Académique Documents
Professionnel Documents
Culture Documents
PRELIMINARY CONSIDERATIONS
4. Tabacalera Insurance vs. North Front Shipping, GR No. 119197, May 16, 1997
The "charter-party" is an agreement whether (a) Contract of Affreightment, or (b)
Bareboat/Demise Charter -
???wherein entire space of ship, or some principal space of the ship is let by the
shipowner/shipagent to one person or more (charterer) for a specified time (time
charter) or use (voyage charter)
For a Contract of Affreightment, this ship is a common carrier. This Contract of
Affreightment may either be time charter (wherein the vessel is leased to the
charterer for a fixed period of time), or voyage charter (wherein the ship is leased for
a single voyage). In both cases whether time charter or voyage charter, the charter-
party agreement provides for the hire of the VESSEL (ship) ONLY so that the
shipowner/shipagent is responsible to all crews and the captain of his ship and
their wages, and also the supplies necessary for the ship (e.g., those things
necessary for the ship voyage such as oil for the ship, drinking water, foods for the
crews and captain, the maintenance of the ship for the travel, etc.) - SO LONG: As
pursuant to Article 1732 NCC, the shipowner/shipagent offers its transportation
business to the public for a fee
Note: For Bareboat/Demise Charter (whether time charter or voyage charter), the
ship is a private carrier because it is converted from common carrier to private carrier
(Continental Co., Ltd. Vs. Liberation Steampship Co., CV-58173, April 29, 1983)
4.1. Importance of distinguishing “Contract of Affreightment” (i.e., Voyage
charter/Time charter) and “Bareboat/demise Charter” - which vessel/ship by
nature is used as common carrier
Contract of Affreightment Bareboat/Demise Charter
(whether time charter or voyage (whether time charter or voyage
charter) charter)
Common carrier because charter- Converted from common carrier
party agreement is that the to private carrier because the
shipowner/shipagent provides for charter party agreement is that the
the hire of the VESSEL (ship) ONLY (1) shipowner/shipagent
so that the shipowner/shipagent completely surrendered the
(not the charterer) is the employer possession and control of his
of the crews and the captain of his vessel (ship) to the charter (in this
ship and their wages, and also the case the charterer becomes the
supplies necessary for the ship owner of the ship pro hac vice
(e.g., those things necessary for [owner of the ship in the
the ship voyage such as oil for the meantime]), AND THAT (2) the
ship, drinking water, foods for the captain and crews are under the
crews and captain, the supervision and control of the
maintenance of the ship for the charterer.
travel, etc.) - SO LONG: As BUT suppose in a bareboat/demise
pursuant to Article 1732 NCC, the charter, the crews and captain are
shipowner/shipagent offers its supplied by the
transportation business to the shipowner/shipagent, is the
public for a fee common carrier still converted to
private carrier? YES, so long as the
captain and crews are under the
supervision and control of the
charterer - viz., the charterer is the
employer pro hac vice of the crews
and captain (Puromines vs. CA, GR
No. 91228, Mar 22, 1993)
5. Vessel as private/special carrier (Valenzuela Hardwood vs. CA, G.R. No. 102316, June
30, 1997; p. 16)
ISSUE: Whether a vessel private carrier, can stipulate that it can be exempted from
any liability
HELD: YES. “X xx, a common carrier undertaking to carry a special cargo to a special
PERSON ONLY (viz., the carrier does not offer its transportation service to the public),
becomes a private carrier” - and that being a private carrier, a
stipulation/agreement between shipowner/shipagent with the charterer that the
shipowner/shipagent is exempted from liability from the negligence of the captain
and crews is valid
Reason: Strict provisions of the Civil Code on common carriers do not apply to private
carriers, not they apply to a common carrier converted into a private carrier
5.1. Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621, September
28, 1999
Issue: When the vessel does not have certificate of public convenience, and
that it transported the goods of only one person - sufficient to become a
private carrier for the purpose of limiting its liability or even exemption of
liability?
Held: NO. First, the fact the carrier has no Certificate of Public Convenience
does not deter from being a common carrier - so long as it offers to the public
(whether general public or certain portion of the public) its transportation
service. Secondly, the fact that the carrier carried the goods of one person
only is merely coincidental because along with the transporting goods of such
one person, the carrier by practice offers its transportation service to the
public carrying passengers and with that, rendered the carrier as a common
carrier
Question: Suppose the carrier carries goods only (no passengers allowed), and
at the time of the damaged of goods, it carried only the goods of one person -
is it a common carrier or private carrier?
Answer: If the carrier offers its transportation service to the public, then it is a
common carrier such that the fact that it carried only the goods of one
passenger, is merely coincidental (as for example rarity of customers; or such
one person occupied the entire space of the carrier).
Article 1733 NCC (Observance of extraordinary diligence over the passengers and/or
goods)
Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe EXTRAORDINARY DILIGENCE in the vigilance over the GOODS
and for the safety of the PASSENGERS transported by them - according to (or
depending upon) all the circumstances of each case (because Article 1734 NCC and
also force majeure exempts common carrier from liability)
Such extraordinary diligence in the vigilance over the GOODS is further expressed in
Articles 1734, 1735, and 1745, Nos. 5, 6, and 7 - WHILE: The extraordinary diligence
for the safety of the PASSENGERS is further set forth in Articles 1755 and 1756.
1. “Extraordinary diligence” – explained
It requires common carriers to render service with the greatest skill and foresight
and "to use all reasonable means to ascertain the nature and characteristic of goods
tendered for shipment, and to exercise due care in the handling and stowage,
including such methods as their nature requires (Compania Maritima v. CA, 164 SCRA
685 [p.20]; Philippine Charter Insurance Corp vs. Unknown Owner of Vessel M/V
National Honor, GR 161833, July 8, 2005)
2. Non-ownership of the vessel does not affect observance of extraordinary diligence
of common carrier (Cebu Salvage Corp. vs. Philippine Home Assurance Corp., 512
SCRA 667, January 25, 2007; p. 21)
FACTS: In this case, ALS Timber Ent. owned the vessel, which vessel was
leased/rented by Cebu Salvage Corp. to transport the passengers and goods for a fee
for the public who opt to avail its services (hence, Cebu Salvage Corp is a common
carrier even if it merely rented the vessel from ALS). Cebu Salvage (lessee of the
vessel of ALS), entered into agreement with MCCI to transport the products of the
latter. During voyage, the products of MCCI damaged.
ISSUE: Cebu Salvage Corp alleged that having merely rented the vessel and therefore
does not own the vessel, it is not therefore a common carrier but rather merely a
private carrier - and being a private carrier, it is not required to observe
extraordinary diligence in the vigilance over the goods of MCCI.
HELD: Cebu Salvage Corp is a common carrier. “Non-ownership of the common
carrier (vessel or vehicle) does not render ineffective observance of extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by the carrier.
X xx. To permit a common carrier to escape its responsibility for the goods it agreed
to transport (by the expedient of alleging non-ownership of the vessel) would
radically derogate from the carrier’s duty of extraordinary diligence.”
3. For a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with sufficient number of competent officers and crews (Loadstar Shipping
Co., Inc. vs. Court of Appeals, G.R. No. 131621, September 28, 1999; p. 21)
“For a vessel to be seaworthy, it must be adequately equipped before the voyage
and manned with a sufficient number of competent officers and crews. The failure
of a common carrier to maintain in seaworthy condition its vessel involved in a
contract of carriage is a clear breach of its duty to observe extraordinary diligence.
