Haystacks Transportation Law

Michael Vernon Guerrero Mendiola 2004

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Caltex vs. Sulpicio Lines (GR 131166, 30 September 1999) …...... 1 First Philippine Industrial Corp. vs. CA (GR 125948, 29 December 1998) …...... 4 Arada vs. CA (GR 98243, 1 July 1992) …...... 6 Sabena Belgian World Airlines vs. CA (GR 104685, 14 March 1996) …...... 8 Philippine National Railways (PNR) vs. CA (GR L-55347, 4 October 1985) …...... 11 Eastern Shipping Lines vs. CA (GR 97412, 12 July 1994) …...... 13 Metro Port Services vs. CA (GR L-57582, 24 August 1984) …...... 15 Home Insurance Co. vs. American Steamship Agencies (GR L-25599, 4 April 1968) …...... 16 Lastimosa vs. Doliente …...... [unavailable] National Steel vs. CA (GR 112287, 12 December 1997) …...... 18

De Villata vs. JS Stanley (GR 8154, 20 December 1915) …...... 24 US vs. Quinajon (GR 8686, 30 July 1915) …...... 31 De Guzman vs. CA (GR L-47822, 22 December 1988) …...... 35 Planters Products vs. CA (GR 101503, 15 September 1993) …...... 39 Bascos vs. CA (GR 101089, 7 April 1993) …...... 43 Mendoza vs. PAL (GR L-3678, 29 February 1952) …...... 45 Coastwise Lighterage Corp. vs. CA (GR 114167, 12 July 1995) …...... 49 Benedicto vs. IAC (GR 70876, 19 July 1990) …...... 51 Teja Marketing vs. IAC (GR L-65510, 9 March 1987) …...... 53 BA Finance vs. CA (GR 98275, 13 November 1992) …...... 55

Vargas vs. Langkay …...... [unavailable] Nocum vs. Laguna Tayabas Bus Co. (GR L-23733, 31 October 1969) …...... 57 Tamayo vs. Aquino, et.al. (GR L-12634 & L-12720, 29 May 1959) …...... 60 Erezo vs. Jepte (GR L-9605, 30 September 1957) …...... 62 Zamboanga Transportation Co. vs. CA (GR L-25292, 29 November 1969) …...... 64 Santos vs. Sibog (GR L-26815, 26 May 1981) …...... 66 PAL vs. NLRC (GR L-62961, 2 September 1983) …...... 70 Vasquez vs. CA (GR L-42926, 13 September 1985) …...... 71 Dangwa Transportation vs. CA (GR 95582, 7 October 1991) …...... 73 Delsan Transport Lines vs. CA (GR 127897, 15 November 2001) …...... 76

Loadstar Shipping vs. CA (GR 131621, 28 September 1999) …...... 79 Metro Transit Corporation vs. CA (GR 104408, 21 June 1993) …...... 81 Kapalaran Bus vs. Coronado (GR 85331, 25 August 1989) …...... 86 Trans-Asia Shipping Lines vs. CA (GR 118126, 4 March 1996) …...... 90 Belgian Overseas Chartering and Shipping vs. Philippine First Insurance Co. Inc. (GR 143133, 5 June 2002) …...... 93 Yobido vs. CA (GR 113003, 17 October 1997) …...... 96 Tan Liam Grocery. vs. De La Rama Steamship …...... [unavailable] National Development Co. vs. CA (GR L-49407, 19 August 1988) …...... 99 Ganzon vs. CA (GR L-48757, 30 Mary 1988) …...... 102 Mirasol vs. Robert Dollar Co. (GR 29721, 27 March 1929) …...... 104

