in "ontra-ention of t(e +a, (Ii+o#)ayan% In". -.
.*in&ona% 232 SCRA 11; J1331K an' to 'i#a++o, t(e #a!e ,(en on+y !*ni"i$a+ "ontra"t# are in-o+-e' (E*&nay Con#tr*"tion
an' De-e+o$!ent Cor$oration -. Laron% 174 SCRA. 21; J1323K.
For a# +on& a# t(e r*+in& in Jilosbayan on locus standi i# not re-er#e'% ,e (a-e no "(oi"e )*t to fo++o, it an' *$(o+' t(e +e&a+
#tan'in& of $etitioner# a# ta:$ayer# to in#tit*te t(e $re#ent a"tion.
IH
In t(e !ain% $etitioner# a##erte' t(at t(e Re-i#e' an' Re#tate' A&ree!ent of A$ri+ 22% 1332 an' t(e S*$$+e!enta+ A&ree!ent
of May 4% 1333 are *n"on#tit*tiona+ an' in-a+i' for t(e fo++o,in& rea#on#A
(1 t(e EDSA LRT III i# a $*)+i" *ti+ity% an' t(e o,ner#(i$ an' o$eration t(ereof i# +i!ite' )y t(e Con#tit*tion to Fi+i$ino "iti/en#
an' 'o!e#ti" "or$oration#% not forei&n "or$oration# +i6e $ri-ate re#$on'entB
(2 t(e E*i+'0Lea#e0Tran#fer (ELT #"(e!e $ro-i'e' in t(e a&ree!ent# i# not t(e EOT or ET S"(e!e *n'er t(e +a,B
(3 t(e "ontra"t to "on#tr*"t t(e EDSA LRT III ,a# a,ar'e' to $ri-ate re#$on'ent not t(ro*&( $*)+i" )i''in& ,(i"( i# t(e on+y
!o'e of a,ar'in& infra#tr*"t*re $ro5e"t# *n'er t(e EOT +a,B an'
(1 t(e a&ree!ent# are &ro##+y 'i#a'-anta&eo*# to t(e &o-ern!ent.
1. Pri-ate re#$on'ent EDSA LRT Cor$oration% Lt'. to ,(o! t(e "ontra"t to "on#tr*"t t(e EDSA LRT III ,a# a,ar'e' )y $*)+i"
re#$on'ent% i# a'!itte'+y a forei&n "or$oration ?'*+y in"or$orate' an' e:i#tin& *n'er t(e +a,# of 9on&6on&? (%ollo% $$. <;%
73. T(ere i# a+#o no 'i#$*te t(at on"e t(e EDSA LRT III i# "on#tr*"te'% $ri-ate re#$on'ent% a# +e##or% ,i++ t*rn it o-er to
DOTC% a# +e##ee% for t(e +atter to o$erate t(e #y#te! an' $ay renta+# for #ai' *#e.
T(e 8*e#tion $o#e' )y $etitioner# i#A
Can re#$on'ent EDSA LRT Cor$oration% Lt'.% a forei&n "or$oration o,n EDSA LRT IIIB a $*)+i" *ti+ityD (%ollo% $. 17.
T(e $(ra#in& of t(e 8*e#tion i# erroneo*#B it i# +oa'e'. W(at $ri-ate re#$on'ent o,n# are t(e rai+ tra"6#% ro++in& #to"6# +i6e t(e
"oa"(e#% rai+ #tation#% ter!ina+# an' t(e $o,er $+ant% not a $*)+i" *ti+ity. W(i+e a fran"(i#e i# nee'e' to o$erate t(e#e fa"i+itie#
to #er-e t(e $*)+i"% t(ey 'o not )y t(e!#e+-e# "on#tit*te a $*)+i" *ti+ity. W(at "on#tit*te# a $*)+i" *ti+ity i# not t(eir o,ner#(i$
)*t t(eir *#e to #er-e t(e $*)+i" (I+oi+o I"e O Co+' Stora&e Co. -. P*)+i" Ser-i"e Eoar'% 11 P(i+. <<1% <<7 <<2 J1323K.
T(e Con#tit*tion% in no *n"ertain ter!#% re8*ire# a fran"(i#e for t(e o$eration of a $*)+i" *ti+ity. 9o,e-er% it 'oe# not re8*ire a
fran"(i#e )efore one "an o,n t(e fa"i+itie# nee'e' to o$erate a $*)+i" *ti+ity #o +on& a# it 'oe# not o$erate t(e! to #er-e t(e
$*)+i".
Se"tion 11 of Arti"+e VII of t(e Con#tit*tion $ro-i'e#A
No fran"(i#e% "ertifi"ate or any ot(er for! of a*t(ori/ation for t(e operation of a public utility #(a++ )e &rante' e:"e$t to "iti/en#
of t(e P(i+i$$ine# or to "or$oration# or a##o"iation# or&ani/e' *n'er t(e +a,# of t(e P(i+i$$ine# at +ea#t #i:ty per centum of
,(o#e "a$ita+ i# o,ne' )y #*"( "iti/en#% nor #(a++ #*"( fran"(i#e% "ertifi"ate or a*t(ori/ation )e e:"+*#i-e "(ara"ter or for a
+on&er $erio' t(an fifty year# . . . (E!$(a#i# #*$$+ie'.
In +a,% t(ere i# a "+ear 'i#tin"tion )et,een t(e ?o$eration? of a $*)+i" *ti+ity an' t(e o,ner#(i$ of t(e fa"i+itie# an' e8*i$!ent
*#e' to #er-e t(e $*)+i".
O,ner#(i$ i# 'efine' a# a re+ation in +a, )y -irt*e of ,(i"( a t(in& $ertainin& to one $er#on i# "o!$+ete+y #*)5e"te' to (i# ,i++
in e-eryt(in& not $ro(i)ite' )y +a, or t(e "on"*rren"e ,it( t(e ri&(t# of anot(er (To+entino% II Co!!entarie# an'
>*ri#$r*'en"e on t(e Ci-i+ Co'e of t(e P(i+i$$ine# 1< J1332K.
T(e e:er"i#e of t(e ri&(t# en"o!$a##e' in o,ner#(i$ i# +i!ite' )y +a, #o t(at a $ro$erty "annot )e o$erate' an' *#e' to
#er-e t(e $*)+i" a# a $*)+i" *ti+ity *n+e## t(e o$erator (a# a fran"(i#e. T(e o$eration of a rai+ #y#te! a# a $*)+i" *ti+ity in"+*'e#
t(e tran#$ortation of $a##en&er# fro! one $oint to anot(er $oint% t(eir +oa'in& an' *n+oa'in& at 'e#i&nate' $+a"e# an' t(e
32
!o-e!ent of t(e train# at $re0#"(e'*+e' ti!e# (cf) Ari/ona Ea#tern R.R. Co. -. >.A.. Matt(e,#% 2; Ari/ 222% 12; P.1<3% 7
A.L.R. 1113 J1313K B7nite' State# Fire In#. Co. -. Nort(ern P.R. Co.% 3; Wa#( 2'. 722% 133 P. 2' 242% 2 A.L.R. 2' 1;4<
J1312K.
T(e ri&(t to o$erate a $*)+i" *ti+ity !ay e:i#t in'e$en'ent+y an' #e$arate+y fro! t(e o,ner#(i$ of t(e fa"i+itie# t(ereof. One "an
o,n #ai' fa"i+itie# ,it(o*t o$eratin& t(e! a# a $*)+i" *ti+ity% or "on-er#e+y% one !ay o$erate a $*)+i" *ti+ity ,it(o*t o,nin& t(e
fa"i+itie# *#e' to #er-e t(e $*)+i". T(e 'e-otion of $ro$erty to #er-e t(e $*)+i" !ay )e 'one )y t(e o,ner or )y t(e $er#on in
"ontro+ t(ereof ,(o !ay not ne"e##ari+y )e t(e o,ner t(ereof.
T(i# 'i"(oto!y )et,een t(e o$eration of a $*)+i" *ti+ity an' t(e o,ner#(i$ of t(e fa"i+itie# *#e' to #er-e t(e $*)+i" "an )e -ery
,e++ a$$re"iate' ,(en ,e "on#i'er t(e tran#$ortation in'*#try. Enfran"(i#e' air+ine an' #(i$$in& "o!$anie# !ay +ea#e t(eir
air"raft an' -e##e+# in#tea' of o,nin& t(e! t(e!#e+-e#.
W(i+e $ri-ate re#$on'ent i# t(e o,ner of t(e fa"i+itie# ne"e##ary to o$erate t(e EDSA. LRT III% it a'!it# t(at it i# not
enfran"(i#e' to o$erate a $*)+i" *ti+ity (Re-i#e' an' Re#tate' A&ree!ent% Se". 3.2B %ollo% $. <7. In -ie, of t(i# in"a$a"ity%
$ri-ate re#$on'ent an' DOTC a&ree' t(at on "o!$+etion 'ate% $ri-ate re#$on'ent ,i++ i!!e'iate+y 'e+i-er $o##e##ion of t(e
LRT #y#te! )y ,ay of +ea#e for 2< year#% '*rin& ,(i"( $erio' DOTC #(a++ o$erate t(e #a!e a# a "o!!on "arrier an' $ri-ate
re#$on'ent #(a++ $ro-i'e te"(ni"a+ !aintenan"e an' re$air #er-i"e# to DOTC (Re-i#e' an' Re#tate' A&ree!ent% Se"#. 3.2%
<.1 an' <.2B %ollo% $$. <70<2% 41042. Te"(ni"a+ !aintenan"e "on#i#t# of $ro-i'in& (1 re$air an' !aintenan"e fa"i+itie# for t(e
'e$ot an' rai+ +ine#% #er-i"e# for ro*tine "+earin& an' #e"*rityB an' (2 $ro'*"in& an' 'i#tri)*tin& !aintenan"e !an*a+# an'
'ra,in&# for t(e entire #y#te! (Re-i#e' an' Re#tate' A&ree!ent% Anne: F.
Pri-ate re#$on'ent #(a++ a+#o train DOTC $er#onne+ for fa!i+iari/ation ,it( t(e o$eration% *#e% !aintenan"e an' re$air of t(e
ro++in& #to"6% $o,er $+ant% #*)#tation#% e+e"tri"a+% #i&na+in&% "o!!*ni"ation# an' a++ ot(er e8*i$!ent a# #*$$+ie' in t(e
a&ree!ent (Re-i#e' an' Re#tate' A&ree!ent% Se". 1;B %ollo% $$. 44047. Trainin& "on#i#t# of t(eoreti"a+ an' +i-e trainin& of
DOTC o$erationa+ $er#onne+ ,(i"( in"+*'e# a"t*a+ 'ri-in& of +i&(t rai+ -e(i"+e# *n'er #i!*+ate' o$eratin& "on'ition#% "ontro+ of
o$eration#% 'ea+in& ,it( e!er&en"ie#% "o++e"tion% "o*ntin& an' #e"*rin& "a#( fro! t(e fare "o++e"tion #y#te! (Re-i#e' an'
Re#tate' A&ree!ent% Anne: E% Se"#. 203. Per#onne+ of DOTC ,i++ ,or6 *n'er t(e 'ire"tion an' "ontro+ of $ri-ate re#$on'ent
on+y '*rin& trainin& (Re-i#e' an' Re#tate' A&ree!ent% Anne: E% Se". 3.1. T(e trainin& o)5e"ti-e#% (o,e-er% #(a++ )e #*"(
t(at *$on "o!$+etion of t(e EDSA LRT III an' *$on o$enin& of nor!a+ re-en*e o$eration% DOTC #(a++ (a-e in t(eir e!$+oy
$er#onne+ "a$a)+e of *n'erta6in& trainin& of a++ ne, an' re$+a"e!ent $er#onne+ (Re-i#e' an' Re#tate' A&ree!ent% Anne: E
Se". <.1. In ot(er ,or'#% )y t(e en' of t(e t(ree0year "on#tr*"tion $erio' an' *$on "o!!en"e!ent of nor!a+ re-en*e
o$eration% DOTC #(a++ )e a)+e to o$erate t(e EDSA LRT III on it# o,n an' train a++ ne, $er#onne+ )y it#e+f.
Fee# for $ri-ate re#$on'ent= # #er-i"e# #(a++ )e in"+*'e' in t(e rent% ,(i"( +i6e,i#e in"+*'e# t(e $ro5e"t "o#t% "o#t of
re$+a"e!ent of $+ant e8*i$!ent an' #$are $art#% in-e#t!ent an' finan"in& "o#t% $+*# a rea#ona)+e rate of ret*rn t(ereon
(Re-i#e' an' Re#tate' A&ree!ent% Se". 1B %ollo% $. <1.
Sin"e DOTC #(a++ o$erate t(e EDSA LRT III% it #(a++ a##*!e a++ t(e o)+i&ation# an' +ia)i+itie# of a "o!!on "arrier. For t(i#
$*r$o#e% DOTC #(a++ in'e!nify an' (o+' (ar!+e## $ri-ate re#$on'ent fro! any +o##e#% 'a!a&e#% in5*rie# or 'eat( ,(i"( !ay
)e "+ai!e' in t(e o$eration or i!$+e!entation of t(e #y#te!% e:"e$t +o##e#% 'a!a&e#% in5*ry or 'eat( '*e to 'efe"t# in t(e
EDSA LRT III on a""o*nt of t(e 'efe"ti-e "on'ition of e8*i$!ent or fa"i+itie# or t(e 'efe"ti-e !aintenan"e of #*"( e8*i$!ent
fa"i+itie# (Re-i#e' an' Re#tate' A&ree!ent% Se"#. 12.1 an' 12.2B %ollo% $. 42.
In #*!% $ri-ate re#$on'ent ,i++ not r*n t(e +i&(t rai+ -e(i"+e# an' "o++e"t fee# fro! t(e ri'in& $*)+i". It ,i++ (a-e no 'ea+in&# ,it(
t(e $*)+i" an' t(e $*)+i" ,i++ (a-e no ri&(t to 'e!an' any #er-i"e# fro! it.
It i# ,e++ to $oint o*t t(at t(e ro+e of $ri-ate re#$on'ent a# +e##or '*rin& t(e +ea#e $erio' !*#t )e 'i#tin&*i#(e' fro! t(e ro+e of
t(e P(i+i$$ine .a!in& Mana&e!ent Cor$oration (P.MC in t(e "a#e of Jilosbayan nc) v) 2uingona% 232 SCRA 11; (1331.
T(erein% t(e Contra"t of Lea#e )et,een P.MC an' t(e P(i+i$$ine C(arity S,ee$#ta6e# Offi"e (PCSO ,a# a"t*a++y a
"o++a)oration or 5oint -ent*re a&ree!ent $re#"ri)e' *n'er t(e "(arter of t(e PCSO. In t(e Contra"t of Lea#eB P.MC% t(e
+e##or o)+i&ate' it#e+f to )*i+'% at it# o,n e:$en#e% a++ t(e fa"i+itie# ne"e##ary to o$erate an' !aintain a nation,i'e on0+ine
+ottery #y#te! fro! ,(o! PCSO ,a# to +ea#e t(e fa"i+itie# an' o$erate t(e #a!e. 7$on '*e e:a!ination of t(e "ontra"t% t(e
Co*rt fo*n' t(at P.MC=# $arti"i$ation ,a# not "onfine' to t(e "on#tr*"tion an' #ettin& *$ of t(e on0+ine +ottery #y#te!. It
#$i++e' o-er to t(e a"t*a+ o$eration t(ereof% )e"o!in& in'i#$en#a)+e to t(e $*r#*it% "on'*"t% a'!ini#tration an' "ontro+ of t(e
(i&(+y te"(ni"a+ an' #o$(i#ti"ate' +ottery #y#te!. In effe"t% t(e PCSO +ea#e' o*t it# fran"(i#e to P.MC ,(i"( a"t*a++y
o$erate' an' !ana&e' t(e #a!e.
In'ee'% a !ere o,ner an' +e##or of t(e fa"i+itie# *#e' )y a $*)+i" *ti+ity i# not a $*)+i" *ti+ity (Pro-i'en"e an' W.R. Co. -.
7nite' State#% 14 F. 2' 113% 1<2 J133;KB C(i$$e,a Po,er Co. -. Rai+roa' Co!!i##ion of Wi#"on#in% 2;< N.W. 3;;% 3;3% 122
Wi#. 214 J132<KB E++i# -. Inter#tate Co!!er"e Co!!i##ion% I++ 3< S. Ct. 41<% 414% 237 7.S. 131% <3 L. E'. 1;34 J1311K.
Neit(er are o,ner# of tan6% refri&erator% ,ine% $o*+try an' )eer "ar# ,(o #*$$+y "ar# *n'er "ontra"t to rai+roa' "o!$anie#
"on#i'ere' a# $*)+i" *ti+itie# (Cry#ta+ Car Line -. State Ta: Co!!i##ion% 171 $. 2' 321% 327 J1314K.
E-en t(e !ere for!ation of a $*)+i" *ti+ity "or$oration 'oe# not ipso facto "(ara"teri/e t(e "or$oration a# one o$eratin& a
$*)+i" *ti+ity. T(e !o!ent for 'eter!inin& t(e re8*i#ite Fi+i$ino nationa+ity i# ,(en t(e entity a$$+ie# for a fran"(i#e% "ertifi"ate
or any ot(er for! of a*t(ori/ation for t(at $*r$o#e (Peo$+e -. Q*a#(a% 33 P(i+. 333 J13<3K.
2. Petitioner# f*rt(er a##ert t(at t(e ELT #"(e!e *n'er t(e A&ree!ent# in 8*e#tion i# not re"o&ni/e' in t(e EOT La, an' it#
I!$+e!entin& R*+e# an' Re&*+ation#.