3.1. Trans-Asia Shipping Lines, Inc. vs. Court of Appeals, GR No. 118126, March 4,
1996
Principle: For a vessel to be seaworthy, it must be adequately equipped for
the voyage and manned with a sufficient number of competent officers and
crew
Facts: Common carrier (vessel) took its voyage despite one of its two engines
was mechanically defective – which should be that two engines must be
functioning. While voyaging, the functioning engine also malfunctioned.
Held: Plainly, the vessel was unseaworthy even before the voyage began. For
a vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with a sufficient number of competent officers and crew. The failure
of a common carrier to maintain in seaworthy condition its vessel involved in
a contract of carriage is a clear breach of its duty to observe extraordinary
diligence.
CHAPTER 2
VIGILANCE OVER THE GOODS
Article 1734 NCC (Exemptions of common carrier from liability for damage/loss of
goods)
Common carriers are responsible for the loss or damage of the goods – UNLESS: The
same is due to any of the following causes ONLY (exclusive/closed lists):
(1) Natural disaster/calamity such as flood, storm, earthquake, lightning, or other
natural disaster or calamity (e.g., tsunami; rouge wave; remember these are all
act of God);
HOWEVER under Article 1739: For the common carrier to be completely free from
liability, the PROXIMATE AND ONLY CAUSE of such damage/loss of the goods
was due to natural disaster - meaning, the common carrier did not commit
intervening negligence by observing "due diligence" before, during and after the
natural disaster. “Due diligence” is the diligence required depending on the
attending/present circumstances of person, place and time - meaning, "due
diligence" to be observed by the common carrier before, during and after the
natural disaster depending on the circumstance of the natural disaster - example,
when the natural disaster poses no danger to the life and limb of the crews of the
common carrier, it is believed that extraordinary diligence must be observed, in
comparison when there is danger to the life/limb of the crews, the diligence
required is proportionate to the danger but less than extraordinary diligence
(2) Act of the public enemy in war, whether international or civil (e.g., international
war when Philippine at war with other country/ies; civil war of the Philippine
government against Filipinos such as Maute group, Abu Sayyaf group, NPA);
Note: Relate this with Article 1739, the same with "natural disaster" as explained
above
(3) Act/omission of the shipper (i.e., one who shipped the goods himself whether as
owner or consignor), or owner of the goods - that caused damage/loss on the
goods;
(4) The character of the goods (e.g., perishable goods despite due diligence by the
common carrier to prevent damage/loss), or defects in the packing of the goods
or defect in the containers of the goods - committed by the shipper/owner of the
goods;
(a) What diligence required of the common carrier in case of loss/damage to
goods - due to character of the goods, defect in packing or defects in
container of the goods committed by the shipper or owner of the goods?
Article 1742: The common carrier must still observe due diligence to
prevent/lessen the loss/damage - otherwise, the common carrier is liable for
damages
(5) Order/act of competent public authority
HOWEVER under Article 1743: The order/act of the competent public authority
must be within his authority/power (i.e., competent) - AND: That such order/act
must also be lawful (Mauro Ganzon vs. Court of Appeal, GR No. L-48757, May 30,
1988; p. 64).
QUESTION: Suppose the Mayor ordered the captain of the vessel common carrier
to dump the scrap irons into the sea. Is that a lawful order of the public authority?
ANSWER: NO. Such order of the mayor dumping iron scraps into the sea is an
"unlawful order" as it is unlawful to dump iron scraps into the sea (Ganzon vs.
Court of Appeal, GR No. L-48757, May 30, 1988 (p. 64))
QUESTION: Suppose the public authority acted or issued an order that is unlawful
and also beyond his power/authority - is there possibility that the common carrier
can still free itself from liability for damage/loss of goods?
ANSWER: YES - provided the public authority acted with grave or irresistible
threat, violence or force which is also considered as force majeure (Pedro De
Guzman vs. Court of Appeals, GR No. L-47822, December 12, 1988; p. 71)
Article 1736 NCC (Duration of observance of extraordinary diligence over the goods)
The EXTRAORDINARY RESPONSIBILITY (extraordinary diligence) of the common
carrier LASTS FROM the time the goods are UNCONDITIONALLY RECEIVED by AND
PLACED IN THE POSSESSION of the common carrier for transportation UNTIL the
same are DELIVERED (actually or constructively) (1) to the consignee (i.e., one who
will receive the goods at the place of destination), or (2) to the person who has a
right to receive the goods - BUT: Without prejudice to the provisions of Article 1738
Article 1738 (Extraordinary diligence continues when goods stored in warehouse
of common carrier)
The extraordinary liability of the common carrier continues to be operative even
during the time the goods are STORED IN THE WAREHOUSE of the carrier at the
place of destination - UNTIL: The consignee has been ADVISED of the arrival of
the goods AND has had REASONABLE OPPORTUNITY thereafter to remove them
(from the warehouse) or otherwise dispose of them (goods).
Article 1737 (Extraordinary diligence continues even when goods temporarily
unloaded or stored in transit)
The common carrier's duty to observe extraordinary diligence over the goods
REMAINS in full force and effect even when they are (1) TEMPORARILY UNLOADED
(e.g., broken trip where goods are temporarily unloaded by common carrier and then
later reloaded when it starts again its trip) or (2) STORED IN TRANSIT (goods
stored/left in the vehicle/vessel of the common carrier while on broken trip), UNLESS
the shipper or owner (of the goods) has made use of his RIGHT OF STOPPAGE IN
TRANSITU (i.e., while common carrier in transport, the shipper/owner of goods
communicated to the common carrier to stop delivering the goods to the place of
destination - in which case, the degree of diligence to be observed by common carrier
is no longer extraordinary diligence but diligence of a good father of a family).
Note: Diligence of good father of a family: Reasonable care consistent with that
ordinary prudent person would have observed when confronted with similar
situation (Crisostomo vs. CA, GR 138334, August 25, 2003)
Comments:
1. Macam vs. Court of Appeals, GR No. 125524, August 25, 1999 (p. 49)
Principle: Article 1736 NCC (Duration of observance of extraordinary diligence over
the goods)
The extraordinary responsibility (extraordinary diligence) of the common carrier lasts
from the time the goods are unconditionally received and placed in the possession of
the common carrier for transportation until the same are delivered (actually or
constructively) by the carrier to the consignee (i.e., one who will receive the goods at
the place of destination) or delivered to the person who has a right to receive them
- without prejudice to the provisions of Article 1738 (i.e., common carrier’s
observance of extraordinary diligence even when goods stored at warehouse of
common carrier).
Facts: The shipper Macam (in Philippines) as seller entered into sale of goods with
GPC as buyer (in Hongkong), and the goods to be shipped from Philippines to
Hongkong. Before shipment of the goods, shipper Macam entered into contract with
Solidbank in the Philippines for the latter bank to make advance payment to shipper
Macam for the value of the goods. The buyer GPC (in Hongkong) also entered into
contract with Pakistan Bank (in Hongkong) for the latter bank to pay Solidbank in the
Philippines after the arrival of the goods in Hongkong regarding the amount that
Solidbank advanced to shipper Macam, and subsequently, for the buyer GPC to pay
Pakistan Bank that it to Solidbank. Now, regarding the shipment of the goods from
the Philippines to Hongkong, shipper Macam transacted with the WALLEM (local
agent of common carrier [China Ocean Shipping Co.] in the Philippines). In the bill of
ladings (B/L) issued by the common carrier, it is stipulated therein that the
consignee of the goods in Hongkong is Pakistan Bank and the buyer GPC merely as
notify party (i.e., party to be notified by common carrier when the goods already
arrived in Hongkong). The B/L is therefore given to the consignee Pakistan Bank
(being the consignee as stipulated in the B/L) which B/L subsequently to be
surrendered by the consignee Pakistan Bank to the common carrier before the latter
surrenders the goods to Pakistan Bank in Hongkong. Now, when the goods reached
Hongkong, the common carrier delivered the goods directly to buyer GPC and not to
the consignee Pakistan Bank seemingly in violation of the stipulations in the B/L
(that the common carrier shall deliver the goods to consignee Pakistan Bank being
the consignee). Now the problem, after the buyer GPC received the goods from the
common carrier, the buyer GPC failed to pay consignee Pakistan Bank - in view of
which, the consignee Pakistan Bank refused to pay Solidbank in the Philippines.