Eastern Shipping Lines vs. IAC (GR L-69044, 29 May 1987) …...... 106 Kui Pai & Co. vs. Dollar Steamship Line (GR 30019, 2 March 1929) …...... 112 Compania Maritima vs. Insurance Co. of North America (GR L-18965, 30 October 1964) …...... 114 Government vs. Inchausti (GR 6957, 14 February 1913) …...... 117 Samar Mining Co. vs. Nordeutscher Lloyd (GR L-28673, 23 October 1984) …...... 119 Macam vs. CA (GR 125524, 25 August 1999) …...... 122 Saludo vs. CA (GR 95536, 23 March 1992) …...... 125 Delgado Bros. vs. CA (GR L-15654, 29 December 1960) …...... 134 Eastern Shipping Lines vs. CA (GR 80936, 17 October 1990) …...... 136 Limpangco Sons vs. Yangco Steamship (GR 10283, 25 July 1916) …...... 139 G. Martini Ltd. vs. Macondray & Co. (GR 13972, 28 July 1919) …...... 141 Heirs of de los Santos vs. CA (GR 51165, 21 June 1990) …...... 146 International Department Store vs. Jabellana …...... [unavailable] Compania Maritima vs. CA (GR L-31379, 29 August 1988) …...... 150 HE Heacock vs. Macondray (GR 16598, 3 October 1921) …...... 153 St. Paul Fire & Marine Insurance vs. Macondray (GR L-27795, 25 March 1976) …...... 155 Valenzuela Hardwood and Industrial vs. CA (GR 102316, 30 June 1997) …...... 157 Sweet Line vs. Teves (GR L-37750, 19 May 1978) …...... 161 Eastern and Australian Steamship vs. Great American Insurance (GR L-37604, 23 October 1981) …...... 164 Sea-land Service vs. IAC (GR 75118, 31 August 1987) …...... 165

Aboitiz Shipping vs. CA (GR 89757, 6 August 1990) …...... 170 Everett Steamship Corp. vs. CA (GR 122494, 8 October 1998) …...... 173 Shewaram vs. PAL (GR L-20099, 7 July 1966) …...... 177 Ong Yiu vs. CA (GR L-40597, 29 June 1979) …...... 179 British Airways vs. CA (GR 121824, 29 January 1998) …...... 182 PAL vs. CA (GR 92501, 6 March 1992) …...... 185 Robles vs. Santos …...... [unavailable] Quisumbing vs. CA (GR 50076, 14 September 1990) …...... 187 PanAm World Airways vs. Rapadas (GR 60673, 19 May 1992) …...... 189 PAL vs. CA (GR 120262, 17 July 1997) …...... 193

Baliwag Transit vs. CA (GR 116110, 15 May 1996) …...... 196 Mecenas vs. CA (GR 88052, 14 December 1989) …...... 199 PAL vs. CA (GR L-46558, 31 July 1981) …...... 204 Pilapil vs. CA (GR 52159, 22 December 1989) …...... 208 Fortune Express vs. CA (GR 119756, 18 March 1999) …...... 211 Landingin vs. Pangasinan Transportation (GR L-28014-15, 29 May 1970) …...... 214 California Lines vs. de los Santos (GR L-13254, 30 December 1961) …...... 216 Estrada vs. Consolacion (GR L-40948, 29 June 1976) …...... 217 Lara vs. Valencia (GR L-9907, 30 June 1958) …...... 220 Bayasen vs. CA (GR L-25785, 26 February 1981) …...... 222

Cervantes vs. CA (GR 125138, 2 March 1999) …...... 223 De Gillaco vs. Manila Railroad Co. (GR L-8034, 18 November 1955) …...... 225 Maranan vs. Perez (GR L-2272, 26 June 1967) …...... 227 Lasam vs. Smith (GR 19495, 2 February 1924) …...... 230 Sweet Lines vs. CA (GR L-46340, 28 April 1983) …...... 232 Magboo vs. Bernardo (GR L-16790, 30 April 1963) …...... 234 Isaac vs. AL Ammen Transportation (GR L-9671, 23 August 1957) …...... 235 Sanez vs. Samala …...... [unavailable] Panay Autobus vs. Pastor (GR 47933, 29 July 1942) …...... 238 Del Prado vs. Meralco (GR 29462, 7 March 1929) …...... 238

Cangco vs. Manila Railroad (GR 12191, 14 October 1918) …...... 241 De Guia vs. Manila Electric Railroad & Light Co. (GR 14335, 28 January 1920) …...... 248 Calalas vs. CA (GR 122039, 31 May 2000) …...... 251 Jesusa Vda. De Nueca vs Manila Railroad …...... [unavailable] Light Rail Transit Authority vs. Navidad (GR 145804, 6 February 2003) …...... 253 La Mallorca vs. CA (GR L-20761, 27 July 1966) …...... 256 Aboitiz Shipping Corp. vs. CA (GR 84458, 6 November 1989) …...... 258 Bachelor Express vs. CA (GR 85691, 31 July 1990) …...... 261 Bacarro vs. Castano (HR L-34597, 5 November 1982) …...... 265 Laguna Tayabas Bus vs. Tiongson (GR L-22143, 30 April 1966) …...... 267 Sulpicio Lines vs. CA (GR 113578, 14 July 1995) …...... 269 Fisher vs. Yangco Steamship (GR 8085, 5 November 1914) …...... 272 Fisher vs. Yangco Steamship (GR 8095, 31 March 1915) …...... 280 Maritime Co. of the Philippines vs. CA (GR 47004, 8 March 1989) …...... 282 Gatchalian vs. Delim (GR 56487, 21 October 1991) …...... 284 American Home Assurance vs. CA (GR 94149, 5 May 1992) …...... 288 Eastern Shipping Lines vs. Margarine-Verkaufs-Union GmbH (GR L-31087, 27 September 1979) …...... 290 Magellan Manufacturing Marketing vs. CA (GR 95529, 22 August 1991) …...... 292 Reyma Brokerage vs. Philippine Home Assurance Corp. (GR 93464, 7 October 1991) …...... 296 Keng Hua Paper Products vs. CA (GR 116863, 12 February 1998) …...... 298