Se"tion 2 of t(e EOT La, 'efine# t(e EOT an' ET #"(e!e# a# fo++o,#A
(a E*i+'0o$erate0an'0tran#fer #"(e!e @ A "ontra"t*a+ arran&e!ent ,(ere)y t(e "ontra"tor *n'erta6e# t(e "on#tr*"tion
in"+*'in& finan"in&% of a &i-en infra#tr*"t*re fa"i+ity% an' t(e o$eration an' !aintenan"e t(ereof. T(e "ontra"tor o$erate# t(e
fa"i+ity o-er a fi:e' ter! '*rin& ,(i"( it i# a++o,e' to "(ar&e fa"i+ity *#er# a$$ro$riate to++#% fee#% renta+# an' "(ar&e# #*ffi"ient
to ena)+e t(e "ontra"tor to re"o-er it# o$eratin& an' !aintenan"e e:$en#e# an' it# in-e#t!ent in t(e $ro5e"t $+*# a
rea#ona)+e rate of ret*rn t(ereon. T(e "ontra"tor tran#fer# t(e fa"i+ity to t(e &o-ern!ent a&en"y or +o"a+ &o-ern!ent *nit
"on"erne' at t(e en' of t(e fi:e' ter! ,(i"( #(a++ not e:"ee' fifty (<; year#. For t(e "on#tr*"tion #ta&e% t(e "ontra"tor !ay
o)tain finan"in& fro! forei&n an'For 'o!e#ti" #o*r"e# an'For en&a&e t(e #er-i"e# of a forei&n an'For Fi+i$ino "on#tr*"tor J sicKA
Pro-i'e'% That the ownership structure of the contractor of an infrastructure facility whose operation requires a public utility
franchise must be in accordance with the !onstitutionA Pro-i'e'% (o,e-er% T(at in t(e "a#e of "or$orate in-e#tor# in t(e )*i+'0
o$erate0an'0tran#fer "or$oration% t(e "iti/en#(i$ of ea"( #to"6(o+'er in t(e "or$orate in-e#tor# #(a++ )e t(e )a#i# for t(e
"o!$*tation of Fi+i$ino e8*ity in t(e #ai' "or$orationA Pro-i'e'% f*rt(er% T(at% in t(e "a#e of forei&n "on#tr*"tor# J sicK% Fi+i$ino
+a)or #(a++ )e e!$+oye' or (ire' in t(e 'ifferent $(a#e# of t(e "on#tr*"tion ,(ere Fi+i$ino #6i++# are a-ai+a)+eA Pro-i'e'%
f*rt(er!ore% t(at t(e finan"in& of a forei&n or forei&n0"ontro++e' "ontra"tor fro! P(i+i$$ine &o-ern!ent finan"in& in#tit*tion#
#(a++ not e:"ee' t,enty $er"ent (2;G of t(e tota+ "o#t of t(e infra#tr*"t*re fa"i+ity or $ro5e"tA Pro-i'e'% fina++y% T(at finan"in&
fro! forei&n #o*r"e# #(a++ not re8*ire a &*arantee )y t(e .o-ern!ent or )y &o-ern!ent0o,ne' or "ontro++e' "or$oration#.
T(e )*i+'0o$erate0an'0tran#fer #"(e!e #(a++ in"+*'e a #*$$+y0an'0o$erate #it*ation ,(i"( i# a "ontra"t*a+ a&ree!ent ,(ere)y
33
t(e #*$$+ier of e8*i$!ent an' !a"(inery for a &i-en infra#tr*"t*re fa"i+ity% if t(e intere#t of t(e .o-ern!ent #o re8*ire#%
o$erate# t(e fa"i+ity $ro-i'in& in t(e $ro"e## te"(no+o&y tran#fer an' trainin& to Fi+i$ino nationa+#.
() E*i+'0an'0tran#fer #"(e!e @ ?A "ontra"t*a+ arran&e!ent ,(ere)y t(e "ontra"tor *n'erta6e# t(e "on#tr*"tion in"+*'in&
finan"in&% of a &i-en infra#tr*"t*re fa"i+ity% an' it# t*rno-er after "o!$+etion to t(e &o-ern!ent a&en"y or +o"a+ &o-ern!ent *nit
"on"erne' ,(i"( #(a++ $ay t(e "ontra"tor it# tota+ in-e#t!ent e:$en'e' on t(e $ro5e"t% $+*# a rea#ona)+e rate of ret*rn
t(ereon. T(i# arran&e!ent !ay )e e!$+oye' in t(e "on#tr*"tion of any infra#tr*"t*re $ro5e"t in"+*'in& "riti"a+ fa"i+itie# ,(i"(
for #e"*rity or #trate&i" rea#on#% !*#t )e o$erate' 'ire"t+y )y t(e &o-ern!ent (E!$(a#i# #*$$+ie'.
T(e EOT #"(e!e i# e:$re##+y 'efine' a# one ,(ere t(e "ontra"tor *n'erta6e# t(e "on#tr*"tion an' finan"in& in infra#tr*"t*re
fa"i+ity% an' o$erate# an' !aintain# t(e #a!e. T(e "ontra"tor o$erate# t(e fa"i+ity for a fi:e' $erio' '*rin& ,(i"( it !ay
re"o-er it# e:$en#e# an' in-e#t!ent in t(e $ro5e"t $+*# a rea#ona)+e rate of ret*rn t(ereon. After t(e e:$iration of t(e a&ree'
ter!% t(e "ontra"tor tran#fer# t(e o,ner#(i$ an' o$eration of t(e $ro5e"t to t(e &o-ern!ent.
In t(e ET #"(e!e% t(e "ontra"tor *n'erta6e# t(e "on#tr*"tion an' finan"in& of t(e fa"i+ity% )*t after "o!$+etion% t(e o,ner#(i$
an' o$eration t(ereof are t*rne' o-er to t(e &o-ern!ent. T(e &o-ern!ent% in t*rn% #(a++ $ay t(e "ontra"tor it# tota+ in-e#t!ent
on t(e $ro5e"t in a''ition to a rea#ona)+e rate of ret*rn. If $ay!ent i# to )e effe"te' t(ro*&( a!orti/ation $ay!ent# )y t(e
&o-ern!ent infra#tr*"t*re a&en"y or +o"a+ &o-ern!ent *nit "on"erne'% t(i# #(a++ )e !a'e in a""or'an"e ,it( a #"(e!e
$ro$o#e' in t(e )i' an' in"or$orate' in t(e "ontra"t (R.A. No. 43<7% Se". 4.
E!$(a#i# !*#t )e !a'e t(at *n'er t(e EOT #"(e!e% t(e o,ner of t(e infra#tr*"t*re fa"i+ity !*#t "o!$+y ,it( t(e "iti/en#(i$
re8*ire!ent of t(e Con#tit*tion on t(e o$eration of a $*)+i" *ti+ity. No #*"( a re8*ire!ent i# i!$o#e' in t(e ET #"(e!e.
T(ere i# no !ention in t(e EOT La, t(at t(e EOT an' ET #"(e!e# )ar any ot(er arran&e!ent for t(e $ay!ent )y t(e
&o-ern!ent of t(e $ro5e"t "o#t. T(e +a, !*#t not )e rea' in #*"( a ,ay a# to r*+e o*t or *n'*+y re#tri"t any -ariation ,it(in t(e
"onte:t of t(e t,o #"(e!e#. In'ee'% no #tat*te "an )e ena"te' to anti"i$ate an' $ro-i'e a++ t(e fine $oint# an' 'etai+# for t(e
!*+tifario*# an' "o!$+e: #it*ation# t(at !ay )e en"o*ntere' in enfor"in& t(e +a, (Dire"tor of Fore#try -. M*no/% 23 SCRA
1123 J1342KB Peo$+e -. E:"on'e% 1;1 P(i+. 112< J13<7KB 7nite' State# -. T*$a#i Mo+ina% 23 P(i+. 113 J1311K.
T(e ELT #"(e!e in t(e "(a++en&e' a&ree!ent# i# )*t a -ariation of t(e ET #"(e!e *n'er t(e +a,.
A# a !atter of fa"t% t(e )*r'en on t(e &o-ern!ent in rai#in& f*n'# to $ay for t(e $ro5e"t i# !a'e +i&(ter )y a++o,in& it to
a!orti/e $ay!ent# o*t of t(e in"o!e fro! t(e o$eration of t(e LRT Sy#te!.
In for! an' #*)#tan"e% t(e "(a++en&e' a&ree!ent# $ro-i'e t(at renta+# are to )e $ai' on a !ont(+y )a#i# a""or'in& to a
#"(e'*+e of rate# t(ro*&( an' *n'er t(e ter!# of a "onfir!e' Irre-o"a)+e Re-o+-in& Letter of Cre'it (S*$$+e!enta+
A&ree!ent% Se". 4B %ollo% $. 2<. At t(e en' of 2< year# an' ,(en f*++ $ay!ent #(a++ (a-e )een !a'e to an' re"ei-e' )y
$ri-ate re#$on'ent% it #(a++ tran#fer to DOTC% free fro! any +ien or en"*!)ran"e#% a++ it# tit+e to% ri&(t# an' intere#t in% t(e
$ro5e"t for on+y 7.S. U1.;; (Re-i#e' an' Re#tate' A&ree!ent% Se". 11.1B S*$$+e!enta+ A&ree!ent% Se"B 7B %ollo% $$. 47% .27.
A +ea#e i# a "ontra"t ,(ere one of t(e $artie# )in'# (i!#e+f to &i-e to anot(er t(e en5oy!ent or *#e of a t(in& for a "ertain
$ri"e an' for a $erio' ,(i"( !ay )e 'efinite or in'efinite )*t not +on&er t(an 33 year# (Ci-i+ Co'e of t(e P(i+i$$ine#% Art. 1413.
T(ere i# no tran#fer of o,ner#(i$ at t(e en' of t(e +ea#e $erio'. E*t if t(e $artie# #ti$*+ate t(at tit+e to t(e +ea#e' $re!i#e#
#(a++ )e tran#ferre' to t(e +e##ee at t(e en' of t(e +ea#e $erio' *$on t(e $ay!ent of an a&ree' #*!% t(e +ea#e )e"o!e# a
+ea#e0$*r"(a#e a&ree!ent.
F*rt(er!ore% it i# of no #i&nifi"an"e t(at t(e rent# #(a++ )e $ai' in 7nite' State# "*rren"y% not P(i+i$$ine $e#o#. T(e EDSA LRT
III Pro5e"t i# a (i&( $riority $ro5e"t "ertifie' )y Con&re## an' t(e Nationa+ E"ono!i" an' De-e+o$!ent A*t(ority a# fa++in&
*n'er t(e In-e#t!ent Prioritie# P+an of .o-ern!ent (%ollo% $$. 31;0311. It i#% t(erefore% o*t#i'e t(e a$$+i"ation of t(e 7nifor!
C*rren"y A"t (R.A. No. <23% ,(i"( rea'# a# fo++o,#A
Se". 1. @ E-ery $ro-i#ion "ontaine' in% or !a'e ,it( re#$e"t to% any 'o!e#ti" o)+i&ation to ,it% any o)+i&ation "ontra"te' in
t(e P(i+i$$ine# ,(i"( $ro-i#ion# $*r$ort# to &i-e t(e o)+i&ee t(e ri&(t to re8*ire $ay!ent in &o+' or in a $arti"*+ar 6in' of "oin
or "*rren"y ot(er t(an P(i+i$$ine "*rren"y or in an a!o*nt of !oney of t(e P(i+i$$ine# !ea#*re' t(ere)y% )e a# it i# (ere)y
'e"+are' a&ain#t $*)+i" $o+i"y% an' n*++% -oi'% an' of no effe"t% an' no #*"( $ro-i#ion #(a++ )e "ontaine' in% or !a'e ,it(
re#$e"t to% any o)+i&ation (ereafter in"*rre'. T(e a)o-e $ro(i)ition #(a++ not a$$+y to (a . . .B () tran#a"tion# affe"tin& (i&(0
$riority e"ono!i" $ro5e"t# for a&ri"*+t*ra+% in'*#tria+ an' $o,er 'e-e+o$!ent a# !ay )e 'eter!ine' )y
t(e Nationa+ E"ono!i" Co*n"i+ ,(i"( are finan"e' )y or t(ro*&( forei&n f*n'#B . . . .
3. T(e fa"t t(at t(e "ontra"t for t(e "on#tr*"tion of t(e EDSA LRT III ,a# a,ar'e' t(ro*&( ne&otiation an' )efore
"on&re##iona+ a$$ro-a+ on >an*ary 22 an' 23% 1332 of t(e Li#t of Nationa+ Pro5e"t# to )e *n'erta6en )y t(e $ri-ate #e"tor
$*r#*ant to t(e EOT La, (%ollo% $$. 3;30312 'oe# not #*ffi"e to in-a+i'ate t(e a,ar'.
S*)#e8*ent "on&re##iona+ a$$ro-a+ of t(e +i#t in"+*'in& ?rai+0)a#e' $ro5e"t# $a"6a&e' ,it( "o!!er"ia+ 'e-e+o$!ent
o$$ort*nitie#? (%ollo% $. 31; *n'er ,(i"( t(e EDSA LRT III $ro5e"t# fa++#% a!o*nt# to a ratifi"ation of t(e $rior a,ar' of t(e
EDSA LRT III "ontra"t *n'er t(e EOT La,.
Petitioner# in#i#t t(at t(e $re8*a+ifi"ation# $ro"e## ,(i"( +e' to t(e ne&otiate' a,ar' of t(e "ontra"t a$$ear# to (a-e )een
ri&&e' fro! t(e -ery )e&innin& to 'o a,ay ,it( t(e *#*a+ o$en internationa+ $*)+i" )i''in& ,(ere 8*a+ifie' internationa++y
6no,n a$$+i"ant# "o*+' fair+y $arti"i$ate.
T(e re"or'# #(o, t(at on+y one a$$+i"ant $a##e' t(e $re8*a+ifi"ation $ro"e##. Sin"e on+y one ,a# +eft% to "on'*"t a $*)+i"
)i''in& in a""or'an"e ,it( Se"tion < of t(e EOT La, for t(at +one $arti"i$ant ,i++ )e an a)#*r) an' $oint+e## e:er"i#e
(cf) De+o#o -. San'i&an)ayan% 217 SCRA 13% 41 J1333K.
Contrary to t(e "o!!ent# of t(e E:e"*ti-e Se"retary Dri+on% Se"tion < of t(e EOT La, in re+ation to Pre#i'entia+ De"ree No.
1<31 a++o,# t(e ne&otiate' a,ar' of &o-ern!ent infra#tr*"t*re $ro5e"t#.
Pre#i'entia+ De"ree No. 1<31% ?Pre#"ri)in& Po+i"ie#% .*i'e+ine#% R*+e# an' Re&*+ation# for .o-ern!ent Infra#tr*"t*re
Contra"t#%? a++o,# t(e ne&otiate' a,ar' of &o-ern!ent $ro5e"t# in e:"e$tiona+ "a#e#. Se"tion# 1 of t(e #ai' +a, rea'# a#
fo++o,#A
9idding. @ Con#tr*"tion $ro5e"t# #(a++ &enera++y )e *n'erta6en )y "ontra"t after "o!$etiti-e $*)+i" )i''in&. *rojects may be
undertaken by administration or force account or by negotiated contract only in exceptional cases where time is of the
essence, or where there is lack of qualified bidders or contractors, or where there is conclusive evidence that greater economy
and efficiency would be achieved through this arrangement% an' in a""or'an"e ,it( $ro-i#ion of +a,# an' a"t# on t(e !atter%
#*)5e"t to t(e a$$ro-a+ of t(e Mini#ter of P*)+i" Wor6# an' Tran#$ortation an' Co!!*ni"ation#% t(e Mini#ter of P*)+i"
9i&(,ay#% or t(e Mini#ter of Ener&y% a# t(e "a#e !ay )e% if t(e $ro5e"t "o#t i# +e## t(an P1 Mi++ion% an' t(e Pre#i'ent of t(e
P(i+i$$ine#% *$on re"o!!en'ation of t(e Mini#ter% if t(e $ro5e"t "o#t i# P1 Mi++ion or !ore (E!$(a#i# #*$$+ie'.
::: ::: :::
In'ee'% ,(ere t(ere i# a +a"6 of 8*a+ifie' )i''er# or "ontra"tor#% t(e a,ar' of &o-ern!ent infra#tr*"t*re "ontra"t# !ay (e
!a'e )y ne&otiation. Pre#i'entia+ De"ree No. 1<31 i# t(e &enera+ +a, on &o-ern!ent infra#tr*"t*re "ontra"t# ,(i+e t(e EOT
La, &o-ern# $arti"*+ar arran&e!ent# or #"(e!e# ai!e' at en"o*ra&in& $ri-ate #e"tor $arti"i$ation in &o-ern!ent
1;
infra#tr*"t*re $ro5e"t#. T(e t,o +a,# are not in"on#i#tent ,it( ea"( ot(er )*t are inpari materia an' #(o*+' )e rea' to&et(er
a""or'in&+y.
In t(e in#tant "a#e% if t(e $re8*a+ifi"ation $ro"e## ,a# a"t*a++y tainte' )y fo*+ $+ay% one ,on'er# ,(y none of t(e "o!$etin&
fir!# e-er )ro*&(t t(e !atter )efore t(e PEAC% or inter-ene' in t(i# "a#e )efore *# (cf) Ma+ayan Inte&rate' In'*#trie# Cor$. -.
Co*rt of A$$ea+#% 213 SCRA 41; J1332KB E*rea* Herita# -. Offi"e of t(e Pre#i'ent% 2;< SCRA 7;< J1332K.
T(e "(a++en&e' a&ree!ent# (a-e )een a$$ro-e' )y Pre#i'ent Ra!o# (i!#e+f. A+t(o*&( t(en E:e"*ti-e Se"retary Dri+on !ay
(a-e 'i#a$$ro-e' t(e ?A&ree!ent to E*i+'% Lea#e an' Tran#fer a Li&(t Rai+ Tran#it Sy#te! for EDSA%? t(ere i# not(in& in o*r
+a,# t(at $ro(i)it# $artie# to a "ontra"t fro! rene&otiatin& an' !o'ifyin& in &oo' fait( t(e ter!# an' "on'ition# t(ereof #o a# to
!eet +e&a+% #tat*tory an' "on#tit*tiona+ re8*ire!ent#. 7n'er t(e "ir"*!#tan"e#% to re8*ire t(e $artie# to &o )a"6 to #te$ one of
t(e $re8*a+ifi"ation $ro"e## ,o*+' 5*#t )e an i'+e "ere!ony. 7#e+e## )*rea*"rati" ?re' ta$e? #(o*+' )e e#"(e,e' )e"a*#e it
'i#"o*ra&e# $ri-ate #e"tor $arti"i$ation% t(e ?!ain en&ine? for nationa+ &ro,t( an' 'e-e+o$!ent (R.A. No. 43<7% Se". 1% an'
ren'er# t(e EOT La, n*&atory.
Re$*)+i" A"t No. 7712 re"o&ni/e# an' 'efine# a ELT #"(e!e in Se"tion 2 t(ereof a#A
(e E*i+'0+ea#e0an'0tran#fer @ A "ontra"t*a+ arran&e!ent ,(ere)y a $ro5e"t $ro$onent i# a*t(ori/e' to finan"e an' "on#tr*"t
an infra#tr*"t*re or 'e-e+o$!ent fa"i+ity an' *$on it# "o!$+etion t*rn# it o-er to t(e &o-ern!ent a&en"y or +o"a+ &o-ern!ent
*nit "on"erne' on a +ea#e arran&e!ent for a fi:e' $erio' after ,(i"( o,ner#(i$ of t(e fa"i+ity i# a*to!ati"a++y tran#ferre' to t(e
&o-ern!ent *nit "on"erne'.
Se"tion <0A of t(e +a,% ,(i"( e:$re##+y a++o,# 'ire"t ne&otiation of "ontra"t#% $ro-i'e#A
Dire"t Ne&otiation of Contra"t#. @ Dire"t ne&otiation #(a++ )e re#orte' to ,(en t(ere i# on+y one "o!$+yin& )i''er +eft a#
'efine' (ere*n'er.
(a If% after a'-erti#e!ent% on+y one "ontra"tor a$$+ie# for $re8*a+ifi"ation an' it !eet# t(e $re8*a+ifi"ation re8*ire!ent#% after
,(i"( it i# re8*ire' to #*)!it a )i' $ro$o#a+ ,(i"( i# #*)#e8*ent+y fo*n' )y t(e a&en"yF+o"a+ &o-ern!ent *nit (L.7 to )e
"o!$+yin&.