Solidbank demanded the common carrier to pay back the value of the goods it
advanced for the shipper Macam on ground that the common carrier violated the
B/L by delivering the goods not to consignee Pakistan Bank but directly to buyer GPC
who is merely a notify party, but the common carrier refused to pay Solidbank,
hence, Solidbank demanded the shipper Macam to pay back the amount it advanced
to him, which shipper Macam complied. Therefore, in order to recover the price of
the goods, shipper Macam demanded payment from the common carrier for the
latter’s failure to comply with the B/L by delivering the goods to the buyer GPC who
is merely a notify party instead to the Pakistan Bank being the consignee.
Issue: Did the common carrier validly delivered the goods directly to the buyer GPC
instead to consignee Pakistan Bank?
Held: YES. Because what Article 1736 provides that the goods can be delivered to the
consignee (Pakistan Bank) or to the person who has the right to receive such goods.
Now, who is this “person who has the right to receive such goods”? Certainly, the
GPC, being the buyer, is a person who has the right to receive the goods from the
common carrier pursuant to Article 1736 – even if GPC was not designated as
consignee in the B/L. In which, case, the common carrier is not liable for misdelivery
of the goods
2. Samar Mining Company vs. Nordeutscher Lloyd, GR L-28673 October 23, 1984 (p.
51)
Facts: Consignee entered into contract of carriage of goods with the common carrier
regarding goods imported by consignee into the Philippines from other country. A
B/L was issued to the consignee and stipulated therein (a) that the common carrier
shall not be liable for damage/loss of goods while the goods not in its actual
custody/possession, and (b) that the common carrier upon its arrival in Manila, shall
tranship the goods from Manila to Davao. Now, after the goods arrived in Manila,
the common carrier unloaded the goods in good order and condition and delivered
the goods to the warehouse of AMCYL in Manila awaiting transhipment of the
goods to Davao (Note: AMCYL is not a warehouse own by the common carrier; it is a
3rd party). The good were however, not delivered to the consignee in Davao.
Consignee filed civil action against the common carrier for damages for the loss of
his goods. However, the common carrier refused to pay on ground that it is
stipulated in the B/L that the common carrier is not liable for the damage/loss of the
goods while not in its actual possession/custody, and in the case at bar, the good
were loss while in the actual possession and custody of AMCYL warehouse
Issue: Is the stipulation in the B/L that the common carrier shall not be liable for the
damage/loss of the goods while not in its actual possession – valid?
Held: YES. This stipulation in the B/L is not against the law, morals, good customs,
public policy or public order
Issue: Article 1736 provides that the extraordinary diligence of the common carrier
begins from the time the goods are unconditionally received and placed in the
possession of the common carrier for transportation until the goods are delivered,
actually or constructively, by the carrier to the consignee, or to the person who has
a right to receive them, without prejudice to the provisions of Article 1738. The
question is, is Article 1736 applies in favor of the common carrier that its duty to
observe extraordinary diligence ceased from the time it delivered the goods to the
consignee in Manila? In other words, was there valid delivery by the common
carrier to the consignee in Manila?
Held: YES. Remember that in the B/L, it is also stipulated that upon arrival of the
goods in Manila, the common carrier shall undertake to tranship the goods from
Manila to Davao. On that note, the moment the goods reached Manila and the
common carrier unloaded the good from the vessel, there was a consignee in Manila
that received the goods, and this consignee is the common carrier itself. Why?
Because it is stipulated in the B/L that once the goods reached Manila, it will be the
common carrier to tranship the goods from Manila to Davao, hence, the common
carrier by transhipping the goods from Manila, it acted as agent-consignee of the
principal-consignee in Davao. And so the common carrier being a consignee,
pursuant to Article 1736, is a person who has the right to receive the delivery of the
goods in Manila. Therefore, the moment the goods reached Manila, the common
carrier is no longer acting as common carrier but merely as agent-consignee of the
principal-consignee in Davao. And being no longer as common carrier but
technically as agent-consignee, it's duty to observe extraordinary diligence ceased
Issue: Article 1736 provides, “without prejudice to the provisions of Article 1738”,
and under Article 1738, “The extraordinary liability of the common carrier (i.e.,
observance of extraordinary diligence) continues to be operative even during the
time the goods are stored in a warehouse of the common carrier at the place of
destination, until the consignee has been advised of the arrival of the goods and has
had reasonable opportunity thereafter to remove them or otherwise dispose of
them.” Now, the question is, in the case at bar, pursuant to Article 1738, should the
common carrier continue to observe extraordinary diligence while goods were inside
the warehouse of AMCYL?
Held: NO. First, when the goods reached Manila, the goods did not yet reach its
place of destination which in this case, Davao. More importantly, the warehouse
does not belong to the common carrier but to AMCYL, a 3rd-party
3. Servando vs. Philippine Steam Navigation Co., GR No. 36481-2, October 23, 1982
(p. 56)
Principle: When the warehouse where goods were stored does not belong to the
common carrier, then common carrier is not bound to observe extraordinary
diligence over the goods while they are stored in said warehouse as it has no control
thereof
Facts: When the goods reached its destination, the common carrier discharged the
goods into the warehouse of Bureau of Customs with the prior consent of the
consignee. The common carrier therefore notified the consignee about the arrival of
the goods and are now in the warehouse of the Bureau of Customs. Later, while the
goods were in the said warehouse, a fire broke out destroying the goods.
Issue: Is Article 1738 applicable against the common carrier as regards the duty of
the common carrier to observe of extraordinary diligence in the vigilance over the
goods while the goods in the warehouse of the common carrier?
Held: NO. The warehouse where the goods were stored is not the warehouse of the
common carrier but rather owned by 3rd party (Bureau of Customs) over which the
common carrier has no control thereof. Hence, the common carrier is not to be
blamed for any damage/loss of the goods while in the warehouse of the Bureau of
Customs
4. Sabena Belgian World Airlines vs. CA, G.R. No. 104685, March 14, 1996 (p. 26)
Facts: “On August 21, 1987, plaintiff was a passenger on board Flight SN 284 of
Airline originating from Casablanca with stopover in Brussels, Belgium, then
afterwhich, flight to Manila. (At the Casablanca airport) Plaintiff checked in her
luggage which contained her valuables for which she was issued Tag No. 71423.
When the airline reached Brussels, the plaintiff stayed overnight in a hotel (i.e.,
stopover) and her luggage was left on board the same airline Flight SN 284 (i.e.,
stored in transit under Article 1737)
When the airline arrived at Manila International Airport on September 2, 1987, her
luggage was missing.