() If% after a'-erti#e!ent% !ore t(an one "ontra"tor a$$+ie' for $re8*a+ifi"ation )*t on+y one !eet# t(e $re8*a+ifi"ation
re8*ire!ent#% after ,(i"( it #*)!it# )i'F$ro$o#a+ ,(i"( i# fo*n' )y t(e a&en"yF+o"a+ &o-ern!ent *nit (L.7 to )e "o!$+yin&.
(" If% after $re8*a+ifi"ation of !ore t(an one "ontra"tor on+y one #*)!it# a )i' ,(i"( i# fo*n' )y t(e a&en"yFL.7 to )e
"o!$+yin&.
(' If% after $re8*a+ifi"ation% !ore t(an one "ontra"tor #*)!it )i'# )*t on+y one i# fo*n' )y t(e a&en"yFL.7 to )e "o!$+yin&.
Pro-i'e'% T(at% any of t(e 'i#8*a+ifie' $ro#$e"ti-e )i''er JsicK !ay a$$ea+ t(e 'e"i#ion of t(e i!$+e!entin& a&en"y%
a&en"yFL.7# $re8*a+ifi"ation )i'# an' a,ar'# "o!!ittee ,it(in fifteen (1< ,or6in& 'ay# to t(e (ea' of t(e a&en"y% in "a#e of
nationa+ $ro5e"t# or to t(e De$art!ent of t(e Interior an' Lo"a+ .o-ern!ent% in "a#e of +o"a+ $ro5e"t# fro! t(e 'ate t(e
'i#8*a+ifi"ation ,a# !a'e 6no,n to t(e 'i#8*a+ifie' )i''erA Pro-i'e'% f*rt(er!ore% T(at t(e i!$+e!entin& a&en"yFL.7#
"on"erne' #(o*+' a"t on t(e a$$ea+ ,it(in forty0fi-e (1< ,or6in& 'ay# fro! re"ei$t t(ereof.
Petitioner#= "+ai! t(at t(e ELT #"(e!e an' 'ire"t ne&otiation of "ontra"t# are not "onte!$+ate' )y t(e EOT La, (a# no, )een
ren'ere' !oot an' a"a'e!i" )y R.A. No. 7712. Se"tion 3 of t(i# +a, a*t(ori/e# a++ &o-ern!ent infra#tr*"t*re a&en"ie#%
&o-ern!ent0o,ne' an' "ontro++e' "or$oration# an' +o"a+ &o-ern!ent *nit# to enter into "ontra"t ,it( any '*+y $re8*a+ifie'
$ro$onent for t(e finan"in&% "on#tr*"tion% o$eration an' !aintenan"e of any finan"ia++y -ia)+e infra#tr*"t*re or 'e-e+o$!ent
fa"i+ity t(ro*&( a EOT% ET% ELT% EOO (E*i+'0o,n0an'0o$erate% CAO (Contra"t0a''0o$erate% DOT (De-e+o$0o$erate0an'0
tran#fer% ROT (Re(a)i+itate0o$erate0an'0tran#fer% an' ROO (Re(a)i+itate0o,n0o$erate (R.A. No. 7712% Se". 2 J)05K.
Fro! t(e +a, it#e+f% on"e an' a$$+i"ant (a# $re8*a+ifie'% it "an enter into any of t(e #"(e!e# en*!erate' in Se"tion 2 t(ereof%
in"+*'in& a ELT arran&e!ent% en*!erate' an' 'efine' t(erein (Se". 3.
Re$*)+i" A"t No. 7712 i# a "*rati-e #tat*te. It i# inten'e' to $ro-i'e finan"ia+ in"enti-e# an' ?a "+i!ate of !ini!*!
&o-ern!ent re&*+ation# an' $ro"e'*re# an' #$e"ifi" &o-ern!ent *n'erta6in&# in #*$$ort of t(e $ri-ate #e"tor? (Se". 1. A
"*rati-e #tat*te !a6e# -a+i' t(at ,(i"( )efore ena"t!ent of t(e #tat*te ,a# in-a+i'. T(*#% ,(ate-er 'o*)t# an' a++e&e'
$ro"e'*ra+ +a$#e# $ri-ate re#$on'ent an' DOTC !ay (a-e en&en'ere' an' "o!!itte' in enterin& into t(e 8*e#tione'
"ontra"t#% t(e#e (a-e no, )een "*re' )y R.A. No. 7712 (cf)De-e+o$!ent Ean6 of t(e P(i+i$$ine# -. Co*rt of A$$ea+#% 34
SCRA 312 J132;KB Santo# H. D*ata% 11 SCRA 1;11 J134<KB A'on& H. C(eon& Sen& .ee% 13 P(i+. 13 J1322K.
1. La#t+y% $etitioner# "+ai! t(at t(e a&ree!ent# are &ro##+y 'i#a'-anta&eo*# to t(e &o-ern!ent )e"a*#e t(e renta+ rate# are
e:"e##i-e an' $ri-ate re#$on'ent=# 'e-e+o$!ent ri&(t# o-er t(e 13 #tation# an' t(e 'e$ot ,i++ ro) DOTC of t(e )e#t ter!#
'*rin& t(e !o#t $ro'*"ti-e year# of t(e $ro5e"t.
It !*#t )e note' t(at a# $art of t(e EDSA LRT III $ro5e"t% $ri-ate re#$on'ent (a# )een &rante'% for a $erio' of 2< year#%
e:"+*#i-e ri&(t# o-er t(e 'e$ot an' t(e air #$a"e a)o-e t(e #tation# for 'e-e+o$!ent into "o!!er"ia+ $re!i#e# for +ea#e%
#*)+ea#e% tran#fer% or a'-erti#in& (S*$$+e!enta+ A&ree!ent% Se". 11B %ollo% $$. 31032. For an' in "on#i'eration of t(e#e
'e-e+o$!ent ri&(t#% $ri-ate re#$on'ent #(a++ $ay DOTC in P(i+i$$ine "*rren"y &*arantee' re-en*e# &enerate' t(erefro! in
t(e a!o*nt# #et fort( in t(e S*$$+e!enta+ A&ree!ent (Se". 11B%ollo% $. 33. In t(e e-ent t(at DOTC #(a++ )e *na)+e to "o++e"t
t(e &*arantee' re-en*e#% DOTC #(a++ )e a++o,e' to 'e'*"t any #(ortfa++# fro! t(e !ont(+y rent '*e $ri-ate re#$on'ent for t(e
"on#tr*"tion of t(e EDSA LRT III (S*$$+e!enta+ A&ree!ent% Se". 11B %ollo% $$. 33031. A++ ri&(t#% tit+e#% intere#t# an' in"o!e
o-er a++ "ontra"t# on t(e "o!!er"ia+ #$a"e# #(a++ re-ert to DOTC *$on e:$iration of t(e 2<0year $erio'. (S*$$+e!enta+
A&ree!ent% Se". 11B %ollo, $$. 31032.
T(e ter!# of t(e a&ree!ent# ,ere arri-e' at after a $ain#ta6in& #t*'y )y DOTC. T(e 'eter!ination )y t(e $ro$er
a'!ini#trati-e a&en"ie# an' offi"ia+# ,(o (a-e a"8*ire' e:$erti#e% #$e"ia+i/e' #6i++# an' 6no,+e'&e in t(e $erfor!an"e of t(eir
f*n"tion# #(o*+' )e a""or'e' re#$e"t a)#ent any #(o,in& of &ra-e a)*#e of 'i#"retion (Fe+i$e C#!ae+% >r. O Co. -. De$*ty
E:e"*ti-e Se"retary% 13; SCRA 473 J133;KB 9oard of $edical 'ducation v) Alfonso% 174 SCRA 3;1 J1323K.
.o-ern!ent offi"ia+# are $re#*!e' to $erfor! t(eir f*n"tion# ,it( re&*+arity an' #tron& e-i'en"e i# ne"e##ary to re)*t t(i#
$re#*!$tion. Petitioner# (a-e not $re#ente' e-i'en"e on t(e rea#ona)+e renta+# to )e $ai' )y t(e $artie# to ea"( ot(er. T(e
!atter of -a+*ation i# an e#oteri" fie+' ,(i"( i# )etter +eft to t(e e:$ert# an' ,(i"( t(i# Co*rt i# not ea&er to *n'erta6e.
T(at t(e &rantee of a &o-ern!ent "ontra"t ,i++ $rofit t(erefro! an' to t(at e:tent t(e &o-ern!ent i# 'e$ri-e' of t(e $rofit# if it
en&a&e# in t(e )*#ine## it#e+f% i# not ,ort(y of )ein& rai#e' a# an i##*e. In a++ "a#e# ,(ere a $arty enter# into a "ontra"t ,it(
t(e &o-ern!ent% (e 'oe# #o% not o*t of "(arity an' not to +o#e !oney% )*t to &ain $e"*niari+y.
<. Definite+y% t(e a&ree!ent# in 8*e#tion (a-e )een entere' into )y DOTC in t(e e:er"i#e of it# &o-ern!enta+ f*n"tion. DOTC
i# t(e $ri!ary $o+i"y% $+annin&% $ro&ra!!in&% re&*+atin& an' a'!ini#trati-e entity of t(e E:e"*ti-e )ran"( of &o-ern!ent in t(e
$ro!otion% 'e-e+o$!ent an' re&*+ation of 'e$en'a)+e an' "oor'inate' net,or6# of tran#$ortation an' "o!!*ni"ation#
#y#te!# a# ,e++ a# in t(e fa#t% #afe% effi"ient an' re+ia)+e $o#ta+% tran#$ortation an' "o!!*ni"ation# #er-i"e# (A'!ini#trati-e
Co'e of 1327% Eoo6 IH% Tit+e VH% Se". 2. It i# t(e E:e"*ti-e 'e$art!ent% DOTC in $arti"*+ar t(at (a# t(e $o,er% a*t(ority an'
te"(ni"a+ e:$erti#e 'eter!ine ,(et(er or not a #$e"ifi" tran#$ortation or "o!!*ni"ation $ro5e"t i# ne"e##ary% -ia)+e an'
11
)enefi"ia+ to t(e $eo$+e. T(e 'i#"retion to a,ar' a "ontra"t i# -e#te' in t(e &o-ern!ent a&en"ie# entr*#te' ,it( t(at f*n"tion
(E*rea* Herita# -. Offi"e of t(e Pre#i'ent% 2;< SCRA 7;< J1332K.
W9EREFORE% t(e $etition i# DISMISSED.
.o-ernin& La,
Sa!ar Minin& Co.% In". -. Nor'e*t#"(er L+oy'% 132 SCRA <23 (1321
T(i# i# an a$$ea+ ta6en 'ire"t+y to 7# on certiorari fro! t(e 'e"i#ion of t(e 'ef*n"t Co*rt of Fir#t In#tan"e of Mani+a% fin'in&
'efen'ant# "arrier an' a&ent% +ia)+e for t(e -a+*e of &oo'# ne-er 'e+i-ere' to $+aintiff "on#i&nee. T(e i##*e rai#e' i# a $*re
8*e#tion of +a,% ,(i"( i#% t(e +ia)i+ity of t(e 'efen'ant#% no, a$$e++ant#% *n'er t(e )i++ of +a'in& "o-erin& t(e #*)5e"t #(i$!ent.
T(e "a#e aro#e fro! an i!$ortation !a'e )y $+aintiff% no, a$$e++ee% SAMAR MININ. COMPANC% INC.% of one (1 "rate
O$ti!a ,e+'e' ,e'&e ,ire #ie-e# t(ro*&( t(e MFS SC9WAEENSTEIN a -e##e+ o,ne' )y 'efen'ant0a$$e++ant
NORDE7TSC9ER LLOCD% (re$re#ente' in t(e P(i+i$$ine# )y it# a&ent% C.F. S9ARP O CO.% INC.% ,(i"( #(i$!ent i# "o-ere'
)y Ei++ of La'in& No. 12 '*+y i##*e' to "on#i&nee SAMAR MININ. COMPANC% INC. 7$on arri-a+ of t(e afore#ai' -e##e+ at t(e
$ort of Mani+a% t(e afore!entione' i!$ortation ,a# *n+oa'e' an' 'e+i-ere' in &oo' or'er an' "on'ition to t(e )on'e'
,are(o*#e of AMCCL. 1 T(e &oo'# ,ere (o,e-er ne-er 'e+i-ere' to% nor re"ei-e' )y% t(e "on#i&nee at t(e $ort of 'e#tination
@ Da-ao.
W(en t(e +etter# of "o!$+aint #ent to 'efen'ant# fai+e' to e+i"it t(e 'e#ire' re#$on#e% "on#i&nee (erein a$$e++ee% fi+e' a for!a+
"+ai! for P1%431.33% t(e e8*i-a+ent of U121.;; at t(e $re-ai+in& rate of e:"(an&e at t(at ti!e% a&ain#t t(e for!er% )*t neit(er
$ai'. 9en"e% t(e fi+in& of t(e in#tant #*it to enfor"e $ay!ent. Defen'ant#0a$$e++ant# )ro*&(t in AMCCL a# t(ir' $arty
'efen'ant.
T(e tria+ "o*rt ren'ere' 5*'&!ent in fa-or of $+aintiff% or'erin& 'efen'ant# to $ay t(e a!o*nt of P1%431.33 $+*# attorney=# fee#
an' "o#t#. 9o,e-er% t(e Co*rt #tate' t(at 'efen'ant# !ay re"o*$ ,(ate-er t(ey !ay $ay $+aintiff )y enfor"in& t(e 5*'&!ent
a&ain#t t(ir' $arty 'efen'ant AMCCL ,(i"( (a' ear+ier )een 'e"+are' in 'efa*+t. On+y t(e 'efen'ant# a$$ea+e' fro! #ai'
'e"i#ion.
T(e i##*e at (an' 'e!an'# a "+o#e #"r*tiny of Ei++ of La'in& No. 12 an' it# -ario*# "+a*#e# an' #ti$*+ation# ,(i"( #(o*+' )e
e:a!ine' in t(e +i&(t of $ertinent +e&a+ $ro-i#ion# an' #ett+e' 5*ri#$r*'en"e. T(i# *n'erta6in& i# not on+y $ro$er )*t ne"e##ary
a# ,e++ )e"a*#e of t(e nat*re of t(e )i++ of +a'in& ,(i"( o$erate# )ot( a# a re"ei$t for t(e &oo'#B an' !ore i!$ortant+y% a# a
"ontra"t to tran#$ort an' 'e+i-er t(e #a!e a# #ti$*+ate' t(erein.
2
Eein& a "ontra"t% it i# t(e +a, )et,een t(e $artie#
t(ereto
3
,(o are )o*n' )y it# ter!# an' "on'ition#
4
$ro-i'e' t(at t(e#e are not "ontrary to +a,% !ora+#% &oo' "*#to!#% $*)+i"
or'er an' $*)+i" $o+i"y.
5
Ei++ of La'in& No. 12 #et# fort( in $a&e 2 t(ereof
6
t(at one (1 "rate of O$ti!a ,e+'e' ,e'&e ,ire #ie-e# ,a# re"ei-e' )y t(e
"arrier NORDE7TSC9ER LLOCD at t(e ?$ort of +oa'in&? ,(i"( i# Ere!en% .er!any% ,(i+e t(e frei&(t (a' )een $re$ai' *$ to
t(e $ort of 'e#tination or t(e ?$ort of 'i#"(ar&e of &oo'# in t(i# "a#e% Da-ao% t(e "arrier *n'ertoo6 to tran#$ort t(e &oo'# in it#
-e##e+% MFS SC9WAEENSTEIN on+y *$ to t(e ?$ort of 'i#"(ar&e fro! #(i$0Mani+a. T(ereafter% t(e &oo'# ,ere to )e
tran##(i$$e' )y t(e "arrier to t(e $ort of 'e#tination or ?$ort of 'i#"(ar&e of &oo'# T(e #ti$*+ation i# $+ain+y in'i"ate' on t(e
fa"e of t(e )i++ ,(i"( "ontain# t(e fo++o,in& $(ra#e $rinte' )e+o, t(e #$a"e $ro-i'e' for t(e $ort of 'i#"(ar&e fro! #(i$?%
t(*#A tKL)MNhqwOM
if &oo'# are to )e tran##(i$$e' at $ort of 'i#"(ar&e% #(o, 'e#tination *n'er t(e "o+*!n for ?'e#"ri$tion of "ontent#?
7
A# in#tr*"te' a)o-e% t(e fo++o,in& ,or'# a$$eare' ty$e,ritten *n'er t(e "o+*!n for ?'e#"ri$tion of "ontent#?A tKL)MNhqwOM
PORT OF DISC9AR.E OF .OODSA DAHAO
FREI.9T PREPAID
8
It i# "+ear% t(en% t(at in 'i#"(ar&in& t(e &oo'# fro! t(e #(i$ at t(e $ort of Mani+a% an' 'e+i-erin& t(e #a!e into t(e "*#to'y of
AMCCL% t(e )on'e' ,are(o*#e% a$$e++ant# ,ere a"tin& in f*++ a""or' ,it( t(e "ontra"t*a+ #ti$*+ation# "ontaine' in Ei++ of
La'in& No. 12. T(e 'e+i-ery of t(e &oo'# to AMCCL ,a# $art of a$$e++ant#= '*ty to tran##(i$ t(e &oo'# fro! Mani+a to t(eir
$ort of 'e#tination0Da-ao. T(e ,or' ?tran##(i$? !ean#A tKL)MNhqwOM
to tran#fer for f*rt(er tran#$ortation fro! one #(i$ or "on-eyan"e to anot(er
9
T(e e:tent of a$$e++ant "arrier=# re#$on#i)i+ity an'For +ia)i+ity in t(e tran##(i$!ent of t(e &oo'# in 8*e#tion are #$e++e' o*t an'
'e+ineate' *n'er Se"tion 1% $ara&ra$( 3 of Ei++ of La'in& No. 12% to ,itA tKL)MNhqwOM
The carrier shall not be liable in any "a$a"ity ,(at#oe-er for any 'e+ay% +o## or 'a!a&e o""*rrin& )efore t(e &oo'# enter
#(i$=# ta"6+e to )e +oa'e' or after the goods leave ship's tackle to be discharged, transshipped or forwarded ... (E!$(a#i#
#*$$+ie'
an' in Se"tion 11 of t(e #a!e Ei++% ,(i"( $ro-i'e#A tKL)MNhqwOM
W(ene-er t(e "arrier or ! a#ter !ay 'ee! it a'-i#a)+e or in any "a#e ,(ere t(e &oo'# are $+a"e' at "arrier=# 'i#$o#a+ at
or consigned to a point where the ship does not expect to load or discharge% t(e "arrier or !a#ter !ay% ,it(o*t noti"e% for,ar'
t(e ,(o+e or any $art of t(e &oo'# )efore or after +oa'in& at t(e ori&ina+ $ort of #(i$!ent% ... T(i# "arrier% in !a6in&
arran&e!ent# for any tran##(i$$in& or for,ar'in& -e##e+# or !ean# of tran#$ortation not o$erate' )y t(i# "arrier #(a++ )e
"on#i'ere' #o+e+y t(e for,ar'in& a&ent of t(e #(i$$er an' ,it(o*t any ot(er re#$on#i)i+ity ,(at#oe-er e-en t(o*&( t(e frei&(t
for t(e ,(o+e tran#$ort (a# )een "o++e"te' )y (i!. ... Pen'in& or '*rin& for,ar'in& or tran##(i$$in& t(e "arrier !ay #tore t(e
&oo'# a#(ore or af+oat #o+e+y a# a&ent of t(e #(i$$er an' at ri#6 an' e:$en#e of t(e &oo'# an' t(e "arrier #(a++ not )e +ia)+e
for 'etention nor re#$on#i)+e for t(e a"t#% ne&+e"t% 'e+ay or fai+*re to a"t of anyone to ,(o! t(e &oo'# are entr*#te' or
'e+i-ere' for #tora&e% (an'+in& or any #er-i"e in"i'enta+ t(ereto (E!$(a#i# #*$$+ie' 10
Defen'ant#0a$$e++ant# no, #(ir6 +ia)i+ity for t(e +o## of t(e #*)5e"t &oo'# )y "+ai!in& t(at t(ey (a-e 'i#"(ar&e' t(e #a!e in
f*++ an' &oo' "on'ition *nto t(e "*#to'y of AMCCL at t(e $ort of 'i#"(ar&e fro! #(i$ @ Mani+a% an' t(erefore% $*r#*ant to t(e
afore8*ote' #ti$*+ation (Se". 11 in t(e )i++ of +a'in&% t(eir re#$on#i)i+ity for t(e "ar&o (a' "ea#e'. 11
We fin' !erit in a$$e++ant#= #tan'. T(e -a+i'ity of #ti$*+ation# in )i++# of +a'in& e:e!$tin& t(e "arrier fro! +ia)i+ity for +o## or
'a!a&e to t(e &oo'# ,(en t(e #a!e are not in it# a"t*a+ "*#to'y (a# )een *$(e+' )y 7# in*H7',; A""-%A,!' !7),
8T&) vs) -,T'& "TAT'" 8,'"% 22 SCRA 471 (1342. Sai' "a#e !at"(e# t(e $re#ent "ontro-er#y not on+y a# to t(e
!ateria+ fa"t# )*t !ore i!$ortant+y% a# to t(e #ti$*+ation# "ontaine' in t(e )i++ of +a'in& "on"erne'. A# if to *n'er+ine t(eir
a,e#o!e +i6ene##% t(e &oo'# in 8*e#tion in )ot( "a#e# ,ere 'e#tine' for Da-ao% )*t ,ere 'i#"(ar&e' fro! #(i$ in Mani+a% in
a""or'an"e ,it( t(eir re#$e"ti-e )i++# of +a'in&.
T(e #ti$*+ation# in t(e )i++ of +a'in& in t(e P9OENIV "a#e ,(i"( are #*)#tantia++y t(e #a!e a# t(e #*)5e"t #ti$*+ation# )efore
7#% $ro-i'e#A tKL)MNhqwOM
T(e "arrier #(a++ not )e +ia)+e in any "a$a"ity ,(at#oe-er for any +o## or 'a!a&e to t(e &oo'# ,(i+e t(e &oo'# are not in it#
a"t*a+ "*#to'y. (Par. 2% +a#t #*)$ar.
::: ::: :::
12
T(e "arrier or !a#ter% in !a6in& arran&e!ent# ,it( any $er#on for or in "onne"tion ,it( a++ tran##(i$$in& or for,ar'in& of t(e
&oo'# or t(e *#e of any !ean# of tran#$ortation or for,ar'in& of &oo'# not *#e' or o$erate' )y t(e "arrier% #(a++ )e
"on#i'ere' #o+e+y t(e a&ent of t(e #(i$$er an' "on#i&nee an' ,it(o*t any ot(er re#$on#i)i+ity ,(at#oe-er or for t(e "o#t
t(ereof ... (Par. 14. 12
Fin'in& t(e a)o-e #ti$*+ation# not "ontrary to +a,% !ora+#% &oo' "*#to!#% $*)+i" or'er or $*)+i" $o+i"y% We #*#taine' t(eir
-a+i'ity 13 A$$+yin& #ai' #ti$*+ation# a# t(e +a, )et,een t(e $artie# in t(e afore"ite' "a#e% t(e Co*rt "on"+*'e' t(atA tKL)
MNhqwOM
... T(e #(ort for! Ei++ of La'in& ( #tate# in no *n"ertain ter!# t(at t(e $ort of 'i#"(ar&e of t(e "ar&o i# Mani+a% )*t t(at t(e
#a!e ,a# to )e tran##(i$$e' )eyon' t(e $ort of 'i#"(ar&e to Da-ao City. P*r#*ant to t(e ter!# of t(e +on& for! Ei++ of La'in&
( % appellee's responsibility as a common carrier ceased the moment the goods were unloaded in $anila and in the matter of
transshipment,a$$e++ee a"te' !ere+y a# an a&ent of t(e #(i$$er an' "on#i&nee. ... (E!$(a#i# #*$$+ie' 14
Co!in& no, to t(e "a#e )efore 7#% We (o+'% t(at )y t(e a*t(ority of t(e a)o-e $rono*n"e!ent#% an' in "onfor!ity ,it( t(e
$ertinent $ro-i#ion# of t(e Ne, Ci-i+ Co'e% Se"tion 11 of Ei++ of La'in& No. 12 an' t(e t(ir' $ara&ra$( of Se"tion 1 t(ereof are
-a+i' #ti$*+ation# )et,een t(e $artie# in#ofar a# t(ey e:e!$t t(e "arrier fro! +ia)i+ity for +o## or 'a!a&e to t(e &oo'# ,(i+e t(e
#a!e are not in t(e +atter=# a"t*a+ "*#to'y.
T(e +ia)i+ity of t(e "o!!on "arrier for t(e +o##% 'e#tr*"tion or 'eterioration of &oo'# tran#$orte' fro! a forei&n "o*ntry to t(e
P(i+i$$ine# i# &o-erne' $ri!ari+y )y t(e Ne, Ci-i+ Co'e. 15 In a++ !atter# not re&*+ate' )y #ai' Co'e% t(e ri&(t# an'
o)+i&ation# of "o!!on "arrier# #(a++ )e &o-erne' )y t(e Co'e of Co!!er"e an' )y #$e"ia+ +a,#. 16 A "aref*+ $er*#a+ of t(e
$ro-i#ion# of t(e Ne, Ci-i+ Co'e on "o!!on "arrier# (Se"tion 1% Tit+e HIII% Eoo6 IH 'ire"t# o*r attention to Arti"+e 1734
t(ereof% ,(i"( rea'#A tKL)MNhqwOM
Arti"+e 1734. T(e e:traor'inary re#$on#i)i+ity of t(e "o!!on "arrier +a#t# fro! t(e ti!e t(e &oo'# are *n"on'itiona++y $+a"e' in
t(e $o##e##ion of% an' re"ei-e' )y t(e "arrier for tran#$ortation *nti+ t(e #a!e are 'e+i-ere'% a"t*a++y or "on#tr*"ti-e+y% )y t(e
"arrier to t(e "on#i&nee% or to t(e $er#on ,(o (a# a ri&(t to re"ei-e t(e!% ,it(o*t $re5*'i"e to t(e $ro-i#ion# of arti"+e 1732.
Arti"+e 1732 referre' to in t(e fore&oin& $ro-i#ion r*n# t(*#A tKL)MNhqwOM
Arti"+e 1732. T(e e:traor'inary +ia)i+ity of t(e "o!!on "arrier "ontin*e# to )e o$erati-e e-en '*rin& t(e ti!e t(e &oo'# are
#tore' in a ,are(o*#e of t(e "arrier at t(e $+a"e of 'e#tination% *nti+ t(e "on#i&nee (a# )een a'-i#e' of t(e arri-a+ of t(e
&oo'# an' (a# (a' rea#ona)+e o$$ort*nity t(ereafter to re!o-e t(e! or ot(er,i#e 'i#$o#e of t(e!.
T(ere i# no 'o*)t t(at Art. 1732 fin'# no a$$+i"a)i+ity to t(e in#tant "a#e. T(e #ai' arti"+e "onte!$+ate# a #it*ation ,(ere t(e
&oo'# (a' a+rea'y rea"(e' t(eir $+a"e of 'e#tination an' are #tore' in t(e ,are(o*#e of t(e "arrier. T(e #*)5e"t &oo'# ,ere
#ti++ a,aitin& tran##(i$!ent to t(eir $ort of 'e#tination% an' ,ere #tore' in t(e ,are(o*#e of a t(ir' $arty ,(en +a#t #een an'For
(ear' of. 9o,e-er% Arti"+e 1734 i# a$$+i"a)+e to t(e in#tant #*it. 7n'er #ai' arti"+e% t(e "arrier !ay )e re+ie-e' of t(e
re#$on#i)i+ity for +o## or 'a!a&e to t(e &oo'# *$on a"t*a+ or "on#tr*"ti-e 'e+i-ery of t(e #a!e )y t(e "arrier to t(e "on#i&nee%
or to t(e $er#on ,(o (a# a ri&(t to re"ei-e t(e!. In #a+e#% a"t*a+ 'e+i-ery (a# )een 'efine' a# t(e "e'in& of "or$orea+
$o##e##ion )y t(e #e++er% an' t(e a"t*a+ a$$re(en#ion of "or$orea+ $o##e##ion )y t(e )*yer or )y #o!e $er#on a*t(ori/e' )y
(i! to re"ei-e t(e &oo'# a# (i# re$re#entati-e for t(e $*r$o#e of "*#to'y or 'i#$o#a+. 17 Ey t(e #a!e to6en% t(ere i# a"t*a+
'e+i-ery in "ontra"t# for t(e tran#$ort of &oo'# ,(en $o##e##ion (a# )een t*rne' o-er to t(e "on#i&nee or to (i# '*+y
a*t(ori/e' a&ent an' a rea#ona)+e ti!e i# &i-en (i! to re!o-e t(e &oo'#. 18 T(e "o*rt a quo fo*n' t(at t(ere ,a# a"t*a+
'e+i-ery to t(e "on#i&nee t(ro*&( it# '*+y a*t(ori/e' a&ent% t(e "arrier.
It )e"o!e# ne"e##ary at t(i# $oint to 'i##e"t t(e "o!$+e: re+ation#(i$ t(at (a' 'e-e+o$e' )et,een a$$e++ant an' a$$e++ee in
t(e "o*r#e of t(e tran#a"tion# t(at &a-e )irt( to t(e $re#ent #*it. T,o *n'erta6in&# a$$eare' e!)o'ie' an'For $ro-i'e' for in
t(e Ei++ of La'in& 19 in 8*e#tion. T(e fir#t i# FOR T9E TRANSPORT OF .OODS fro! Ere!en% .er!any to Mani+a. T(e
#e"on'% T9E TRANSS9IPMENT OF T9E SAME .OODS fro! Mani+a to Da-ao% ,it( a$$e++ant a"tin& a# a&ent of t(e
"on#i&nee.
20
At t(e (iat*# )et,een t(e#e t,o *n'erta6in&# of a$$e++ant ,(i"( i# t(e !o!ent ,(en t(e #*)5e"t &oo'# are
'i#"(ar&e' in Mani+a% it# $er#ona+ity "(an&e# fro! t(at of "arrier to t(at of a&ent of t(e "on#i&nee. T(*#% t(e "(ara"ter of
a$$e++ant=# $o##e##ion a+#o "(an&e#% fro! $o##e##ion in it# o,n na!e a# "arrier% into $o##e##ion in t(e na!e of "on#i&nee a#
t(e +atter=# a&ent. S*"( )ein& t(e "a#e% t(ere ,a#% in effe"t% a"t*a+ 'e+i-ery of t(e &oo'# fro! a$$e++ant a# "arrier to t(e #a!e
a$$e++ant a# a&ent of t(e "on#i&nee. 7$on #*"( 'e+i-ery% t(e a$$e++ant% a# er#t,(i+e "arrier% "ea#e# to )e re#$on#i)+e for any
+o## or 'a!a&e t(at !ay )efa++ t(e &oo'# fro! t(at $oint on,ar'#. T(i# i# t(e f*++ i!$ort of Arti"+e 1734% a# a$$+ie' to t(e "a#e
)efore 7#.
E*t e-en a# a&ent of t(e "on#i&nee% t(e a$$e++ant "annot )e !a'e an#,era)+e for t(e -a+*e of t(e !i##in& &oo'#% It i# tr*e
t(at t(e tran##(i$!ent of t(e &oo'#% ,(i"( ,a# t(e o)5e"t of t(e a&en"y% ,a# not f*++y $erfor!e'. 9o,e-er% a$$e++ant (a'
"o!!en"e' #ai' $erfor!an"e% t(e "o!$+etion of ,(i"( ,a# a)orte' )y "ir"*!#tan"e# )eyon' it# "ontro+. An a&ent ,(o
"arrie# o*t t(e or'er# an' in#tr*"tion# of t(e $rin"i$a+ ,it(o*t )ein& &*i+ty of ne&+i&en"e% 'e"eit or fra*'% "annot )e (e+'
re#$on#i)+e for t(e fai+*re of t(e $rin"i$a+ to a""o!$+i#( t(e o)5e"t of t(e a&en"y%
21
T(i# "an )e &+eane' fro! t(e fo++o,in&
$ro-i#ion# of t(e Ne, Ci-i+ Co'e on t(e o)+i&ation# of t(e a&entA tKL)MNhqwOM
Arti"+e 1221. T(e a&ent i# )o*n' )y (i# a""e$tan"e to "arry o*t t(e a&en"y% an' i# +ia)+e for t(e 'a!a&e# ,(i"(% t(ro*&( (i#
non0$erfor!an"e% t(e $rin"i$a+ !ay #*ffer.
::: ::: :::
Arti"+e 1223. T(e a&ent #(a++ )e +ia)+e for 'a!a&e# if% t(ere )ein& a "onf+i"t )et,een (i# intere#t# an' t(o#e of t(e $rin"i$a+% (e
#(o*+' $refer (i# o,n.
Arti"+e 1232. T(e a&ent !ay a$$oint a #*)#tit*te if t(e $rin"i$a+ (a# not $ro(i)ite' (i! fro! 'oin& #oB )*t (e #(a++ )e
re#$on#i)+e for t(e a"t# of t(e #*)#tit*teA
(1 W(en (e ,a# not &i-en t(e $o,er to a$$oint oneB
(2 W(en (e ,a# &i-en #*"( $o,er )*t ,it(o*t 'e#i&natin& t(e $er#on an' t(e $er#on a$$ointe' ,a# notorio*#+y in"o!$etent
or in#o+-ent.
::: ::: :::
Arti"+e 13;3. T(e a&ent i# re#$on#i)+e not on+y for fra*'% )*t a+#o for ne&+i&en"e ,(i"( #(a++ )e 5*'&e' ,it( !ore or +e## ri&or
)y t(e "o*rt#% a""or'in& to ,(et(er t(e a&en"y ,a# or ,a# not for a "o!$en#ation.
T(e re"or'# fai+ to re-ea+ $roof of ne&+i&en"e% 'e"eit or fra*' "o!!itte' )y a$$e++ant or )y it# re$re#entati-e in t(e P(i+i$$ine#.
Neit(er i# t(ere any #(o,in& of notorio*# in"o!$eten"e or in#o+-en"y on t(e $art of AMCCT% ,(i"( a"te' a# a$$e++ant=#
#*)#tit*te in #torin& t(e &oo'# a,aitin& tran##(i$!ent.
T(e a"tion# of a$$e++ant "arrier an' of it# re$re#entati-e in t(e P(i+i$$ine# )ein& in f*++ fait( ,it( t(e +a,f*+ #ti$*+ation# of Ei++ of
La'in& No. 12 an' in "onfor!ity ,it( t(e $ro-i#ion# of t(e Ne, Ci-i+ Co'e on "o!!on "arrier#% a&en"y an' "ontra"t#% t(ey
in"*r no +ia)i+ity for t(e +o## of t(e &oo'# in 8*e#tion.
W9EREFORE% t(e a$$ea+e' 'e"i#ion i# (ere)y REHERSED. P+aintiff0a$$e++ee=# "o!$+aint i# (ere)y DISMISSED.
13
Ea#tern S(i$$in& Line# -. IAC% 1<; SCRA 141 (1321
T(e#e t,o "a#e#% )ot( for t(e re"o-ery of t(e -a+*e of "ar&o in#*ran"e% aro#e fro! t(e #a!e in"i'ent% t(e #in6in& of t(e MFS
ASIATICA ,(en it "a*&(t fire% re#*+tin& in t(e tota+ +o## of #(i$ an' "ar&o.
T(e )a#i" fa"t# are not in "ontro-er#yA
In 2)%) ,o) PHGII% #o!eti!e in or $rior to >*ne% 1377% t(e MFS ASIATICA% a -e##e+ o$erate' )y $etitioner Ea#tern S(i$$in&
Line#% In".% (referre' to (ereinafter a# Petitioner Carrier +oa'e' at Io)e% >a$an for tran#$ortation to Mani+a% <%;;; $ie"e# of
"a+ori/e' +an"e $i$e# in 22 $a"6a&e# -a+*e' at P2<4%;33.;; "on#i&ne' to P(i+i$$ine E+oo!in& Mi++# Co.% In".% an' 7 "a#e# of
#$are $art# -a+*e' at P32%341.7<% "on#i&ne' to Centra+ Te:ti+e Mi++#% In". Eot( #et# of &oo'# ,ere in#*re' a&ain#t !arine ri#6
for t(eir #tate' -a+*e ,it( re#$on'ent De-e+o$!ent In#*ran"e an' S*rety Cor$oration.
In 2)%) ,o) QCIQR, '*rin& t(e #a!e $erio'% t(e #a!e -e##e+ too6 on )oar' 122 "arton# of &ar!ent fa)ri"# an' a""e##orie#% in
t,o (2 "ontainer#% "on#i&ne' to Mari-e+e# A$$are+ Cor$oration% an' t,o "a#e# of #*r-eyin& in#tr*!ent# "on#i&ne' to A!an
Enter$ri#e# an' .enera+ Mer"(an'i#e. T(e 122 "arton# ,ere in#*re' for t(eir #tate' -a+*e )y re#$on'ent Ni##(in Fire O
Marine In#*ran"e Co.% for 7S U14%<23.;;% an' t(e 2 "a#e# )y re#$on'ent Do,a Fire O Marine In#*ran"e Co.% Lt'.% for 7S
U11%32<.;;.
Enro*te for Io)e% >a$an% to Mani+a% t(e -e##e+ "a*&(t fire an' #an6% re#*+tin& in t(e tota+ +o## of #(i$ an' "ar&o. T(e
re#$e"ti-e re#$on'ent In#*rer# $ai' t(e "orre#$on'in& !arine in#*ran"e -a+*e# to t(e "on#i&nee# "on"erne' an' ,ere t(*#
#*)ro&ate' *nto t(e ri&(t# of t(e +atter a# t(e in#*re'.