Airline asserts that the loss of the luggage was due to plaintiff’s sole if not
contributory negligence because she did not declare her valuable items in her
checked-in luggage at the flight counter in Casablanca Airport when she checked in
for her flight from Casablanca so as the airline would have advised her to secure an
insurance for her valuable items and required her to pay additional charges
otherwise the airline would have refused acceptance of her baggage as required by
the generally accepted practices of international carriers; that Section 9(a), Article IX
of General Conditions of carriage requiring passengers to collect their checked
baggage at the place of stopover, passenger neglected to claim her baggage at the
Brussels Airport (stopover; overnight in Brussels); that passenger should have
retrieved her undeclared valuables from her baggage at the Brussels Airport since her
flight from Brussels to Manila will still have to be confirmed by the airline company
inasmuch as only her flight from Casablanca to Brussels was confirmed; that Airline
incorporated in all Sabena Plane Tickets, including Sabena Ticket No. 082422-
72502241 issued to passenger in Manila on August 21, 1987, a warning that ‘Items of
value should be carried on your person’ and that some carriers assume no liability for
fragile, valuable or perishable articles and that further information may be obtained
from the carrier for guidance’; that granting without conceding that Airline is liable,
its liability is limited only to US $20.00 per kilo due to passenger’s failure to declare a
higher value on the contents of her checked in luggage and pay additional charges
thereon.
Issue No. 1: Whether the common carrier (Airline) is presumed negligent regarding
the loss of valuables of the passenger
Held: YES. Article 1735 provides that when the loss of the goods is not due to any of
the five closed lists under Article 1734, then the common carrier is presumed at
fault/negligent In the case at bar, the loss of the goods is not due to any of the five
closed lists
Issue No. 2: When did the common carrier's duty to observe extraordinary diligence
began?
Held: Article 1736 provides that the extraordinary diligence of the common carrier
lasts from the time the goods are unconditionally received by and placed in the
possession of the common carrier for transportation until the same are delivered to
the owner of the goods. In the case at bar, the common carrier unconditionally
received the luggage of the plaintiff, and that such luggage has not been received by
the plaintiff at the place of destination which is Manila (obviously, the luggage was
lost).
Issue No. 3: Is the common carrier's duty to observe extraordinary diligence
continues when the plaintiff left the airline and took her hotel at the stopover in
Brussels and left her luggage inside the airline?
Held: YES. Article 1736 provides the common carrier's duty to observe extraordinary
diligence continues even when the goods are store in transitu (i.e., the plaintiff left
her luggage inside the airline at the stopover in Brussels).
Issue No. 4: In order to mitigate its liability for damages, can the airline asserts that
the plaintiff committed contributory negligence for the loss of her luggage under
Article 1741?
Held: NO. Article 1741 provides that "If the shipper/owner of the goods MERELY
CONTRIBUTED to the loss/damage of the goods, BUT the PROXIMATE CAUSE (i.e.,
not proximate and only cause) thereof being still that of the negligence of the
common carrier, the common carrier is liable for damages but equitably reduced.
Now, PROXIMATE CAUSE is that which, by natural and continuous sequence of
events unbroken by any efficient intervening cause, produces injury without which
the result would not have occurred. In the case at bar, the plaintiff did not
contribute to the loss of her luggage because it is not negligence to leave her luggage
inside the airline which we call it "stored in transitu," neither that the plaintiff
contributed to the cause of the loss of her luggage because from the time the
luggage was unconditionally accepted by the airline and placed in its custody in
Casablanca airport, to the time the luggage was stored in transitu inside the airline
at stopover in Brussels, to the time the luggage was discovered loss in Manila, there
was no efficient intervening cause on the part of the plaintiff’s act/omission that
could have been the cause of or even contributed to the loss of the luggage
5. Tabacalera Insurance Co. vs. Court of Appeals, GR No. 119197, May 16, 1997 (p. 32)
Principle: Contributory negligence on the part of the owner of the goods under
Article 1738 when he did not removed his goods from the warehouse of the common
carrier after having been advised of the arrival of his goods despite reasonable
opportunity to do so
Facts: The common carrier issued clean bill of lading (i.e., no annotation by the
common carrier on the bill of lading regarding any defect/character of the goods or
its packing/container) regarding sacks of corn grains consigned to RFM. After the
arrival of the goods at its destination, it is stored at the place of the common carrier,
and then advised/notified the consignee RFM about said arrival - but RFM
committed delays because it did not immediately begin unloading the goods. When
the goods were finally unloaded by RFM from the place of the common carrier, there
were shortage of goods about 26 metric tons.
(1) Issue: What is the effect of common carrier issuing a “clean bill of lading”?
Held: It means that the goods were received by the common carrier in “good
condition.” Hence, the common carrier could no longer allege that it received the
goods in bad order/condition.
(2) Issue: In the case at bar, is the common carrier presumed at fault/negligent?
YES. Under Article 1735, when the cause of the loss/damage on goods is not due
to any of the five closed lists under Article 1734 - then the common carrier is
presumed at fault/negligent
(a) Issue: What is the defense of the common carrier to refute such presumption
of fault/negligence under Article 1735?
Held: Article 1735 provides, common carrier must prove that it observed
extraordinary diligence in the vigilance over the goods
(3) Issue: In the case at bar, was the common carrier able to refute such
presumption of fault/negligence under Article 1735?
Held: NO. Because the no evidence shown by the common carrier that it
observed extraordinary diligence in the vigilance over the goods. In the case at
bar, it is not known who caused the loss of the goods, i.e., it could be due to the
fault/negligence of the common carrier or it could also be due to the delay of
unloading operation of the consignee RFM. Considering that the common carrier
cannot prove that the loss of the goods was due to any of the 5 closed lists under
Article 1734, under Article 1735, the common carrier is therefore presumed
negligent which unfortunately, it was not able to refute such presumption.
(4) Issue: What evidence does the consignee (i.e., receiver of the goods at the place
of destination) has to prove against the common carrier – so that presumption of
fault/negligent attaches against the common carrier?
Held: The consignee has only to prove that he has contract of carriage of goods
with the common carrier, and the goods were received by common carrier in
good condition (or unconditionally), and that the goods arrived with
damages/loss – and afterwhich, the common carrier is now presumed at
fault/negligent. HENCE: It is not automatic that just because the goods arrived
with damage/loss, the common carrier is already ipso jure presumed
negligent/fault
(5) Issue: It is undisputed that the common carrier is presumed negligent not having
able to prove that it observed extraordinary diligence in the vigilance over the
goods. But can the common carrier lessen its liability by proving “contributory
negligence” against RFM?
Held: YES. While it is true that the common carrier was not able to refute the
presumption of negligence for the loss of the goods - NEVERTHELESS: The loss of
the goods was not solely due to the negligence of the common carrier since the
consignee RFM also committed contributory negligence because it did not start
removing operations despite already notified by the common carrier of the
arrival of the goods and had reasonable opportunity to do removed those
goods (Article 1738)
6. Sarkies Tours Philippines, Inc. vs. Court of Appeals, GR No. 108897, October 2, 1997
(p. 40)
Principles:
(a) When the common unconditionally received the goods in good order (i.e., either
by issuing clean bill of lading, or no bill of lading issued – and that no reservation
made by common carrier [e.g., defects of goods, defects on package/container,
etc.]), and the arrival of the goods at the place of destination in bad order
produces presumption that common carrier is at fault/negligent
(b) The failure of the passenger in paying freight charge of his baggage/goods is not
the fault of the passenger - but it is the common carrier’s own lookout
Facts: Passenger boarded the bus (common carrier), and with the help of
employee of the common carrier, the passenger’s three (3) pieces luggage placed
inside the baggage compartment of the bus without paying the corresponding
baggage fare. During the stopover in Daet, it was discovered that one (1) of her
luggage was missing, which loss was caused when the common carrier did not
ensure that bus baggage compartment was securely fastened/locked
Issue: Is the common carrier presumed at fault/negligent?
Held: YES. Under Article 1735, when the loss of the goods is not due to any of the
5 closed lists under Article 1734, then the common carrier is presumed negligent.