2)%) ,7) PHGII
On May 11% 1372% re#$on'ent De-e+o$!ent In#*ran"e O S*rety Cor$oration (De-e+o$!ent In#*ran"e% for #(ort% (a-in& )een
#*)ro&ate' *nto t(e ri&(t# of t(e t,o in#*re' "o!$anie#% fi+e' #*it a&ain#t $etitioner Carrier for t(e re"o-ery of t(e a!o*nt# it
(a' $ai' to t(e in#*re' )efore t(e t(en Co*rt of Fir#t in#tan"e of Mani+a% Eran"( VVV (Ci-i+ Ca#e No. 4;27.
Petitioner0Carrier 'enie' +ia)i+ity !ain+y on t(e &ro*n' t(at t(e +o## ,a# '*e to an e:traor'inary fort*ito*# e-ent% (en"e% it i#
not +ia)+e *n'er t(e +a,.
On A*&*#t 31% 1373% t(e Tria+ Co*rt ren'ere' 5*'&!ent in fa-or of De-e+o$!ent In#*ran"e in t(e a!o*nt# of P2<4%;33.;; an'
P32%341.7<% re#$e"ti-e+y% ,it( +e&a+ intere#t% $+*# P3<%;;;.;; a# attorney=# fee# an' "o#t#. Petitioner Carrier too6 an a$$ea+ to
t(e t(en Co*rt of A$$ea+# ,(i"(% on A*&*#t 11% 1321% affir!e'.
Petitioner Carrier i# no, )efore *# on a Petition for Re-ie, on Certiorari.
2)%) ,7) QCIQR
On >*ne 14% 1372% re#$on'ent# Ni##(in Fire O Marine In#*ran"e Co. NISS9IN for #(ort% an' Do,a Fire O Marine In#*ran"e
Co.% Lt'. (DOWA% for )re-ity% a# #*)ro&ee# of t(e in#*re'% fi+e' #*it a&ain#t Petitioner Carrier for t(e re"o-ery of t(e in#*re'
-a+*e of t(e "ar&o +o#t ,it( t(e t(en Co*rt of Fir#t In#tan"e of Mani+a% Eran"( 11 (Ci-i+ Ca#e No. 1141<1% i!$*tin&
*n#ea,ort(ine## of t(e #(i$ an' non0o)#er-an"e of e:traor'inary 'i+i&en"e )y $etitioner Carrier.
Petitioner Carrier 'enie' +ia)i+ity on t(e $rin"i$a+ &ro*n'# t(at t(e fire ,(i"( "a*#e' t(e #in6in& of t(e #(i$ i# an e:e!$tin&
"ir"*!#tan"e *n'er Se"tion 1(2 () of t(e Carria&e of .oo'# )y Sea A"t (CO.SAB an' t(at ,(en t(e +o## of fire i#
e#ta)+i#(e'% t(e )*r'en of $ro-in& ne&+i&en"e of t(e -e##e+ i# #(ifte' to t(e "ar&o #(i$$er.
On Se$te!)er 1<% 132;% t(e Tria+ Co*rt ren'ere' 5*'&!ent in fa-or of NISS9IN an' DOWA in t(e a!o*nt# of 7S U14%<23.;;
an' 7S U11%32<.;;% re#$e"ti-e+y% ,it( +e&a+ intere#t% $+*# attorney=# fee# of P<%;;;.;; an' "o#t#. On a$$ea+ )y $etitioner% t(e
t(en Co*rt of A$$ea+# on Se$te!)er 1;% 1321% affir!e' ,it( !o'ifi"ation t(e Tria+ Co*rt=# 5*'&!ent )y 'e"rea#in& t(e a!o*nt
re"o-era)+e )y DOWA to 7S U1%;;;.;; )e"a*#e of U<;; $er $a"6a&e +i!itation of +ia)i+ity *n'er t(e CO.SA.
9en"e% t(i# Petition for Re-ie, on "ertiorari )y Petitioner Carrier.
Eot( Petition# ,ere initia++y 'enie' for +a"6 of !erit. ..R. No. 43;11 on >an*ary 14% 132< )y t(e Fir#t Di-i#ion% an' .. R. No.
71172 on Se$te!)er 2<% 132< )y t(e Se"on' Di-i#ion. 7$on Petitioner Carrier=# Motion for Re"on#i'eration% (o,e-er% ..R.
No. 43;11 ,a# &i-en '*e "o*r#e on Mar"( 2<% 132<% an' t(e $artie# ,ere re8*ire' to #*)!it t(eir re#$e"ti-e Me!oran'a%
,(i"( t(ey (a-e 'one.
On t(e ot(er (an'% in ..R. No. 71172% Petitioner Carrier #o*&(t re"on#i'eration of t(e Re#o+*tion 'enyin& t(e Petition for
Re-ie, an' !o-e' for it# "on#o+i'ation ,it( ..R. No. 43;11% t(e +o,er0n*!)ere' "a#e% ,(i"( ,a# t(en $en'in& re#o+*tion
,it( t(e Fir#t Di-i#ion. T(e #a!e ,a# &rante'B t(e Re#o+*tion of t(e Se"on' Di-i#ion of Se$te!)er 2<% 132< ,a# #et a#i'e
an' t(e Petition ,a# &i-en '*e "o*r#e.
At t(e o*t#et% ,e re5e"t Petitioner Carrier=# "+ai! t(at it i# not t(e o$erator of t(e MFS A#iati"a )*t !ere+y a "(arterer t(ereof.
We note t(at in ..R. No. 43;11% Petitioner Carrier #tate' in it# PetitionA
T(ere are a)o*t 22 "a#e# of t(e ?ASIATICA? $en'in& in -ario*# "o*rt# ,(ere -ario*# $+aintiff# are re$re#ente' )y -ario*#
"o*n#e+ re$re#entin& -ario*# "on#i&nee# or in#*ran"e "o!$anie#. T(e "o!!on 'efen'ant in t(e#e "a#e# i# $etitioner (erein%
)ein& t(e o$erator of #ai' -e##e+. ... 1
Petitioner Carrier #(o*+' )e (e+' )o*n' to #ai' a'!i##ion. A# a &enera+ r*+e% t(e fa"t# a++e&e' in a $arty=# $+ea'in& are
'ee!e' a'!i##ion# of t(at $arty an' )in'in& *$on it.
2
An' an a'!i##ion in one $+ea'in& in one a"tion !ay )e re"ei-e' in
e-i'en"e a&ain#t t(e $+ea'er or (i# #*""e##or0in0intere#t on t(e tria+ of anot(er a"tion to ,(i"( (e i# a $arty% in fa-or of a $arty
to t(e +atter a"tion.
3
T(e t(re#(o+' i##*e# in )ot( "a#e# areA (1 ,(i"( +a, #(o*+' &o-ern @ t(e Ci-i+ Co'e $ro-i#ion# on Co!!on "arrier# or t(e
Carria&e of .oo'# )y Sea A"tD an' (2 ,(o (a# t(e )*r'en of $roof to #(o, ne&+i&en"e of t(e "arrierD
7n the 8aw Applicable
T(e +a, of t(e "o*ntry to ,(i"( t(e &oo'# are to )e tran#$orte' &o-ern# t(e +ia)i+ity of t(e "o!!on "arrier in "a#e of t(eir +o##%
'e#tr*"tion or 'eterioration.
4
A# t(e "ar&oe# in 8*e#tion ,ere tran#$orte' fro! >a$an to t(e P(i+i$$ine#% t(e +ia)i+ity of
Petitioner Carrier i# &o-erne' $ri!ari+y )y t(e Ci-i+ Co'e.
5
9o,e-er% in a++ !atter# not re&*+ate' )y #ai' Co'e% t(e ri&(t# an'
o)+i&ation# of "o!!on "arrier #(a++ )e &o-erne' )y t(e Co'e of Co!!er"e an' )y #$e"ia+ +a,#.
6
T(*#% t(e Carria&e of .oo'#
)y Sea A"t% a #$e"ia+ +a,% i# #*$$+etory to t(e $ro-i#ion# of t(e Ci-i+ Co'e.
7
7n the 9urden of *roof
7n'er t(e Ci-i+ Co'e% "o!!on "arrier#% fro! t(e nat*re of t(eir )*#ine## an' for rea#on# of $*)+i" $o+i"y% are )o*n' to
o)#er-e e:traor'inary 'i+i&en"e in t(e -i&i+an"e o-er &oo'#% a""or'in& to a++ t(e "ir"*!#tan"e# of ea"( "a#e.
8
Co!!on
"arrier# are re#$on#i)+e for t(e +o##% 'e#tr*"tion% or 'eterioration of t(e &oo'# *n+e## t(e #a!e i# '*e to any of t(e fo++o,in&
"a*#e# on+yA
(1 F+oo'% #tor!% eart(8*a6e% +i&(tnin& or ot(er nat*ra+ 'i#a#ter or "a+a!ityB
::: ::: :::
9
Petitioner Carrier "+ai!# t(at t(e +o## of t(e -e##e+ )y fire e:e!$t# it fro! +ia)i+ity *n'er t(e $(ra#e ?nat*ra+ 'i#a#ter or
"a+a!ity. ? 9o,e-er% ,e are of t(e o$inion t(at fire !ay not )e "on#i'ere' a nat*ra+ 'i#a#ter or "a+a!ity. T(i# !*#t )e #o a# it
ari#e# a+!o#t in-aria)+y fro! #o!e a"t of !an or )y (*!an !ean#. 10 It 'oe# not fa++ ,it(in t(e "ate&ory of an a"t of .o'
11
*n+e## "a*#e' )y +i&(tnin& 11 or )y ot(er nat*ra+ 'i#a#ter or "a+a!ity. 12 It !ay e-en )e "a*#e' )y t(e a"t*a+ fa*+t or $ri-ity of
t(e "arrier. 13
Arti"+e 142; of t(e Ci-i+ Co'e% ,(i"( "on#i'er# fire a# an e:traor'inary fort*ito*# e-ent refer# to +ea#e# of r*ra+ +an'# ,(ere a
re'*"tion of t(e rent i# a++o,e' ,(en !ore t(an one0(a+f of t(e fr*it# (a-e )een +o#t '*e to #*"( e-ent% "on#i'erin& t(at t(e
+a, a'o$t# a $rote"tion $o+i"y to,ar'# a&ri"*+t*re. 14
A# t(e $eri+ of t(e fire i# not "o!$re(en'e' ,it(in t(e e:"e$tion in Arti"+e 1731% supra, Arti"+e 173< of t(e Ci-i+ Co'e $ro-i'e#
t(at a++ "a#e# t(an t(o#e !ention in Arti"+e 1731% t(e "o!!on "arrier #(a++ )e $re#*!e' to (a-e )een at fa*+t or to (a-e a"te'
ne&+i&ent+y% *n+e## it $ro-e# t(at it (a# o)#er-e' t(e e:traor'inary 'e+i&en"e re8*ire' )y +a,.
In t(i# "a#e% t(e re#$e"ti-e In#*rer#. a# #*)ro&ee# of t(e "ar&o #(i$$er#% (a-e $ro-en t(at t(e tran#$orte' &oo'# (a-e )een
+o#t. Petitioner Carrier (a# a+#o $ro-e' t(at t(e +o## ,a# "a*#e' )y fire. T(e )*r'en t(en i# *$on Petitioner Carrier to $ro-e'
t(at it (a# e:er"i#e' t(e e:traor'inary 'i+i&en"e re8*ire' )y +a,. In t(i# re&ar'% t(e Tria+ Co*rt% "on"*rre' in )y t(e A$$e++ate
Co*rt% !a'e t(e fo++o,in& Fin'in& of fa"tA
T(e "ar&oe# in 8*e#tion ,ere% a""or'in& to t(e ,itne##e# 'efen'ant $+a"e' in (at"(e# No% 2 an' 3 "f t(e -e##e+% Eoat#,ain
Erne#to Pa#trana noti"e' t(at #!o6e ,a# "o!in& o*t fro! (at"( No. 2 an' (at"( No. 3B t(at ,(ere t(e #!o6e ,a# noti"e'%
t(e fire ,a# a+rea'y )i&B t(at t(e fire !*#t (a-e #tarte' t,enty0fo*r 21 o*r t(e #a!e ,a# noti"e'B t(at "ar)on 'io:i'e ,a#
or'ere' re+ea#e' an' t(e "re, ,a# or'ere' to o$en t(e (at"( "o-er# of No% 2 tor "o!!en"e!ent of fire fi&(tin& )y #ea ,aterA
t(at a++ of t(e#e effort ,ere not eno*&( to "ontro+ t(e fire.
P*r#*ant to Arti"+e 1733% "o!!on "arrier# are )o*n' to e:traor'inary 'i+i&en"e in t(e -i&i+an"e o-er t(e &oo'#. T(e e-i'en"e
of t(e 'efen'ant 'i' not #(o, t(at e:traor'inary -i&i+an"e ,a# o)#er-e' )y t(e -e##e+ to $re-ent t(e o""*rren"e of fire at
(at"(e# n*!)er# 2 an' 3. Defen'ant=# e-i'en"e 'i' not +i6e,i#e #(o, (e a!o*nt of 'i+i&en"e !a'e )y t(e "re,% on or'er#% in
t(e "are of t(e "ar&oe#. W(at a$$ear# i# t(at after t(e "ar&oe# ,ere #tore' in t(e (at"(e#% no re&*+ar in#$e"tion ,a# !a'e a#
to t(eir "on'ition '*rin& t(e -oya&e. Con#e8*ent+y% t(e "re, "o*+' not (a-e e-en e:$+ain ,(at "o*+' (a-e "a*#e' t(e fire. T(e
'efen'ant% in t(e Co*rt=# !in'% fai+e' to #ati#fa"tori+y #(o, t(at e:traor'inary -i&i+an"e an' "are (a' )een !a'e )y t(e "re, to
$re-ent t(e o""*rren"e of t(e fire. T(e 'efen'ant% a# a "o!!on "arrier% i# +ia)+e to t(e "on#i&nee# for #ai' +a"6 of 'e+i&en"e
re8*ire' of it *n'er Arti"+e 1733 of t(e Ci-i+ Co'e. 15
9a-in& fai+e' to 'i#"(ar&e t(e )*r'en of $ro-in& t(at it (a' e:er"i#e' t(e e:traor'inary 'i+i&en"e re8*ire' )y +a,% Petitioner
Carrier "annot e#"a$e +ia)i+ity for t(e +o## of t(e "ar&o.
An' e-en if fire ,ere to )e "on#i'ere' a ?nat*ra+ 'i#a#ter? ,it(in t(e !eanin& of Arti"+e 1731 of t(e Ci-i+ Co'e% it i# re8*ire'
*n'er Arti"+e 1733 of t(e #a!e Co'e t(at t(e ?nat*ra+ 'i#a#ter? !*#t (a-e )een t(e ?$ro:i!ate an' on+y "a*#e of t(e +o##%?
an' t(at t(e "arrier (a# ?e:er"i#e' '*e 'i+i&en"e to $re-ent or !ini!i/e t(e +o## )efore% '*rin& or after t(e o""*rren"e of t(e
'i#a#ter. ? T(i# Petitioner Carrier (a# a+#o fai+e' to e#ta)+i#( #ati#fa"tori+y.
Nor !ay Petitioner Carrier #ee6 ref*&e fro! +ia)i+ity *n'er t(e Carria&e of .oo'# )y Sea A"t% It i# $ro-i'e' t(erein t(atA
Se". 1(2. Neit(er t(e "arrier nor t(e #(i$ #(a++ )e re#$on#i)+e for +o## or 'a!a&e ari#in& or re#*+tin& fro!
() Fire% *n+e## "a*#e' )y t(e a"t*a+ fa*+t or $ri-ity of t(e "arrier.
::: ::: :::
In t(i# "a#e% )ot( t(e Tria+ Co*rt an' t(e A$$e++ate Co*rt% in effe"t% fo*n'% a# a fa"t% t(at t(ere ,a# ?a"t*a+ fa*+t? of t(e "arrier
#(o,n )y ?+a"6 of 'i+i&en"e? in t(at ?,(en t(e #!o6e ,a# noti"e'% t(e fire ,a# a+rea'y )i&B t(at t(e fire !*#t (a-e #tarte'
t,enty0fo*r (21 (o*r# )efore t(e #a!e ,a# noti"e'B ? an' t(at ?after t(e "ar&oe# ,ere #tore' in t(e (at"(e#% no re&*+ar
in#$e"tion ,a# !a'e a# to t(eir "on'ition '*rin& t(e -oya&e.? T(e fore&oin& #*ffi"e# to #(o, t(at t(e "ir"*!#tan"e# *n'er
,(i"( t(e fire ori&inate' an' #$rea' are #*"( a# to #(o, t(at Petitioner Carrier or it# #er-ant# ,ere ne&+i&ent in "onne"tion
t(ere,it(. Con#e8*ent+y% t(e "o!$+ete 'efen#e affor'e' )y t(e CO.SA ,(en +o## re#*+t# fro! fire i# *na-ai+in& to Petitioner
Carrier.
7n the -" S=GG *er *ackage 8imitation3
Petitioner Carrier a-er# t(at it# +ia)i+ity if any% #(o*+' not e:"ee' 7S U<;; $er $a"6a&e a# $ro-i'e' in #e"tion 1(< of t(e
CO.SA% ,(i"( rea'#A
(< Neit(er t(e "arrier nor t(e #(i$ #(a++ in any e-ent )e or )e"o!e +ia)+e for any +o## or 'a!a&e to or in "onne"tion ,it( t(e
tran#$ortation of &oo'# in an a!o*nt e:"ee'in& U<;; $er $a"6a&e +a,f*+ !oney of t(e 7nite' State#% or in "a#e of &oo'# not
#(i$$e' in $a"6a&e#% $er "*#to!ary frei&(t *nit% or t(e e8*i-a+ent of t(at #*! in ot(er "*rren"y% *n+e## t(e nat*re an' -a+*e of
#*"( &oo'# (a-e )een 'e"+are' )y t(e #(i$$er )efore #(i$!ent an' in#erte' in )i++ of +a'in&. T(i# 'e"+aration if e!)o'ie' in
t(e )i++ of +a'in& #(a++ )e $ri!a fa"ie e-i'en"e% )*t a++ )e "on"+*#i-e on t(e "arrier.
Ey a&ree!ent )et,een t(e "arrier% !a#ter or a&ent of t(e "arrier% an' t(e #(i$$er anot(er !a:i!*! a!o*nt t(an t(at
!entione' in t(i# $ara&ra$( !ay )e fi:e'A Pro-i'e'% T(at #*"( !a:i!*! #(a++ not )e +e## t(an t(e fi&*re a)o-e na!e'. In no
e-ent #(a++ t(e "arrier )e Lia)+e for !ore t(an t(e a!o*nt of 'a!a&e a"t*a++y #*#taine'.
::: ::: :::
Arti"+e 1713 of t(e Ne, Ci-i+ Co'e a+#o a++o,# t(e +i!itation# of +ia)i+ity in t(i# ,i#eA
Art. 1713. A #ti$*+ation t(at t(e "o!!on "arrier=# +ia)i+ity a# +i!ite' to t(e -a+*e of t(e &oo'# a$$earin& in t(e )i++ of +a'in&%
*n+e## t(e #(i$$er or o,ner 'e"+are# a &reater -a+*e% i# )in'in&.