In the case at bar, it was proven that the loss was due to a non-secured baggage
compartment of the bus which is among those five closed lists under Article
1734.
Issue: What are those stages where the common carrier is to observe
extraordinary diligence in the vigilance over the goods?
Answer: The stages are three-tiered:
(1) Article 1736: From the time the common carrier unconditionally received the
goods for transportation up to the time the goods received by the person who
has the right to receive
(2) Article 1737: Even during the time goods are temporarily unloaded or stored
in transit
(3) Article 1738: When goods reached its destination and are stored in the
warehouse of the common carrier - until the common carrier advised the
consignee about the arrival of the goods and had reasonable opportunity
after advice to remove them or dispose of them
Issue: What is the legal effect when the common carrier unconditionally received
the goods for transportation (i.e., clean bill of lading) – and the goods are
discovered damaged/loss either along the way or upon arrival at the place of
destination?
Held: The goods having been received unconditionally by the common carrier for
transportation, it means that the goods were received in good order – and as
such, when the goods are discovered damaged/loss at the place of destination,
the presumption is that common carrier is at fault/negligent
Issue: Can the common carrier free itself from liability because the passenger did
not declare his three (3) luggage and correspondingly pay the baggage fare
(freightage) thereof – since the passenger outright placed his three (3) luggage
inside the baggage compartment of the bus though with the help of its
employee?
Held: NO. The failure of the passenger in paying freightage for the three (3)
pieces of luggage is not the passenger's fault but the common carrier’s own
lookout. To make matter worse for the common carrier, it was even the
employee of the common carrier who helped the passenger load the three (3)
pieces of luggage into the bus baggage compartment without such employee
requiring the passenger to have her luggage be declared and pay the
corresponding charge therefor
7. Coastwise Lighterage Corp. vs. Court of Appeals, GR No. 114167, July 12, 1995 (p.
43)
Principle: When the common received the goods in good order (i.e., clean bill of
lading), and when the goods reached its destination, they are already in bad order –
THEN: The common carrier presumed at fault/negligent
Note: Charter party agreement can either be (a) Contract of Affreightment [whether
Voyage Charter or Time Charter], or (b) Bareboat/demise Charter
Facts: The common carrier (vessel) entered into Contract of Affreightment (i.e.,
whether Voyage Charter or Time Charter) with the charterer (i.e., in the case at bar,
the shipper-consignee) to carry the goods of the latter. When the cargo reached its
destination, the cargoes were damaged
Issue No. 1: The shipowner of the common carrier entering into Contract of
Affreightment with the charterer, is the common carrier converted into private
carrier?
Held: NO. Because in Contract of Affreightment (whether Voyage Charter or Time
Charter), the command and navigation of the vessel remains with the shipowner of
the common carrier and not the charterer. IN CONTRAST WITH: Demise/Bareboat
Charter Contract, the command and navigation of the vessel is no longer of the
shipowner but completely transferred by the shipowner to the charterer, hence,
insofar as between the shipowner and demise/bareboat charterer, the shipowner is
converted from being a common carrier to a private carrier (and as such, the
shipowner need only to observe ordinary diligence and not extraordinary diligence)
Note: Suppose, the demise/bareboat charterer used the vessel for transporting
the goods of all those who opt to avail of its transportation services (i.e., open
to the public) - THEN:
(1) The category of the shipowner to that of the demise/bareboat charterer - is
private carrier
(2) The category of the demise/bareboat charterer to that of the shippers - is
common carrier
(3) The relationship between shipowner and shippers is none - because there is
no contractual relationship between them - BUT: Only between the
demise/bareboat charterer and the shippers.
However, the demise/bareboat charterer can have a cause of action against
the shipowner when former received the vessel from the latter without
knowledge of its being unseaworthy
Issue No.2: We now know that in Contract of Affreightment (whether Voyage
charter or Time Charter), the shipowner is still a common carrier and not converted
into private carrier insofar as the relationship between the shipowner and charterer
is concerned - because the command and navigation of the vessel belongs to the
shipowner. The question is, what is then the degree of diligence required of the
shipowner in the vigilance over the goods of the charterer?
Held: Being still a common carrier, pursuant to Article 1733, the shipowner must
observe extraordinary diligence in the vigilance over the goods
Issue No. 3: What legal effect when the shipowner as common carrier received the
goods in good order, but when it reached its destination, the goods are already in
bad order/condition?
Held: The shipowner being still a common carrier, and pursuant to Article 1735, the
cause damage being not one of those 5 closed lists under Article 1734, the common
carrier is presumed at fault/negligent – UNLESS: This presumption is rebutted
proving that it exercised extraordinary diligence in the vigilance over the goods
Issue No. 4: Was the shipowner acting as common carrier able to refute such
presumption of fault/negligence?
Held: NO. Because it was proven that the patron (one who commands the vessel) of
the shipowner is not licensed, hence, the common carrier is unseaworthy for being
manned by incompetent officer (Note: For a vessel to be seaworthy, it must be
adequately equipped for the voyage and manned with sufficient number of
competent officers and crews [Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R.
No. 131621, September 28, 1999])
8. PAL vs. Court of Appeals, GR No. 119706, March 14, 1996 (p. 47)
When the common carrier unconditionally accepts a cargo despite knowledge of its
improper packing, or unconditionally accepts a cargo even without actual
knowledge of such improper packing but apparent by mere ordinary observation
(i.e., implied knowledge) - then the common carrier cannot escape liability in case
such cargo is damaged resulting from said improper packing of the cargo
Note: When common carrier unconditionally accepts goods for transportation and
reached the destination with already loss/damaged goods, then the common carrier
is presumed at fault/negligent
9. Arrastre operator and stevedore – distinguished (p. 47)
Stevedoring refers to the loading of cargo into the vessel at the port of origin, or the
unloading of cargo from the vessel at the port destination – WHILE: Arrastre
operator refers to the transportation of cargo unloaded from the vessel to the
agreed establishment/place (e.g., delivery into the warehouse/place as instructed by
the consignee).
A stevedore is therefore not a common carrier because it is not involved in the
transportation of goods – WHILE: Arrastre operator can be a common carrier for it is
involved in transporting the goods for all who want to avail of its transportation,
hence, must observe extraordinary diligence in the vigilance over the goods pursuant
Article 1733 - and pursuant to Article 1735, the arrastre operator is presumed at
fault/negligence in case of damage/loss of goods not due to any of the 5 closed list
under Article 1734. (Philippine First Insurance Co. vs. Wallem Phils. Shipping Inc. GR
No. 165647, March 26, 2009; p. 48)
10. Article 1737 (Extraordinary diligence continues even when goods temporarily
unloaded or stored in transit)
The common carrier's duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored
in transit (goods stored in the common carrier), unless the shipper or owner (of the
goods) has made use of his right of stoppage in transitu.
a. Right of stoppage in transitu
Refers to the right of an unpaid shipper or owner of the goods to stop the goods
in transit - as when the buyer is or becomes insolvent while the goods are being
transported to the buyer.