It i# to )e note' t(at t(e Ci-i+ Co'e 'oe# not of it#e+f +i!it t(e +ia)i+ity of t(e "o!!on "arrier to a fi:e' a!o*nt $er $a"6a&e
a+t(o*&( t(e Co'e e:$re##+y $er!it# a #ti$*+ation +i!itin& #*"( +ia)i+ity. T(*#% t(e CO.SA ,(i"( i# #*$$+etory to t(e $ro-i#ion#
of t(e Ci-i+ Co'e% #te$# in an' #*$$+e!ent# t(e Co'e )y e#ta)+i#(in& a #tat*tory $ro-i#ion +i!itin& t(e "arrier=# +ia)i+ity in t(e
a)#en"e of a 'e"+aration of a (i&(er -a+*e of t(e &oo'# )y t(e #(i$$er in t(e )i++ of +a'in&. T(e $ro-i#ion# of t(e Carria&e of
.oo'# )y.Sea A"t on +i!ite' +ia)i+ity are a# !*"( a $art of a )i++ of +a'in& a# t(o*&( $(y#i"a++y in it an' a# !*"( a $art t(ereof
a# t(o*&( $+a"e' t(erein )y a&ree!ent of t(e $artie#. 16
In 2)%) ,o) PHGII% t(ere i# no #ti$*+ation in t(e re#$e"ti-e Ei++# of La'in& (E:(i)it# ?C02? an' ?I03? 1 7 +i!itin& t(e "arrier=#
+ia)i+ity for t(e +o## or 'e#tr*"tion of t(e &oo'#. Nor i# t(ere a 'e"+aration of a (i&(er -a+*e of t(e &oo'#. 9en"e% Petitioner
Carrier=# +ia)i+ity #(o*+' not e:"ee' 7S U<;; $er $a"6a&e% or it# $e#o e8*i-a+ent% at t(e ti!e of $ay!ent of t(e -a+*e of t(e
&oo'# +o#t% )*t in no "a#e ?!ore t(an t(e a!o*nt of 'a!a&e a"t*a++y #*#taine'.?
T(e a"t*a+ tota+ +o## for t(e <%;;; $ie"e# of "a+ori/e' +an"e $i$e# ,a# P2<4%;33 (E:(i)it ?C?% ,(i"( ,a# e:a"t+y t(e a!o*nt of
t(e in#*ran"e "o-era&e )y De-e+o$!ent In#*ran"e (E:(i)it ?A?% an' t(e a!o*nt affir!e' to )e $ai' )y re#$on'ent Co*rt. T(e
&oo'# ,ere #(i$$e' in 22 $a"6a&e# (E:(i)it ?C02? M*+ti$+yin& 22 $a"6a&e# )y U<;; ,o*+' re#*+t in a $ro'*"t of U11%;;;
,(i"(% at t(e "*rrent e:"(an&e rate of P2;.11 to 7S U1% ,o*+' )e P224%14;% or ?!ore t(an t(e a!o*nt of 'a!a&e a"t*a++y
#*#taine'.? Con#e8*ent+y% t(e afore#tate' a!o*nt of P2<4%;33 #(o*+' )e *$(e+'.
Wit( re#$e"t to t(e #e-en (7 "a#e# of #$are $art# (E:(i)it ?I03?% t(eir a"t*a+ -a+*e ,a# P32%341.7< (E:(i)it ?I?% ,(i"( i#
+i6e,i#e t(e in#*re' -a+*e of t(e "ar&o (E:(i)it ?9? an' a!o*nt ,a# affir!e' to )e $ai' )y re#$on'ent Co*rt. (o,e-er%
!*+ti$+yin& #e-en (7 "a#e# )y U<;; $er $a"6a&e at t(e $re#ent $re-ai+in& rate of P2;.11 to 7S U1 (7S U3%<;; : P2;.11
1<
,o*+' yie+' P71%<1; on+y% ,(i"( i# t(e a!o*nt t(at #(o*+' )e $ai' )y Petitioner Carrier for t(o#e #$are $art#% an' not
P32%341.7<.
In 2)%) ,o) QCIQR, in #o far a# t(e t,o (2 "a#e# of #*r-eyin& in#tr*!ent# are "on"erne'% t(e a!o*nt a,ar'e' to DOWA
,(i"( ,a# a+rea'y re'*"e' to U1%;;; )y t(e A$$e++ate Co*rt fo++o,in& t(e #tat*tory U<;; +ia)i+ity $er $a"6a&e% i# in or'er.
In re#$e"t of t(e #(i$!ent of 122 "arton# of &ar!ent fa)ri"# in t,o (2 "ontainer# an' in#*re' ,it( NISS9IN% t(e A$$e++ate
Co*rt a+#o +i!ite' Petitioner Carrier=# +ia)i+ity to U<;; $er $a"6a&e an' affir!e' t(e a,ar' of U14%<23 to NISS9IN. it !*+ti$+ie'
122 "arton# ("on#i'ere' a# CO.SA $a"6a&e# )y U<;; to arri-e at t(e fi&*re of U41%;;;% an' e:$+aine' t(at ?#in"e t(i#
a!o*nt i# !ore t(an t(e in#*re' -a+*e of t(e &oo'#% t(at i# U14%<23% t(e Tria+ Co*rt ,a# "orre"t in a,ar'in& #ai' a!o*nt on+y
for t(e 122 "arton#% ,(i"( a!o*nt i# +e## t(an t(e !a:i!*! +i!itation of t(e "arrier=# +ia)i+ity.?
We fin' no re-er#i)+e error. T(e 122 "arton# an' not t(e t,o (2 "ontainer# #(o*+' )e "on#i'ere' a# t(e #(i$$in& *nit.
In $itsui + !o), 8td) vs) American 'xport 8ines, nc) 434 F 2' 2;7 (1321% t(e "on#i&nee# of tin in&ot# an' t(e #(i$$er of f+oor
"o-erin& )ro*&(t a"tion a&ain#t t(e -e##e+ o,ner an' o$erator to re"o-er for +o## of in&ot# an' f+oor "o-erin&% ,(i"( (a' )een
#(i$$e' in -e##e+ @ #*$$+ie' "ontainer#. T(e 7.S. Di#tri"t Co*rt for t(e So*t(ern Di#tri"t of Ne, Cor6 ren'ere' 5*'&!ent for
t(e $+aintiff#% an' t(e 'efen'ant a$$ea+e'. T(e 7nite' State# Co*rt of A$$ea+#% Se"on' Di-i#ion% !o'ifie' an' affir!e'
(o+'in& t(atA
W(en ,(at ,o*+' or'inari+y )e "on#i'ere' $a"6a&e# are #(i$$e' in a "ontainer #*$$+ie' )y t(e "arrier an' t(e n*!)er of
#*"( *nit# i# 'i#"+o#e' in t(e #(i$$in& 'o"*!ent#% ea"( of t(o#e *nit# an' not t(e "ontainer "on#tit*te# t(e ?$a"6a&e? referre'
to in +ia)i+ity +i!itation $ro-i#ion of Carria&e of .oo'# )y Sea A"t. Carria&e of .oo'# )y Sea A"t% 1(<% 14 7.S.C.A.O 13;1(<.
E-en if +an&*a&e an' $*r$o#e# of Carria&e of .oo'# )y Sea A"t +eft 'o*)t a# to ,(et(er "arrier0f*rni#(e' "ontainer# ,(o#e
"ontent# are 'i#"+o#e' #(o*+' )e treate' a# $a"6a&e#% t(e intere#t in #e"*rin& internationa+ *nifor!ity ,o*+' #*&&e#t t(at t(ey
#(o*+' not )e #o treate'. Carria&e of .oo'# )y Sea A"t% 1(<% 14 7.S.C.A. 13;1(<.
... After 8*otin& t(e #tate!ent in Leat(er=# Ee#t% #*$ra% 1<1 F 2' at 21<% t(at treatin& a "ontainer a# a $a"6a&e i# in"on#i#tent
,it( t(e "on&re##iona+ $*r$o#e of e#ta)+i#(in& a rea#ona)+e !ini!*! +e-e+ of +ia)i+ity% >*'&e Eee6# ,rote% 111 F. S*$$. at 3;7
(footnote# o!itte'A
A+t(o*&( t(i# a$$roa"( (a# not "o!$+ete+y e#"a$e' "riti"i#!% t(ere i#% nonet(e+e##% !*"( to "o!!en' it. It &i-e# nee'e'
re"o&nition to t(e re#$on#i)i+ity of t(e "o*rt# to "on#tr*e an' a$$+y t(e #tat*te a# ena"te'% (o,e-er &reat !i&(t )e t(e
te!$tation to ?!o'erni/e? or re"on#tit*te it )y artf*+ 5*'i"ia+ &+o##. If CO.SA=# $a"6a&e +i!itation #"(e!e #*ffer# fro! interna+
i++ne##% Con&re## a+one !*#t *n'erta6e t(e #*r&ery. T(ere i#% in t(i# re&ar'% o)-io*# ,i#'o! in t(e Nint( Cir"*it=# "on"+*#ion
in 9artfor' t(at te"(no+o&i"a+ a'-an"e!ent#% ,(et(er or not for#eea)+e )y t(e CO.SA $ro!*+&ator#% 'o not ,arrant a
'i#tortion or artifi"ia+ "on#tr*"tion of t(e #tat*tory ter! ?$a"6a&e.? A r*+in& t(at t(e#e +ar&e re*#a)+e !eta+ $ie"e# of tran#$ort
e8*i$!ent 8*a+ify a# CO.SA $a"6a&e# @ at +ea#t ,(ere% a# (ere% t(ey ,ere "arrier o,ne' an' #*$$+ie' @ ,o*+' a!o*nt to
5*#t #*"( a 'i#tortion.
Certain+y% if t(e in'i-i'*a+ "rate# or "arton# $re$are' )y t(e #(i$$er an' "ontainin& (i# &oo'# "an ri&(t+y )e "on#i'ere'
?$a"6a&e#? #tan'in& )y t(e!#e+-e#% t(ey 'o not #*''en+y +o#e t(at "(ara"ter *$on )ein& #to,e' in a "arrier=# "ontainer. I
,o*+' +i6en t(e#e "ontainer# to 'eta"(a)+e #to,a&e "o!$art!ent# of t(e #(i$. T(ey #i!$+y #er-e to 'i-i'e t(e #(i$=# o-era++
"ar&o #to,a&e #$a"e into #!a++er% !ore #er-i"ea)+e +o"i. S(i$$er#= $a"6a&e# are 8*ite +itera++y ?#to,e'? in t(e "ontainer#
*ti+i/in& #te-e'orin& $ra"ti"e# an' !ateria+# ana+o&o*# to t(o#e e!$+oye' in tra'itiona+ on )oar' #to,a&e.
In :eramex nternational v) ")") Tando,, 1377 A.M.C. 12;7 (E.D. Ha. re-=' on ot(er &ro*n'#% <3< F 2n' 313 (1 Cir. 1373%
anot(er 'i#tri"t ,it( !any !ariti!e "a#e# fo++o,e' >*'&e Eee6#= rea#onin& in Mat#*#(ita an' #i!i+ar+y re5e"te' t(e f*n"tiona+
e"ono!i"# te#t. >*'&e Ie++a! (e+' t(at ,(en ro++# of $o+ye#ter &oo'# are $a"6e' into "ar')oar' "arton# ,(i"( are t(en
$+a"e' in "ontainer#% t(e "arton# an' not t(e "ontainer# are t(e $a"6a&e#.
::: ::: :::
T(e "a#e of "mithgreyhound v) $?. 'urygenes, 18 fo++o,e' t(e Mit#*i te#tA
E*ry&ene# "on"erne' a #(i$!ent of #tereo e8*i$!ent $a"6a&e' )y t(e #(i$$er into "arton# ,(i"( ,ere t(en $+a"e' )y t(e
#(i$$er into a "arrier0 f*rni#(e' "ontainer. The number of cartons was disclosed to the carrier in the bill of lading) 'urygenes
followed the $itsui test and treated the cartons, not the container, as the !72"A packages) 9o,e-er% E*ry&ene# in'i"ate'
t(at a "arrier "o*+' +i!it it# +ia)i+ity to U<;; $er "ontainer if t(e )i++ of +a'in& fai+e' to 'i#"+o#e t(e n*!)er of "arton# or *nit#
,it(in t(e "ontainer% or if t(e $artie# in'i"ate'% in "+ear an' *na!)i&*o*# +an&*a&e% an a&ree!ent to treat t(e "ontainer a# t(e
$a"6a&e.
(A'!ira+ty Liti&ation in Per$et**!A T(e Contin*in& Sa&a of Pa"6a&e Li!itation# an' T(ir' Wor+' De+i-ery Pro)+e!# )y
C(e#ter D. 9oo$er O Ieit( L. F+i"6er% $*)+i#(e' in For'(a! Internationa+ La, >o*rna+% Ho+. 4% 1322023% N*!)er 1 (E!$(a#i#
#*$$+ie'
In t(i# "a#e% t(e Ei++ of La'in& (E:(i)it ?A? 'i#"+o#e' t(e fo++o,in& 'ataA
2 Container#
(122 Carton#
Men=# .ar!ent# Fa)ri"# an' A""e##orie# Frei&(t Pre$ai'
SayA T,o (2 Container# On+y.
Con#i'erin&% t(erefore% t(at t(e Ei++ of La'in& "+ear+y 'i#"+o#e' t(e "ontent# of t(e "ontainer#% t(e n*!)er of "arton# or *nit#%
a# ,e++ a# t(e nat*re of t(e &oo'#% an' a$$+yin& t(e r*+in& in t(e $itsui an' 'urygenes "a#e# it i# "+ear t(at t(e 122 "arton#%
not t(e t,o (2 "ontainer# #(o*+' )e "on#i'ere' a# t(e #(i$$in& *nit #*)5e"t to t(e U<;; +i!itation of +ia)i+ity.
Tr*e% t(e e-i'en"e 'oe# not 'i#"+o#e ,(et(er t(e "ontainer# in-o+-e' (erein ,ere "arrier0f*rni#(e' or not. 7#*a++y% (o,e-er%
"ontainer# are $ro-i'e' )y t(e "arrier. 19 In t(i# "a#e% t(e $ro)a)i+ity i# t(at t(ey ,ere #o f*rni#(e' for Petitioner Carrier ,a#
at +i)erty to $a"6 an' "arry t(e &oo'# in "ontainer# if t(ey ,ere not #o $a"6e'. T(*#% at t(e 'or#a+ #i'e of t(e Ei++ of La'in&
(E:(i)it ?A? a$$ear# t(e fo++o,in& #ti$*+ation in fine $rintA
11. (7#e of Container W(ere t(e &oo'# re"ei$t of ,(i"( i# a"6no,+e'&e' on t(e fa"e of t(i# Ei++ of La'in& are not a+rea'y
$a"6e' into "ontainer(# at t(e ti!e of re"ei$t% t(e Carrier #(a++ )e at +i)erty to $a"6 an' "arry t(e! in any ty$e of "ontainer(#.
T(e fore&oin& ,o*+' e:$+ain t(e *#e of t(e e#ti!ate ?SayA T,o (2 Container# On+y? in t(e Ei++ of La'in&% !eanin& t(at t(e
&oo'# "o*+' $ro)a)+y fit in t,o (2 "ontainer# on+y. It "annot !ean t(at t(e #(i$$er (a' f*rni#(e' t(e "ontainer# for if #o% ?T,o
(2 Container#? a$$earin& a# t(e fir#t entry ,o*+' (a-e #*ffi"e'. an' if t(ere i# any a!)i&*ity in t(e Ei++ of La'in&% it i# a
"ar'ina+ $rin"i$+e in t(e "on#tr*"tion of "ontra"t# t(at t(e inter$retation of o)#"*re ,or'# or #ti$*+ation# in a "ontra"t #(a++ not
fa-or t(e $arty ,(o "a*#e' t(e o)#"*rity.
20
T(i# a$$+ie# ,it( e-en &reater for"e in a "ontra"t of a'(e#ion ,(ere a "ontra"t i#
a+rea'y $re$are' an' t(e ot(er $arty !ere+y a'(ere# to it% +i6e t(e Ei++ of La'in& in t(i# "a#e% ,(i"( i# 'ra,. *$ )y t(e "arrier.
21
7n Alleged &enial of 7pportunity to *resent &eposition of ts Bitnesses3 (in ..R. No. 43;11 on+y
Petitioner Carrier "+ai!# t(at t(e Tria+ Co*rt 'i' not &i-e it #*ffi"ient ti!e to ta6e t(e 'e$o#ition# of it# ,itne##e# in >a$an )y
,ritten interro&atorie#.
14
We 'o not a&ree. $etitioner Carrier ,a# &i-en0 f*++ o$$ort*nity to $re#ent it# e-i'en"e )*t it fai+e' to 'o #o. On t(i# $oint% t(e
Tria+ Co*rt fo*n'A
::: ::: :::
In'ee'% #in"e after No-e!)er 4% 1372% to A*&*#t 27% 1373% not to !ention t(e ti!e fro! >*ne 27% 1372% ,(en it# an#,er ,a#
$re$are' an' fi+e' in Co*rt% *nti+ Se$te!)er 24% 1372% ,(en t(e $re0tria+ "onferen"e ,a# "on'*"te' for t(e +a#t ti!e% t(e
'efen'ant (a' !ore t(an nine !ont(# to $re$are it# e-i'en"e. It# )e+ate' noti"e to ta6e 'e$o#ition on ,ritten interro&atorie# of
it# ,itne##e# in >a$an% #er-e' *$on t(e $+aintiff on A*&*#t 2<t(% 5*#t t,o 'ay# )efore t(e (earin& #et for A*&*#t 27t(% 6no,in&
f*++y ,e++ t(at it ,a# it# *n'erta6in& on >*+y 11 t(e t(at t(e 'e$o#ition of t(e ,itne##e# ,o*+' )e 'i#$en#e' ,it( if )y ne:t ti!e
it (a' not yet )een o)taine'% on+y $ro-e# t(e +a"6 of !erit of t(e 'efen'ant=# !otion for $o#t$one!ent% for ,(i"( rea#on it
'e#er-e# no #y!$at(y fro! t(e Co*rt in t(at re&ar'. T(e 'efen'ant (a# to+' t(e Co*rt #in"e Fe)r*ary 14% 1373% t(at it ,a#
&oin& to ta6e t(e 'e$o#ition of it# ,itne##e# in >a$an. W(y 'i' it ta6e *nti+ A*&*#t 2<% 1373% or !ore t(an #i: !ont(#% to
$re$are it# ,ritten interro&atorie#. On+y t(e 'efen'ant it#e+f i# to )+a!e for it# fai+*re to a''*"e e-i'en"e in #*$$ort of it#
'efen#e#.
::: ::: :::
22
Petitioner Carrier ,a# affor'e' a!$+e ti!e to $re#ent it# #i'e of t(e "a#e.
23
It "annot "o!$+ain no, t(at it ,a# 'enie' '*e
$ro"e## ,(en t(e Tria+ Co*rt ren'ere' it# De"i#ion on t(e )a#i# of t(e e-i'en"e a''*"e'. W(at '*e $ro"e## a)(or# i#
a)#o+*te +a"6 of o$$ort*nity to )e (ear'.