Effect of the exercise by the shipper/owner of his right of stoppage in
transitu
It is as if the shipper/owner never parted with the goods he caused to be
shipped, and thereby, the common carrier ceases to be a common carrier but
converted into a mere bailee or depository – and as such, the common carrier
is no longer bound to exercise extraordinary diligence over the goods, but
merely diligence of a good father of a family (i.e., diligence of a man of
ordinary prudence/care, not extraordinary prudence/care)
Note: Diligence of good father of a family: Reasonable care consistent with
that ordinary prudent person would have observed when confronted with
similar situation (Crisostomo vs. CA, GR 138334, August 25, 2003)
b. "Stored in transit"
Explained in the case of Sarkies Tours Philippines, Inc. vs. Court of Appeals, GR
No. 108897, October 2, 1997 (p. 40) and the case of Sabena Belgian World
Airlines vs. CA, G.R. No. 104685, March 14, 1996 (p. 26)
c. "Temporarily unloaded"
It means that the goods are in transport, and the common carrier before reaching
its destination (i.e., in between the place of departure to the place of destination),
it temporarily unloaded the goods from the common carrier, and later, when the
common carrier is to resume its transportation, it again loaded the goods into the
common carrier. Now, during the goods were temporarily unloaded from the
common carrier, the latter is still to observe extraordinary diligence.
Article 1742 (Due diligence by common carrier even in faulty package or character of
goods; Note: Relate Article 1742 with Article 1734 [4])
Even if the deterioration/damage/loss of the goods is caused by the character of the
goods, or the faulty(defective) packaging/containers of the goods – nevertheless,
the common carrier still has the obligation to observe DUE DILIGENCE to
lessen/prevent further damage/loss
Note: This "due diligence" is similar to Article 1739 wherein despite the existence of
fortuitous event/natural disaster, the common carrier must still observe due
diligence before/during/after the fortuitous event to lessen/prevent further
damage/loss of the goods
Note: “Due diligence” is the diligence required depending on the demand of
circumstances of person, place and time
1. Calvo vs. UCPB General Insurance Co., 379 SCRA 510, March 19, 2002 (p. 63)
Facts: The shipper was the one who made the packing/container of the goods. When
the shipper contracted with the common carrier for the transportation of his goods,
the common carrier has knowledge about the defective/improper packing/container
of the goods, or the common carrier has no knowledge about such
defective/improper packing/container but such defective/improper
packing/container is apparent (visible to the eye) upon ordinary observation – but
despite of which, the common carrier unconditionally received the goods for
transportation (viz., clean bill of lading [i.e., no annotation written by the common
carrier on the B/L it issued regarding any defect in the packing/container]). When the
goods arrived at destination, they were already damaged
Issue: What degree of diligence should be observed by the common carrier – should
it be due diligence to lessen/prevent the damage/loss pursuant to Article 1742
considering that the common carrier alleged defective packing/container of the
goods?
Held: NO. Diligence required is extraordinary diligence. While it is true that Article
1734 (4) exempts common carrier from liability when the damage/loss of the goods
due to character of the goods, or defect is packing or its container – NEVERTHELESS:
The moment common carrier unconditionally received the goods (i.e., without
protest raised by the common carrier about any defect in the packing/container) for
transportation despite knowledge about the character of the goods or
defective/improper packing/container of the goods, or the common carrier has no
knowledge about such defective/improper packing/container but such
defective/improper packing/container is apparent upon ordinary observation –
then, it is as if the common carrier received the goods in good order (i.e., as if the
goods have no defect in character/packing/container) - and with that, pursuant to
Article 1735 when the goods is loss/damaged is not due to any of the 5 closed list
under Article 1734, then the common carrier is presumed at fault/negligence, unless
it proved EXTRAORDINARY DILIGENCE. This presumption the common carrier not
able to rebut, neither it proved it exercised extraordinary diligence.
Note: Under Article 1736, when the common carrier unconditionally received the
goods, it must observe extraordinary responsibility (diligence) beginning from
unconditional receipt of the goods up to the time delivered to the consignee
Issue: Is there presumption of fault/negligence against the common carrier?
Held: YES. As mentioned, under Article 1735, when the goods is loss/damaged is not
due to any of the 5 closed list under Article 1734, then the common carrier is
presumed at fault/negligence, unless the common carrier proves it observed
extraordinary diligence to prevent such loss/damage.
Issue: When then the common carrier under the law is not liable for damages and
not presumed at fault/negligence for the loss/damage of the goods due to its
character or defect in packing/container?
Answer: When the common carrier before accepting the goods, he gave his protest
as to the character of the goods (e.g., perishable), or protest as to the defect in
packing/container made by the shipper - THEN: The common carrier is not presumed
at fault/negligence pursuant to Article 1735 because the loss/damage is due to one
of the 5 closed list under Article 1734 [4] (i.e., loss/damage of goods due to its
character or defect in packing/container), and hence, not liable for any damages
because the loss/damage is due to character of the goods or defect in
packing/container pursuant to Article 1734 [4]
1.1. Philippine Charter Insurance vs. M/V National Honor, 463 SCRA 202, July 8,
2005 (p. 63)
The common carrier received from shipper goods sealed and packed in a
wooden container (viz., it was the shipper who sealed and packed the goods in
a wooden container and then the common carrier merely received it for
transportation). The contents inside the wooden crater cannot be seen by the
common carrier from outside. The common carrier issued a B/L stating therein
“shipment in apparent good condition.” When the goods reached destination,
and while the wooden crater is being lifted for unloading, the bottom of the
wooden crater broke that caused the goods plunged on the ground causing
damage.
Issue: When the goods arrived in bad order, is there presumption against the
common carrier?
Held: zzzYES. Article 1735 (Presumption of negligence/fault on the part of
common carrier): In all cases OTHER THAN those mentioned in Nos. 1, 2, 3, 4,
and 5 of the preceding article (Article 1734) – IF: The goods are lost, destroyed
or deteriorated, common carriers are PRESUMED to have been at fault or to
have acted negligently, UNLESS they prove that they observed extraordinary
diligence as required under Article 1733.
Issue: When the common carrier received the goods sealed and packed by the
shipper himself, and the common carrier issued B/L stating therein that the
goods in “shipment in apparent good condition”, is there any presumption
against the common carrier?
Held: YES. But this presumption brought about by the words "shipment in
apparent good condition" is only to the “external condition” of the shipment
meaning it refers to the container woods that contained the goods as it is
visible & apparent to the eye of the common carrier which in this case the
container is apparently in good condition. In the case at bar, the crater woods
that contained the sealed goods were made by the shipper himself, and as the
common carrier received it, the common carrier sees the external condition of
the shipment which is the wooden crater in apparent good condition, the
common carrier then issued B/L stating therein in good faith "shipment in
apparent good condition", viz., the wooden crater in good condition as it is
"apparent" to the common carrier because there is no apparent defect on the
container made of wooden crater. It would have been different when the B/L
generally stated, the wooden crater "in good order/condition" without the
word "apparent."
Issue: In the case at bar, pursuant to Article 1735, the common carrier is
presumed negligent when the cause of the damage/loss of the goods is not due
to any of the five closed list under Article 1734. In the case at bar, is the
common carrier liable for damages?
Held: NO. Because pursuant to Article 1734 (4), the damage was due to defect
in the container of the goods.
Note: In this case, considering that the common carrier not liable for damages,
it is assumed that the common carrier also observed "due diligence" to
prevent/minimize loss/damage of the goods pursuant to Article 1742
2. Article 1742: "Even if the deterioration/damage/loss of the goods is caused by the
character of the goods, or the faulty(defective) packaging/containers of the goods –
nevertheless, the common carrier still has the obligation to observe due diligence to
lessen/prevent further damage/loss"
2.1. Iron Bulk Shipping Philippines Co. vs. Remington Industrial Sales Corp., 417
SCRA 229, December 8, 2003 (p. 64)
Even when at the time the common carrier received steel sheets (goods) to have
been covered with rust due to natural character of the iron to get rust all the
more when exposed to sea, nevertheless, pursuant to Article 1742, the common
carrier must still exercise due diligence to lessen/prevent further deterioration
of the steel. In this case, , the common carrier in observing due diligence, it
should have applied additional safety measures to make sure the iron sheets
protected from (further) corrosion such that the common carrier cannot assert
that the character of the goods being iron, is prone to rusting especially so
when exposed the salty nature of the sea. The Supreme Court even applied
Article 1736 which pronounced, "This observance of extraordinary responsibility
(i.e., due diligence) lasts from the common carrier received the goods until
delivered to the consignee either constructively/actually."