24
7n the Award of Attorney's (ees3
Petitioner Carrier 8*e#tion# t(e a,ar' of attorney=# fee#. In )ot( "a#e#% re#$on'ent Co*rt affir!e' t(e a,ar' )y t(e Tria+ Co*rt
of attorney=# fee# of P3<%;;;.;; in fa-or of De-e+o$!ent In#*ran"e in ..R. No. 43;11% an' P<%;;;.;; in fa-or of NISS9IN an'
DOWA in ..R. No. 71172.
Co*rt# )ein& -e#te' ,it( 'i#"retion in fi:in& t(e a!o*nt of attorney=# fee#% it i# )e+ie-e' t(at t(e a!o*nt of P<%;;;.;; ,o*+' )e
!ore rea#ona)+e in ..R. No. 43;11. T(e a,ar' of P<%;;;.;; in ..R. No. 71172 i# affir!e'.
W9EREFORE% 1 in ..R. No. 43;11% t(e 5*'&!ent i# !o'ifie' in t(at $etitioner Ea#tern S(i$$in& Line# #(a++ $ay t(e
De-e+o$!ent In#*ran"e an' S*rety Cor$oration t(e a!o*nt of P2<4%;33 for t(e t,enty0ei&(t (22 $a"6a&e# of "a+ori/e' +an"e
$i$e#% an' P71%<1; for t(e #e-en (7 "a#e# of #$are $art#% ,it( intere#t at t(e +e&a+ rate fro! t(e 'ate of t(e fi+in& of t(e
"o!$+aint on >*ne 13% 1372% $+*# P<%;;; a# attorney=# fee#% an' t(e "o#t#.
2 In ..R.No.71172%t(e 5*'&!ent i# (ere)y affir!e'.
Nationa+ De-. Co. -. Co*rt of A$$ea+#% 141 SCRA <33 (1322
T(e#e are a$$ea+# )y "ertiorari fro! t(e 'e"i#ion A of t(e Co*rt of A$$ea+# in CA ..R. NoA L0 14<130R entit+e' ?De-e+o$!ent
In#*ran"e an' S*rety Cor$oration $+aintiff0a$$e++ee -#. Mariti!e Co!$any of t(e P(i+i$$ine# an' Nationa+ De-e+o$!ent
Co!$any 'efen'ant0a$$e++ant#%? affir!in& in toto t(e 'e"i#ion AA in Ci-i+ Ca#e No. 4;411 of t(e t(en Co*rt of Fir#t In#tan"e of
Mani+a% Si:t( >*'i"ia+ Di#tri"t% t(e 'i#$o#iti-e $ortion of ,(i"( rea'#A
W9EREFORE% 5*'&!ent i# (ere)y ren'ere' or'erin& t(e 'efen'ant# Nationa+ De-e+o$!ent Co!$any an' Mariti!e Co!$any
of t(e P(i+i$$ine#% to $ay 5oint+y an' #e-era++y% to t(e $+aintiff De-e+o$!ent In#*ran"e an' S*rety Cor$.% t(e #*! of T9REE
97NDRED SIVTC FO7R T9O7SAND AND NINE 97NDRED FIFTEEN PESOS AND EI.9TC SIV CENTAHOS (341%31<.24
,it( t(e +e&a+ intere#t t(ereon fro! t(e fi+in& of $+aintiff# "o!$+aint on A$ri+ 22% 134< *nti+ f*++y $ai'% $+*# TEN T9O7SAND
PESOS (P+;%;;;.;; )y ,ay of 'a!a&e# a# an' for attorney=# fee.
On 'efen'ant Mariti!e Co!$any of t(e P(i+i$$ine#= "ro##0"+ai! a&ain#t t(e 'efen'ant Nationa+ De-e+o$!ent Co!$any%
5*'&!ent i# (ere)y ren'ere'% or'erin& t(e Nationa+ De-e+o$!ent Co!$any to $ay t(e "ro##0"+ai!ant Mariti!e Co!$any of
t(e P(i+i$$ine# t(e tota+ a!o*nt t(at t(e Mariti!e Co!$any of t(e P(i+i$$ine# !ay -o+*ntari+y or )y "o!$+ian"e to a ,rit of
e:e"*tion $ay to t(e $+aintiff $*r#*ant to t(e 5*'&!ent ren'ere' in t(i# "a#e.
Wit( "o#t# a&ain#t t(e 'efen'ant Mariti!e Co!$any of t(e P(i+i$$ine#.
($$. 3103<% Ro++o% .R No. L013143
T(e fa"t# of t(e#e "a#e# a# fo*n' )y t(e Co*rt of A$$ea+#% are a# fo++o,#A
T(e e-i'en"e )efore *# #(o,# t(at in a""or'an"e ,it( a !e!oran'*! a&ree!ent entere' into )et,een 'efen'ant# NDC an'
MCP on Se$te!)er 13% 1342% 'efen'ant NDC a# t(e fir#t $referre' !ort&a&ee of t(ree o"ean &oin& -e##e+# in"+*'in& one ,it(
t(e na!e =Dona Nati= a$$ointe' 'efen'ant MCP a# it# a&ent to !ana&e an' o$erate #ai' -e##e+ for an' in it# )e(a+f an'
a""o*nt (E:(. A. T(*#% on Fe)r*ary 22% 1341 t(e E. P(i+i$$ Cor$oration of Ne, Cor6 +oa'e' on )oar' t(e -e##e+ ?Dona Nati?
at San Fran"i#"o% Ca+ifornia% a tota+ of 1%2;; )a+e# of A!eri"an ra, "otton "on#i&ne' to t(e or'er of Mani+a Ean6in&
Cor$oration% Mani+a an' t(e Peo$+e=# Ean6 an' Tr*#t Co!$any a"tin& for an' in )e(a+f of t(e Pan A#iati" Co!!er"ia+
Co!$any% In".% ,(o re$re#ent# Ri-er#i'e Mi++# Cor$oration (E:(#. I02 to I70A O L02 to L070A. A+#o +oa'e' on t(e #a!e
-e##e+ at To6yo% >a$an% ,ere t(e "ar&o of Iyo6*to Eoe6*i% Iai#a% Lt'.% "on#i&ne' to t(e or'er of Mani+a Ean6in& Cor$oration
"on#i#tin& of 2;; "arton# of #o'i*! +a*ry+ #*+fate an' 1; "a#e# of a+*!in*! foi+ (E:(#. M O M01. En ro*te to Mani+a t(e
-e##e+ Dofia Nati fi&*re' in a "o++i#ion at 4A;1 a.!. on A$ri+ 1<% 1341 at I#e Eay% >a$an ,it( a >a$ane#e -e##e+ =SS Ca#*#(i!a
Mar*= a# a re#*+t of ,(i"( <<; )a+e# of afore#ai' "ar&o of A!eri"an ra, "otton ,ere +o#t an'For 'e#troye'% of ,(i"( <3< )a+e#
a# 'a!a&e' ,ere +an'e' an' #o+' on t(e a*t(ority of t(e .enera+ A-era&e S*r-eyor for Cen 4%;1<%0<;; an' 1< )a+e# ,ere
not +an'e' an' 'ee!e' +o#t (E:(. .. T(e 'a!a&e' an' +o#t "ar&oe# ,a# ,ort( P311%377.24 ,(i"( a!o*nt% t(e $+aintiff a#
in#*rer% $ai' to t(e Ri-er#i'e Mi++# Cor$oration a# (o+'er of t(e ne&otia)+e )i++# of +a'in& '*+y en'or#e' (E:(#. L070A% I020A% I0
20A% I030A% I010A% I0<0A% A0 2% N03 an' R03Z. A+#o "on#i'ere' tota++y +o#t ,ere t(e afore#ai' #(i$!ent of Iyo6*to% Eoe6*i
Iai#a Lt'.% "on#i&ne' to t(e or'er of Mani+a Ean6in& Cor$oration% Mani+a% a"tin& for .*i+"on% Mani+a% T(e tota+ +o## ,a#
P13%332.;; ,(i"( t(e $+aintiff a# in#*rer $ai' to .*i+"on a# (o+'er of t(e '*+y en'or#e' )i++ of +a'in& (E:(i)it# M01 an' S03.
T(*#% t(e $+aintiff (a' $ai' a# in#*rer t(e tota+ a!o*nt of P341%31<.24 to t(e "on#i&nee# or t(eir #*""e##or#0in0intere#t% for t(e
#ai' +o#t or 'a!a&e' "ar&oe#. 9en"e% $+aintiff fi+e' t(i# "o!$+aint to re"o-er #ai' a!o*nt fro! t(e 'efen'ant#0NDC an' MCP
a# o,ner an' #(i$ a&ent re#$e"ti-e+y% of t(e #ai' =Dofia Nati= -e##e+. (Ro++o% L013143% $.32
On A$ri+ 22% 134<% t(e De-e+o$!ent In#*ran"e an' S*rety Cor$oration fi+e' )efore t(e t(en Co*rt of Fir#t In#tan"e of Mani+a
an a"tion for t(e re"o-ery of t(e #*! of P341%31<.24 $+*# attorney=# fee# of P1;%;;;.;; a&ain#t NDC an' MCP (Re"or' on
A$$ea+% $$. 104.
Inter$o#in& t(e 'efen#e t(at t(e "o!$+aint #tate# no "a*#e of a"tion an' e-en if it 'oe#% t(e a"tion (a# $re#"ri)e'% MCP fi+e'
on May 12% 134< a !otion to 'i#!i## (Re"or' on A$$ea+% $$. 7011. DISC fi+e' an O$$o#ition on May 21% 134< to ,(i"( MCP
fi+e' a re$+y on May 27% 134< (Re"or' on A$$ea+% $$. 11021. On >*ne 23% 134<% t(e tria+ "o*rt 'eferre' t(e re#o+*tion of t(e
!otion to 'i#!i## ti++ after t(e tria+ on t(e !erit# (Re"or' on A$$ea+% $. 32. On >*ne 2% 134<% MCP fi+e' it# an#,er ,it(
"o*nter"+ai! an' "ro##0"+ai! a&ain#t NDC.
17
NDC% for it# $art% fi+e' it# an#,er to DISC=# "o!$+aint on May 27% 134< (Re"or' on A$$ea+% $$. 22021. It a+#o fi+e' an an#,er
to MCP=# "ro##0"+ai! on >*+y 14% 134< (Re"or' on A$$ea+% $$. 3301;. 9o,e-er% on O"to)er 14% 134<% NDC=# an#,er to
DISC=# "o!$+aint ,a# #tri"6en off fro! t(e re"or' for it# fai+*re to an#,er DISC=# ,ritten interro&atorie# an' to "o!$+y ,it( t(e
tria+ "o*rt=# or'er 'ate' A*&*#t 11% 134< a++o,in& t(e in#$e"tion or $(oto&ra$(in& of t(e !e!oran'*! of a&ree!ent it
e:e"*te' ,it( MCP. Sai' or'er of O"to)er 14% 134< +i6e,i#e 'e"+are' NDC in 'efa*+t (Re"or' on A$$ea+% $. 11. On A*&*#t
31% 1344% NDC fi+e' a !otion to #et a#i'e t(e or'er of O"to)er 14% 134<% )*t t(e tria+ "o*rt 'enie' it in it# or'er 'ate'
Se$te!)er 21% 1344.
On No-e!)er 12% 1343% after DISC an' MCP $re#ente' t(eir re#$e"ti-e e-i'en"e% t(e tria+ "o*rt ren'ere' a 'e"i#ion or'erin&
t(e 'efen'ant# MCP an' NDC to $ay 5oint+y an' #o+i'arity to DISC t(e #*! of P341%31<.24 $+*# t(e +e&a+ rate of intere#t to )e
"o!$*te' fro! t(e fi+in& of t(e "o!$+aint on A$ri+ 22% 134<% *nti+ f*++y $ai' an' attorney=# fee# of P1;%;;;.;;. Li6e,i#e% in #ai'
'e"i#ion% t(e tria+ "o*rt &rante' MCP=# "ro##"+ai! a&ain#t NDC.
MCP inter$o#e' it# a$$ea+ on De"e!)er 2;% 1343% ,(i+e NDC fi+e' it# a$$ea+ on Fe)r*ary 17% 137; after it# !otion to #et
a#i'e t(e 'e"i#ion ,a# 'enie' )y t(e tria+ "o*rt in it# or'er 'ate' Fe)r*ary 13%137;.
On No-e!)er 17%1372% t(e Co*rt of A$$ea+# $ro!*+&ate' it# 'e"i#ion affir!in& in toto t(e 'e"i#ion of t(e tria+ "o*rt.
9en"e t(e#e a$$ea+# )y "ertiorari.
NDC=# a$$ea+ ,a# 'o"6ete' a# ..R. No. 131;7% ,(i+e t(at of MCP ,a# 'o"6ete' a# ..R. No. 13143. On >*+y 2<%1373% t(i#
Co*rt or'ere' t(e "on#o+i'ation of t(e a)o-e "a#e# (Ro++o% $. 1;3. On A*&*#t 27%1373% t(e#e "on#o+i'ate' "a#e# ,ere &i-en
'*e "o*r#e (Ro++o% $. 1;2 an' #*)!itte' for 'e"i#ion on Fe)r*ary 23% 132; (Ro++o% $. 134.
In it# )rief% NDC "ite' t(e fo++o,in& a##i&n!ent# of errorA
I
T9E CO7RT OF APPEALS ERRED IN APPLCIN. ARTICLE 227 OF T9E CODE OF COMMERCE AND NOT SECTION
1(2a OF COMMONWEALT9 ACT NO. 4<% OT9ERWISE INOWN AS T9E CARRIA.E OF .OODS EC SEA ACT IN
DETERMININ. T9E LIAEILITC FOR LOSS OF CAR.OES RES7LTIN. FROM T9E COLLISION OF ITS HESSEL ?DONA
NATI? WIT9 T9E CAS7S9IMA MAR7?OCC7RRED AT ISE EAC% >APAN OR O7TSIDE T9E TERRITORIAL >7RISDICTION
OF T9E P9ILIPPINES.
II
T9E CO7RT OF APPEALS ERRED IN NOT DISMISSIN. T9E C;MPLAINT FOR REIME7RSEMENT FILED EC T9E
INS7RER% 9EREIN PRIHATE RESPONDENT0APPELLEE% A.AINST T9E CARRIER% 9EREIN PETITIONER0APPELLANT.
($$. 102% Erief for Petitioner0A$$e++ant Nationa+ De-e+o$!ent Co!$anyB $. 34% Ro++o.
On it# $art% MCP a##i&ne' t(e fo++o,in& a++e&e' error#A
I
T9E RESPONDENT CO7RT OF APPEALS ERRED IN NOT 9OLDIN. T9AT RESPONDENT DEHELOPMENT INS7RANCE
AND S7RETC CORPORATION 9AS NO CA7SE OF ACTION AS A.AINST PETITIONER MARITIME COMPANC OF T9E
P9ILIPPINES AND IN NOT DISMISSIN. T9E COMPLAINT.
II
T9E RESPONDENT CO7RT OF APPEALS ERRED IN NOT 9OLDIN. T9AT T9E CA7SE OF ACTION OF RESPONDENT
DEHELOPMENT INS7RANCE AND S7RETC CORPORATION IF ANC EVISTS AS A.AINST 9EREIN PETITIONER
MARITIME COMPANC OF T9E P9ILIPPINES IS EARRED EC T9E STAT7TE OF LIMITATION AND 9AS ALREADC
PRESCRIEED.
III
T9E RESPONDENT CO7RT OF APPEALS ERRED IN ADMITTIN. IN EHIDENCE PRIHATE RESPONDENTS EV9IEIT ?9?
AND IN FINDIN. ON T9E EASIS T9EREOF T9AT T9E COLLISION OF T9E SS DONA NATI AND T9E CAS7S9IMA
MAR7 WAS D7E TO T9E FA7LT OF EOT9 HESSELS INSTEAD OF FINDIN. T9AT T9E COLLISION WAS CA7SED EC
T9E FA7LT% NE.LI.ENCE AND LACI OF SIILL OF T9E COMPLEMENTS OF T9E CAS7S9IMA MAR7 WIT9O7T T9E
FA7LT OR NE.LI.ENCE OF T9E COMPLEMENT OF T9E SS DONA NATI
IH
T9E RESPONDENT CO7RT OF APPEALS ERRED IN 9OLDIN. T9AT 7NDER T9E CODE OF COMMERCE PETITIONER
APPELLANT MARITIME COMPANC OF T9E P9ILIPPINES IS A S9IP A.ENT OR NAHIERO OF SS DONA NATI OWNED
EC CO0PETITIONER APPELLANT NATIONAL DEHELOPMENT COMPANC AND T9AT SAID PETITIONER0APPELLANT IS
SOLIDARILC LIAELE WIT9 SAID CO0PETITIONER FOR LOSS OF OR DAMA.ES TO CAR.O RES7LTIN. IN T9E
COLLISION OF SAID HESSEL% WIT9 T9E >APANESE CAS7S9IMA MAR7.
H
T9E RESPONDENT CO7RT OF APPEALS ERRED IN FINDIN. T9AT T9E LOSS OF OR DAMA.ES TO T9E CAR.O OF
<<; EALES OF AMERICAN RAW COTTON% DAMA.ES WERE CA7SED IN T9E AMO7NT OF P311%377.24 INSTEAD OF
ONLC P11;%;;; AT P2;;.;; PER EALE AS ESTAELIS9ED IN T9E EILLS OF LADIN. AND ALSO IN 9OLDIN. T9AT
PARA.RAP9 1O OF T9E EILLS OF LADIN. 9AS NO APPLICATION IN T9E INSTANT CASE T9ERE EEIN. NO
.ENERAL AHERA.E TO SPEAI OF.
HI
T9E RESPONDENT CO7RT OF APPEALS ERRED IN 9OLDIN. T9E PETITIONERS NATIONAL DEHELOPMENT
COMPANC AND COMPANC OF T9E P9ILIPPINES TO PAC >OINTLC AND SEHERALLC TO 9EREIN RESPONDENT
DEHELOPMENT INS7RANCE AND S7RETC CORPORATION T9E S7M OF P341%31<.24 WIT9 LE.AL INTEREST FROM
T9E FILIN. OF T9E COMPLAINT 7NTIL F7LLC PAID PL7S P1;%;;;.;; AS AND FOR ATTORNECS FEES INSTEAD OF
SENTENCIN. SAID PRIHATE RESPONDENT TO PAC 9EREIN PETITIONERS ITS CO7NTERCLAIM IN T9E AMO7NT OF
P1;%;;;.;; EC WAC OF ATTORNEC=S FEES AND T9E COSTS. ($$. 101% Erief for t(e Mariti!e Co!$any of t(e P(i+i$$ine#B
$. 121% Ro++o
T(e $i-ota+ i##*e in t(e#e "on#o+i'ate' "a#e# i# t(e 'eter!ination of ,(i"( +a,# &o-ern +o## or 'e#tr*"tion of &oo'# '*e to
"o++i#ion of -e##e+# o*t#i'e P(i+i$$ine ,ater#% an' t(e e:tent of +ia)i+ity a# ,e++ a# t(e r*+e# of $re#"ri$tion $ro-i'e' t(ere*n'er.