Article 1743 (Common carrier not liable for order of public authority who has power
to issue such order)
If through the order of public authority the goods are seized/destroyed, the common
carrier is not responsible, provided said public authority had power/authority to
issue such order.
Note: Connect this with Article 1734 (5)
1. zzzGanzon vs. Court of Appeal, GR No. L-48757, May 30, 1988 (p. 64)
Principle: In order to excuse the common carrier from liability under Article 1734 (5)
NCC, the order of competent public authority must be lawful. Now, if such order is
unlawful, the common carrier can still free itself from liability when such order
completely overpower the will of the common carrier (force majeure; i.e., public
authority acted with grave or irresistible threat, violence or force)
Facts: The captain of common carrier dumped the goods (scrap iron) into the sea
upon order of the mayor accompanied by three armed policemen
Issue: Is the common carrier presumed negligent/at fault?
Held: YES. Because the damage/loss of the goods is not due to any of the five closed
list under Article 1734, hence, pursuant to Article 1735, the common carrier is
presumed negligent/at fault
Issue: In the case at bar, what remedy has the common carrier to free itself from
liability?
Held: It must either prove that:
a. The order of the Mayor is lawful;
b. Even the order of the Mayor is unlawful, it must prove that the captain of the
common carrier cannot do anything because the Mayor acted with grave or
irresistible threat, violence or force (i.e., force majeure)
Issue: Is the order of the Mayor lawful?
Held: NO. It is unlawful because it is obviously unlawful to dump the goods into the
sea
Issue: Granting that the order of the Mayor is unlawful, is the order of the Mayor
deemed force majeure?
Held: NO. In order to constitute force majeure, the Mayor should have acted with
grave or irresistible threat, violence or force, thereby completely overpower the will
of the captain of the common carrier rendering him a mere instrument. In the case
at bar the mere fact that the mayor was accompanied by three (3) armed
policemen, is not sufficient to render the will of the captain overpowered without
force/intimidation actually committed against the captain (e.g., without the any or
all of the three armed men pointed their gun against the captain)
Article 1744 (Agreement as to vigilance over goods less than extraordinary diligence)
A stipulation between the common carrier and the shipper or owner that the former
shall only observe degree of vigilance over the goods less than extraordinary
diligence is valid (e.g., diligence of a good father of a family otherwise known also as
ordinary diligence) – PROVIDED:
Note: Diligence of good father of a family: Reasonable care consistent with that
ordinary prudent person would have observed when confronted with similar
situation (Crisostomo vs. CA, GR 138334, August 25, 2003)
(1) The agreement is in writing and signed by the shipper or owner of the goods
(Note: One of the exceptions to the general rule that oral contract is binding);
(2) The agreement is supported by a valuable consideration other than the
transportation service rendered by the common carrier; and
(3) The agreement is reasonable, just and not contrary to public policy
Comments:
1. Question: If the common carrier and the shipper validly entered into agreement that
the former shall observe only ordinary diligence – the question is, if the goods were
damaged/loss – would there be presumption of fault/negligence under Article 1735
against the common carrier?
Answer (Opinion): NO. Article 1735 provides "common carriers are presumed
negligent unless it observed extraordinary diligence." Hence, by legal implication
therefore, the common carriers are presumed negligent/at fault because of the high
degree in the vigilance over the goods which is extraordinary diligence. So, if the
diligence agreed is only ordinary diligence, the common carrier is not presumed
negligent/at fault in case of damage/loss of the goods
2. “In writing and signed by the shipper or owner”
This is one of the exceptions to the general rule that oral contract is binding. Under
this Article 1744, the agreement must be in writing
3. “Supported by a valuable consideration - other than the transportation service
rendered by the common carrier
Examples that are allowed: Discount/reduction in the freightage because they are
"valuable consideration" (Civil Code, Book V, Justice Edgardo Paras, 14th Edition
2000, p. 490)
(a) Loadstar Shipping Co. vs. Court of Appeals, GR 131621, September 28, 1999 (p.
68)
There are three (3) kinds of stipulations/agreements have often been made in a
bill of lading.
(1) FIRST: Exempting the common carrier from any and all liability for
damage/loss caused by the common carrier's own negligence
Example: The transportation of the goods shall be "at shipper's/owner's own
risk".
(2) SECOND: Unqualified limitation of the common carrier's liability for damages
to an agreed limited/lesser liability
Example: The agreement simply states: "The common carrier's liability is
limited only to the value of the goods", or "The common carrier's liability is
limited only to P500." This is an "unqualified" limitation of liability because
there is no valuable consideration given by the common carrier in exchange to
the limited liability - viz., there is no reciprocity
(3) THIRD: Qualified limitation of the liability for damages of the common carrier
to an agreed limited/lesser liability
Examples of agreement under a "qualified" limitation of common carrier's
liability:
(a) Agreement that the common carrier limits its liability to a reasonable
amount - unless the shipper declares a higher value of the goods so that
shipper will be charged for a higher freightage amount
(b) Article 1749: A stipulation that the common carrier's liability is limited to
the “value of the goods "as written on the B/L – UNLESS: The shipper or
owner of the goods declares a greater/higher value of the goods (for a
higher freightage) - is binding
HERE: The FIRST and SECOND stipulations are VOID as being contrary to public
policy, and also there is "no valuable consideration" given to the shipper for the
latter in agreeing to shipper's/owner's own risk or agreeing to common carrier's
limited liability for damages. WHILE: The THIRD stipulation is valid because there
is "valuable consideration" given by the common carrier in favor of the
shipper/owner of the goods for the common carrier's limited liability, i.e., at
times, the shipper undervalues his goods in order to reduce the freightage,
hence, the common carrier gives the shipper two (2) options, i.e., if the shipper
agrees to declare the true/higher value of his goods, then the common carrier
cannot limit its liability, but if the shipper undervalue his goods to in order to pay
lower freightage, then the common carrier can validly (proportionately) limit its
liability
4. “Reasonable, just and not contrary to public policy”
Question: Article 1744 provides that diligence must be less than that of the
"extraordinary" diligence. The question is, can it be stipulated that the degree of
diligence is “less than 'ordinary' diligence”?
NO. Article 1745 (4) provides, it is unreasonable, unjust and contrary to public policy
when common carrier exercise a degree of diligence less than “ordinary
diligence/diligence of good father of a family” in the vigilance over the good. Hence,
being against public policy, such agreement is VOID
Note: Diligence of good father of a family: Reasonable care consistent with that
ordinary prudent person would have observed when confronted with similar situation
(Crisostomo vs. CA, GR 138334, August 25, 2003)
Question: In determining whether the agreed limited liability of the common carrier
is “reasonable, just and not against public policy” – what are things that you should
consider?
Answer: Consider (1) Article 1745 referring to void stipulations for being
unreasonable, unjust or against public policy, (2) Article 1746 referring to refusal of
common carrier to transport the goods unless the shipper agrees limited liability of
the common carrier, and (3) Article, 1751 referring to situation that the common
carrier has no competitor in the transportation of goods, which situation is taken
advantage of by the common carrier in wresting the consent of the shipper to agree
to limited liability of the common carrier
Article 1745 (Stipulations that are VOID being unreasonable, unjust and contrary to
public policy)
Any of the following or similar stipulations are void for being unreasonable, unjust
and contrary to public policy:
(1) Stipulation that the goods are transported at the risk of the owner or shipper
(i.e., even if the common carrier is negligent)
(2) Stipulation that the common carrier will not be liable for any damage/loss of the
goods (i.e., even if the common carrier is negligent)
(3) Stipulation that the common carrier need not observe any diligence in the
custody/vigilance of the goods;
(4) Stipulation that the common carrier shall exercise a degree of diligence less than
ordinary diligence in the vigilance over the goods (i.e., less than good father of a
family, or of a man of ordinary prudence/diligence)
Note: Diligence of good father of a family: Reasonable care consistent with that
ordinary prudent person would have observed when confronted with similar
situation (Crisostomo vs. CA, GR 138334, August 25, 2003)
(5) Stipulation that the common carrier is not responsible for the acts or omission of
its own employees (i.e., even if the its employee is negligent)
(6) Stipulation that the common carrier's liability is dispensed/limited for acts of
thieves, or robbers who do NOT ACT with grave or irresistible threat, force or
violence (Note: Such grave/irresistible threat, force or valance must be upon
person and not upon things);
(7) Stipulation that the common carrier is not liable for damage/loss of the goods
because of defective condition of its vehicle/ship/airplane or other equipment
used in the contract of carriage
1. "Stipulation that the goods are transported at the risk of the owner or shipper" (i.e.,
even if the common carrier is negligent)
Loadstar Shipping Co. vs. Court of Appeals, GR 131621, September 28, 1999 (p. 68)
Facts: Common carrier received goods for transport. Along the voyage, the vessel
sank along with its cargoes. In the B/L, is it stipulated that the goods are to be
transported at “owner’s risk.”
Issue: Is the stipulation valid?
Held: NO. Article 1745 (1) provides Stipulation that the goods are transported at the
risk of the owner or shipper is void for being unreasonable, unjust and contrary to
public policy
2. “Stipulation that the common carrier's liability is dispensed/limited for acts of
thieves, or robbers who do NOT ACT with grave or irresistible threat, force or
violence” (upon person)
2.1. Pedro De Guzman vs. Court of Appeals, GR No. L-47822, December 12, 1988
(p. 71)
Principles: Force majeure exempts common carrier from liability – provided the
robbers/hijackers acted with grave or irresistible threat, violence or force
Facts: The truck (common carrier) was hijacked by armed men and took the
truck including its cargo. Shipper filed civil case against the common carrier.
Pending the civil case, the owner of the common carrier filed criminal action
against the robbers, where they were held guilty beyond reasonable doubt and
in fact, the Judgment of Conviction even ruled that the robbers acted with
irresistible force.
(a) Issue: Is the act by armed men deemed as force majeure?
Held: YES. Because the robbers acted with grave or irresistible threat,
violence or force as this in fact even ruled by the RTC in criminal action
finding the robbers guilty beyond reasonable doubt
(b) Issue: Despite existence of force majeure, is the common carrier still
presumed negligent?
Held: YES. Because Article 1735 provides that the common carriers is
presumed negligent when the cause of the damage/loss (in this case, force
majeure) is not included in the 5 closed list under Article 1734 unless it
exercised extraordinary diligence
(c) Issue: If the common carrier is presumed at fault/negligence and must
observe extraordinary diligence even if there is force majeure, the question
is, what is then the remedy of the common carrier to free itself from
liability?
Held: Common carrier should prove that the cause of the damage/loss of
the goods is due to force majeure, i.e., robbers acted with grave or
irresistible threat, violence or force - because how could the common
carrier observe extraordinary diligence if it is prevented by the grave or
irresistible threat, violence or force act of the robbers
2.2. Bascos vs. Court of Appeals, GR 101089, April 7, 1993 (p. 75)
Facts: CIPTRADE (it is not a common carrier but merely a contractor) undertook
to transport the goods of the JIBFAIR. CIPTRADE (being not a common carrier)
subcontracted BASCOS (common carrier) to transport the goods of JIBFAIR.
BASCOS failed to deliver the goods. CIPTRADE paid JIBFAIR because of their
contract that CIPTRADE will pay JIBFAIR in case of theft, hijacking/robbery, and
non-delivery of the goods. Now, CIPTRADE having been subrogated, filed civil
action against BASCOS for breach of contract of carriage. BASCOS in attempt to
be free from liability, alleged that the cargo truck was hijacked along the way.
Pending the civil case, BASCOS filed criminal case for robbery against the
accused, but the criminal court has not yet reached final Judgment on the
criminal case.
In the civil case filed by CIPTRADE against BASCOS, the owner of the BASCOS
common carrier testified on his own Affidavit about hijacking/robbery,
however, his Affidavit is based on what has been told her by his truck helper -
hence, the testimony of the owner of BASCOS is hearsay. When such Affidavit
of the owner of BASCOS common carrier was formally offered in evidence in
court, the shipper failed to object – hence, it was admitted in evidence because
it is relevant pursuant to Rule 128 Section 3 Rules on Evidence (but its probative
evidentiary value is a different matter). Now the question, did such Affidavit of
the owner of BASCOS common carrier proved that the act of the hijackers was
grave or irresistible threat/force/violence
Held: NO. There is stark difference between admitted evidence and the
probative evidentiary value of such evidence. In replete jurisprudential laws,
hearsay evidence though admitted in evidence for lack of objection,
nevertheless, is wanting of evidentiary value. What should have been done by
the common carrier is to present its truck helper who has personal knowledge
about the hijacking and prove that the act of the hijackers/robbers was
grave/irresistible threat, force/violence
Article 1746 (When can shipper can annul the agreement he entered into regarding
limited liability of the common carrier)
When shipper/owner of the goods entered into agreement with common carrier
regarding the latter's limited liability - the shipper/owner may (extrajudicially) annul
such agreement when the common carrier refused to transport the goods unless the
shipper/owner of the goods agrees to common carrier's limited liability
1. Article 1746 – explained
The contract of carriage is already perfected, the reason why Article 1746 says “may
be annulled by shipper” (i.e., valid until annulled).
As regards "the shipper may annul", it means that the contract limiting liability is
merely voidable and not void, viz., valid until annulled - HENCE: The shipper must
communicate to the common carrier that he already annulled the agreement
regarding limited liability of the common carrier before the goods are transported by
the common carrier
As regards the method of annulling the contract of limited liability, the shipper can
annul it extrajudicially without need of filing action (Civil Code, Book V, Justice
Edgardo Paras, 14th Edition 2000, p. 492). This is an exception to the general rule
under Article 1390 2nd Paragraph NCC that voidable contract can only be annulled
by judicial action
2. Who can annul the contract of carriage?
Article 1746 gives only the shipper/owner of the goods (consignee-owner) the right
to annul the agreement
3. Under Article 1746, why the shipper can annul the contract/agreement limiting the
common carrier's liability?
Since the shipper/owner of the goods was constrained to agree to such limitation of
liability because the common carrier refused to carry the goods unless the
shipper/owner of the goods agrees to such limited liability - in which case, there is
some kind of UNDUE INFLUENCE that vitiated the consent of the shipper thereby
making the agreement as voidable
Note: Article 1330 NCC: A contract where consent is given through mistake, violence,
intimidation, undue influence, or fraud is voidable.
When can there be undue influence?
Article 1337 NCC: There is undue influence when a person takes improper
advantage of his power over the will of another, depriving the latter of a
reasonable freedom of choice. The following circumstances shall be considered:
the confidential, family, spiritual and other relations between the parties, or the
fact that the person alleged to have been unduly influenced was suffering from
mental weakness, or was ignorant or in financial distress