T(e !ain t(r*#t of NDC=# ar&*!ent i# to t(e effe"t t(at t(e Carria&e of .oo'# )y Sea A"t #(o*+' a$$+y to t(e "a#e at )ar an'
not t(e Ci-i+ Co'e or t(e Co'e of Co!!er"e. 7n'er Se"tion 1 (2 of #ai' A"t% t(e "arrier i# not re#$on#i)+e for t(e +o## or
'a!a&e re#*+tin& fro! t(e ?a"t% ne&+e"t or 'efa*+t of t(e !a#ter% !ariner% $i+ot or t(e #er-ant# of t(e "arrier in t(e na-i&ation or
in t(e !ana&e!ent of t(e #(i$.? T(*#% NDC in#i#t# t(at )a#e' on t(e fin'in&# of t(e tria+ "o*rt ,(i"( ,ere a'o$te' )y t(e
Co*rt of A$$ea+#% )ot( $i+ot# of t(e "o++i'in& -e##e+# ,ere at fa*+t an' ne&+i&ent% NDC ,o*+' (a-e )een re+ie-e' of +ia)i+ity
*n'er t(e Carria&e of .oo'# )y Sea A"t. In#tea'% Arti"+e 227 of t(e Co'e of Co!!er"e ,a# a$$+ie' an' )ot( NDC an' MCP
,ere or'ere' to rei!)*r#e t(e in#*ran"e "o!$any for t(e a!o*nt t(e +atter $ai' to t(e "on#i&nee a# ear+ier #tate'.
T(i# i##*e (a# a+rea'y )een +ai' to re#t )y t(i# Co*rt of Ea#tern S(i$$in& Line# In". -. IAC (1 <; SCRA 143017; J1327K ,(ere
it ,a# (e+' *n'er #i!i+ar "ir"*!#tan"e ?t(at t(e +a, of t(e "o*ntry to ,(i"( t(e &oo'# are to )e tran#$orte' &o-ern# t(e +ia)i+ity
12
of t(e "o!!on "arrier in "a#e of t(eir +o##% 'e#tr*"tion or 'eterioration? (Arti"+e 17<3% Ci-i+ Co'e. T(*#% t(e r*+e ,a#
#$e"ifi"a++y +ai' 'o,n t(at for "ar&oe# tran#$orte' fro! >a$an to t(e P(i+i$$ine#% t(e +ia)i+ity of t(e "arrier i# &o-erne' $ri!ari+y
)y t(e Ci-i+ Co'e an' in a++ !atter# not re&*+ate' )y #ai' Co'e% t(e ri&(t# an' o)+i&ation# of "o!!on "arrier #(a++ )e &o-erne'
)y t(e Co'e of "o!!er"e an' )y +a,# (Arti"+e 1744% Ci-i+ Co'e. 9en"e% t(e Carria&e of .oo'# )y Sea A"t% a #$e"ia+ +a,% i#
!ere+y #*$$+etory to t(e $ro-i#ion of t(e Ci-i+ Co'e.
In t(e "a#e at )ar% it (a# )een e#ta)+i#(e' t(at t(e &oo'# in 8*e#tion are tran#$orte' fro! San Fran"i#"o% Ca+ifornia an'
To6yo% >a$an to t(e P(i+i$$ine# an' t(at t(ey ,ere +o#t or '*e to a "o++i#ion ,(i"( ,a# fo*n' to (a-e )een "a*#e' )y t(e
ne&+i&en"e or fa*+t of )ot( "a$tain# of t(e "o++i'in& -e##e+#. 7n'er t(e a)o-e r*+in&% it i# e-i'ent t(at t(e +a,# of t(e P(i+i$$ine#
,i++ a$$+y% an' it i# i!!ateria+ t(at t(e "o++i#ion a"t*a++y o""*rre' in forei&n ,ater#% #*"( a# I#e Eay% >a$an.
7n'er Arti"+e 1733 of t(e Ci-i+ Co'e% "o!!on "arrier# fro! t(e nat*re of t(eir )*#ine## an' for rea#on# of $*)+i" $o+i"y are
)o*n' to o)#er-e e:traor'inary 'i+i&en"e in t(e -i&i+an"e o-er t(e &oo'# an' for t(e #afety of t(e $a##en&er# tran#$orte' )y
t(e! a""or'in& to a++ "ir"*!#tan"e# of ea"( "a#e. A""or'in&+y% *n'er Arti"+e 173< of t(e #a!e Co'e% in a++ ot(er t(an t(o#e
!entione' i# Arti"+e 1731 t(ereof% t(e "o!!on "arrier #(a++ )e $re#*!e' to (a-e )een at fa*+t or to (a-e a"te' ne&i&ent+y%
*n+e## it $ro-e# t(at it (a# o)#er-e' t(e e:traor'inary 'i+i&en"e re8*ire' )y +a,.
It a$$ear#% (o,e-er% t(at "o++i#ion fa++# a!on& !atter# not #$e"ifi"a++y re&*+ate' )y t(e Ci-i+ Co'e% #o t(at no re-er#i)+e error
"an )e fo*n' in re#$on'ent "o*r#e# a$$+i"ation to t(e "a#e at )ar of Arti"+e# 224 to 233% Eoo6 T(ree of t(e Co'e of
Co!!er"e% ,(i"( 'ea+ e:"+*#i-e+y ,it( "o++i#ion of -e##e+#.
More #$e"ifi"a++y% Arti"+e 224 of t(e Co'e of Co!!er"e $ro-i'e# t(at ,(ere "o++i#ion i# i!$*ta)+e to t(e $er#onne+ of a -e##e+%
t(e o,ner of t(e -e##e+ at fa*+t% #(a++ in'e!nify t(e +o##e# an' 'a!a&e# in"*rre' after an e:$ert a$$rai#a+. E*t !ore in $oint
to t(e in#tant "a#e i# Arti"+e 227 of t(e #a!e Co'e% ,(i"( $ro-i'e# t(at if t(e "o++i#ion i# i!$*ta)+e to )ot( -e##e+#% ea"( one
#(a++ #*ffer it# o,n 'a!a&e# an' )ot( #(a++ )e #o+i'ari+y re#$on#i)+e for t(e +o##e# an' 'a!a&e# #*ffere' )y t(eir "ar&oe#.
Si&nifi"ant+y% *n'er t(e $ro-i#ion# of t(e Co'e of Co!!er"e% $arti"*+ar+y Arti"+e# 224 to 233% t(e #(i$o,ner or "arrier% i# not
e:e!$t fro! +ia)i+ity for 'a!a&e# ari#in& fro! "o++i#ion '*e to t(e fa*+t or ne&+i&en"e of t(e "a$tain. Pri!ary +ia)i+ity i# i!$o#e'
on t(e #(i$o,ner or "arrier in re"o&nition of t(e *ni-er#a++y a""e$te' 'o"trine t(at t(e #(i$!a#ter or "a$tain i# !ere+y t(e
re$re#entati-e of t(e o,ner ,(o (a# t(e a"t*a+ or "on#tr*"ti-e "ontro+ o-er t(e "on'*"t of t(e -oya&e (C=e*n& S(en&
E:"(an&e an' Tra'in& Co. -. 7rr*tia O Co.% 12 P(i+. 7<1 J13;3K.
T(ere i#% t(erefore% no roo! for NDC=# inter$retation t(at t(e Co'e of Co!!er"e #(o*+' a$$+y on+y to 'o!e#ti" tra'e an' not
to forei&n tra'e. A#i'e fro! t(e fa"t t(at t(e Carria&e of .oo'# )y Sea A"t (Co!. A"t No. 4< 'oe# not #$e"ifi"a++y $ro-i'e for
t(e #*)5e"t of "o++i#ion% #ai' A"t in no *n"ertain ter!#% re#tri"t# it# a$$+i"ation ?to a++ "ontra"t# for t(e "arria&e of &oo'# )y #ea
to an' fro! P(i+i$$ine $ort# in forei&n tra'e.? 7n'er Se"tion I t(ereof% it i# e:$+i"it+y $ro-i'e' t(at ?not(in& in t(i# A"t #(a++ )e
"on#tr*e' a# re$ea+in& any e:i#tin& $ro-i#ion of t(e Co'e of Co!!er"e ,(i"( i# no, in for"e% or a# +i!itin& it# a$$+i"ation.? Ey
#*"( in"or$oration% it i# o)-io*# t(at #ai' +a, not on+y re"o&ni/e# t(e e:i#ten"e of t(e Co'e of Co!!er"e% )*t !ore
i!$ortant+y 'oe# not re$ea+ nor +i!it it# a$$+i"ation.
On t(e ot(er (an'% Mariti!e Co!$any of t(e P(i+i$$ine# "+ai!# t(at De-e+o$!ent In#*ran"e an' S*rety Cor$oration% (a# no
"a*#e of a"tion a&ain#t it )e"a*#e t(e +atter 'i' not $ro-e t(at it# a++e&e' #*)ro&er# (a-e eit(er t(e o,ner#(i$ or #$e"ia+
$ro$erty ri&(t or )enefi"ia+ intere#t in t(e "ar&o in 8*e#tionB neit(er ,a# it $ro-e' t(at t(e )i++# of +a'in& ,ere tran#ferre' or
a##i&ne' to t(e a++e&e' #*)ro&er#B t(*#% t(ey "o*+' not $o##i)+y (a-e tran#ferre' any ri&(t of a"tion to #ai' $+aintiff0 a$$e++ee in
t(i# "a#e. (Erief for t(e Mariti!e Co!$any of t(e P(i+i$$ine#% $. 14.
T(e re"or'# #(o, t(at t(e Ri-er#i'e Mi++# Cor$oration an' .*i+"on% Mani+a are t(e (o+'er# of t(e '*+y en'or#e' )i++# of +a'in&
"o-erin& t(e #(i$!ent# in 8*e#tion an' an e:a!ination of t(e in-oi"e# in $arti"*+ar% #(o,# t(at t(e a"t*a+ "on#i&nee# of t(e
#ai' &oo'# are t(e afore!entione' "o!$anie#. Moreo-er% no +e## t(an MCP it#e+f i##*e' a "ertifi"ation atte#tin& to t(i# fa"t.
A""or'in&+y% a# it i# *n'i#$*te' t(at t(e in#*rer% $+aintiff a$$e++ee $ai' t(e tota+ a!o*nt of P341%31<.24 to #ai' "on#i&nee# for
t(e +o## or 'a!a&e of t(e in#*re' "ar&o% it i# e-i'ent t(at #ai' $+aintiff0a$$e++ee (a# a "a*#e of a"tion to re"o-er (,(at it (a#
$ai' fro! 'efen'ant0a$$e++ant MCP (De"i#ion% CA0..R. No. 14<130R% $. 1;B Ro++o% $. 13.
MCP ne:t "onten'# t(at it "an not )e +ia)+e #o+i'arity ,it( NDC )e"a*#e it i# !ere+y t(e !ana&er an' o$erator of t(e -e##e+
Dona Nati not a #(i$ a&ent. A# t(e &enera+ !ana&in& a&ent% a""or'in& to MCP% it "an on+y )e +ia)+e if it a"te' in e:"e## of it#
a*t(ority.
A# fo*n' )y t(e tria+ "o*rt an' )y t(e Co*rt of A$$ea+#% t(e Me!oran'*! A&ree!ent of Se$te!)er 13% 1342 (E:(i)it 4%
Mariti!e #(o,# t(at NDC a$$ointe' MCP a# A&ent% a ter! )roa' eno*&( to in"+*'e t(e "on"e$t of S(i$0a&ent in Mariti!e
La,. In fa"t% MCP ,a# e-en "onferre' a++ t(e $o,er# of t(e o,ner of t(e -e##e+% in"+*'in& t(e $o,er to "ontra"t in t(e na!e of
t(e NDC (De"i#ion% CA ..R. No. 14<13% $. 12B Ro++o% $. 1;. Con#e8*ent+y% *n'er t(e "ir"*!#tan"e#% MCP "annot e#"a$e
+ia)i+ity.
It i# ,e++ #ett+e' t(at )ot( t(e o,ner an' a&ent of t(e offen'in& -e##e+ are +ia)+e for t(e 'a!a&e 'one ,(ere )ot( are
i!$+ea'e' (P(i+i$$ine S(i$$in& Co. -. .ar"ia Her&ara% 34 P(i+. 221 J13;4KB t(at in "a#e of "o++i#ion% )ot( t(e o,ner an' t(e
a&ent are "i-i++y re#$on#i)+e for t(e a"t# of t(e "a$tain (C*en& S(en& E:"(an&e an' Tra'in& Co. -. 7rr*tia O Co.% supra "itin&
Arti"+e <24 of t(e Co'e of Co!!er"eB Stan'ar' Oi+ Co. of Ne, Cor6 -. Lo$e/ Ca#te+o% 12 P(i+. 2<4% 242 J1321KB t(at ,(i+e it i#
tr*e t(at t(e +ia)i+ity of t(e naviero in t(e #en#e of "(arterer or a&ent% i# not e:$re##+y $ro-i'e' in Arti"+e 224 of t(e Co'e of
Co!!er"e% it i# "+ear+y 'e'*"i)+e fro! t(e &enera+ 'o"trine of 5*ri#$r*'en"e *n'er t(e Ci-i+ Co'e )*t !ore #$e"ia++y a#
re&ar'# "ontra"t*a+ o)+i&ation# in Arti"+e <24 of t(e Co'e of Co!!er"e. Moreo-er% t(e Co*rt (e+' t(at )ot( t(e o,ner an'
a&ent (,aviero #(o*+' )e 'e"+are' 5oint+y an' #e-era++y +ia)+e% #in"e t(e o)+i&ation ,(i"( i# t(e #*)5e"t of t(e a"tion (a' it#
ori&in in a tortio*# a"t an' 'i' not ari#e fro! "ontra"t (Her/o#a an' R*i/% Re!enteria y Cia -. Li!% 1< P(i+. 123 J1323K.
Con#e8*ent+y% t(e a&ent% e-en t(o*&( (e !ay not )e t(e o,ner of t(e -e##e+% i# +ia)+e to t(e #(i$$er# an' o,ner# of t(e "ar&o
tran#$orte' )y it% for +o##e# an' 'a!a&e# o""a#ione' to #*"( "ar&o% ,it(o*t $re5*'i"e% (o,e-er% to (i# ri&(t# a&ain#t t(e
o,ner of t(e #(i$% to t(e e:tent of t(e -a+*e of t(e -e##e+% it# e8*i$!ent% an' t(e frei&(t (Ee(n Meyer C Co. -. M"Mi"6in& et a+.
11 P(i+. 274 J13;2K.
A# to t(e e:tent of t(eir +ia)i+ity% MCP in#i#t# t(at t(eir +ia)i+ity #(o*+' )e +i!ite' to P2;;.;; $er $a"6a&e or $er )a+e of ra,
"otton a# #tate' in $ara&ra$( 17 of t(e )i++# of +a'in&. A+#o t(e MCP ar&*e# t(at t(e +a, on a-era&e# #(o*+' )e a$$+ie' in
'eter!inin& t(eir +ia)i+ity.
MCP=# "ontention i# 'e-oi' of !erit. T(e 'e"+are' -a+*e of t(e &oo'# ,a# #tate' in t(e )i++# of +a'in& an' "orro)orate' no +e##
)y in-oi"e# offere' a# e-i'en"e = '*rin& t(e tria+. Ee#i'e#% "o!!on "arrier#% in t(e +an&*a&e of t(e "o*rt in >*an C#!ae+ O
Co.% In". -. Earrette et a+.% (<1 P(i+. 3; J1327K ?"annot +i!it it# +ia)i+ity for in5*ry to a +o## of &oo'# ,(ere #*"( in5*ry or +o## ,a#
"a*#e' )y it# o,n ne&+i&en"e.? Ne&+i&en"e of t(e "a$tain# of t(e "o++i'in& -e##e+ )ein& t(e "a*#e of t(e "o++i#ion% an' t(e
"ar&oe# not )ein& 5etti#one' to #a-e #o!e of t(e "ar&oe# an' t(e -e##e+% t(e tria+ "o*rt an' t(e Co*rt of A$$ea+# a"te'
"orre"t+y in not a$$+yin& t(e +a, on a-era&e# (Arti"+e# 2;4 to 212% Co'e of Co!!er"e.
MCP=# "+ai! t(at t(e fa*+t or ne&+i&en"e "an on+y )e attri)*te' to t(e $i+ot of t(e -e##e+ SS Ca#*#(i!a Mar* an' not to t(e
>a$ane#e Coa#t $i+ot na-i&atin& t(e -e##e+ Dona Nati nee' not )e 'i#"*##e' +en&t(i+y a# #ai' "+ai! i# not on+y at -arian"e ,it(
13
NDC=# $o#t*re% )*t a+#o "ontrary to t(e fa"t*a+ fin'in&# of t(e tria+ "o*rt affir!e' no +e## )y t(e Co*rt of A$$ea+#% t(at )ot(
$i+ot# ,ere at fa*+t for not "(an&in& t(eir e:"e##i-e #$ee' 'e#$ite t(e t(i"6 fo& o)#tr*"tin& t(eir -i#i)i+ity.
Fina++y on t(e i##*e of $re#"ri$tion% t(e tria+ "o*rt "orre"t+y fo*n' t(at t(e )i++# of +a'in& i##*e' a++o, tran#0#(i$!ent of t(e
"ar&o% ,(i"( #i!$+y !ean# t(at t(e 'ate of arri-a+ of t(e #(i$ Dona Nati on A$ri+ 12%1341 ,a# !ere+y tentati-e to &i-e
a++o,an"e# for #*"( "ontin&en"ie# t(at #ai' -e##e+ !i&(t not arri-e on #"(e'*+e at Mani+a an' t(erefore% ,o*+' ne"e##itate t(e
tran#0#(i$!ent of "ar&o% re#*+tin& in "on#e8*ent 'e+ay of t(eir arri-a+. In fa"t% )e"a*#e of t(e "o++i#ion% t(e "ar&o ,(i"( ,a#
#*$$o#e' to arri-e in Mani+a on A$ri+ 12% 1341 arri-e' on+y on >*ne 12% 13% 12% 2; an' >*+y 1;% 13 an' 1<% 1341. 9en"e% (a'
t(e "ar&oe# in 8*e#tion )een #a-e'% t(ey "o*+' (a-e arri-e' in Mani+a on t(e a)o-e0!entione' 'ate#. A""or'in&+y% t(e
"o!$+aint in t(e in#tant "a#e ,a# fi+e' on A$ri+ 22% 134<% t(at i#% +on& )efore t(e +a$#e of one (1 year fro! t(e 'ate t(e +o#t or
'a!a&e' "ar&o ?#(o*+' (a-e )een 'e+i-ere'? in t(e +i&(t of Se"tion 3% #*)0$ara&ra$( (4 of t(e Carria&e of .oo'# )y Sea A"t.
PREMISES CONSIDERED% t(e #*)5e"t $etition# are DENIED for +a"6 of !erit an' t(e a##ai+e' 'e"i#ion of t(e re#$on'ent
A$$e++ate Co*rt i# AFFIRMED.
SO ORDERED.
<;

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TRANSPORTATION LAW Day 1

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