Ysmael vs. Barretto (GR 28028, 25 November 1927) …...... 301 Maersk Line vs. CA (GR 94761, 17 May 1993) …...... 304 New Zealand Insurance Co. vs. IAC (GR L-66596, 28 August 1984) …...... 307 Mariano Uy Chaco Sons & Co. vs. Admiral Line (GR 22134, 17 October 1924) …...... 308 Standard Vacuum Oil Co. vs. Luzon Stevedoring Co. (GR L-5203, 18 April 1956) …...... 310 Tan Chiong Sian vs. Inchausti (GR 6092, 8 March 1912) …...... 313 World Fire vs. Macondray …...... [unavailable] Heacock’s Aklam vs. Aboitiz …...... [unavailable] New Zealand Insurance vs. Chua Joy (GR L-7311, 30 September 1955) …...... 318 E. Razon vs, CA (GR L-50242, 21 May 1988) …...... 320

Pernito Arrastre Services vs. Mendoza (GR L-53492, 29 December 1986) …...... 322 Tan Pho vs. Dalamal (GR 45598, 26 April 1939) …...... 327 Baer Senior & Co. vs. La Compania Maritima (GR 1963, 30 April 1906) …...... 328 Lopez vs. Duruelo (GR 29166, 22 October 1928) …...... 330 Philippine Refining v. Jarque (GR 41506, 25 March 1935) …...... 333 McMicking vs. El Banco Espanol-Filipino (GR 5029, 1 April 1909) …...... 334 Ivancich vs. Odlin (GR 924, 1 May 1902) …...... 337 Heath vs. Steamer San Nicolas (GR L-3066, 25 February 1907) …...... 339 Manila Steamship vs. Insa Abdulhaman (GR L-9534, 29 September 1956) …...... 343 Chua Yek Hong vs. IAC (GR L-74811, 30 September 1988) …...... 345

Commissioner vs. US Lines (GR L-16850, 30 May 1962) …...... 348 Madrigal Shipping vs. Ogilve (GR L-8431, 30 October 1958) …...... 350 Garcia vs. Ruiz (GR 923, 16 January 1903) …...... 353 Yaptico vs. Anderson (GR 9366, 1 August 1916) …...... 355 Yu Con vs. Ipil (GR 10195, 29 December 1916) …...... 356 US vs. Steamship “Islas Filipinas” (GR 8746, 30 October 1914) …...... 360 Ohta Development Co. vs. Steamship Pompey (GR 24658, 31 March 1926) …...... 363 Triton Insurance vs. Jose (GR 10381 and 10714, 14 January 1916) …...... 364 USA vs. Steamship Rubi (GR 9235, 17 November 1915) …...... 365 International Harvester Co. in Russia vs. Hamburg-American Line (GR 11515, 29 July 1918) …...... 370

Compagnie Franco-Indochinoise vs. Deutsch Australische Dampschiffs Gesselschaft (GR 11169, 31 March 1917) …...... 374 Guzman vs. William X (GR L-3649, 24 October 1907) …...... 378 US vs. Bacho (GR L-4091, 25 March 1908) …...... 380 Vir-Jen Shipping and Marine Services, NLRC (GR L-58011-12, 20 July 1982) …...... 381 Wallem Phil. Shipping vs. Minister of Labor (GR L-50734-37, 20 February 1981) …...... 387 Abueg vs. San Diego (CA-773-775, 17 December 1946) …...... 390 Murillo vs. Mendoza (GR 46020, 8 December 1938) …...... 392 Macondray vs. Delgado Bros. (GR L-13118, 28 April 1960) …...... 397 Bryan vs. Eastern & Australian SS (GR 9403, 4 November 1914) …...... 398 Puromines Inc. vs. CA (GR 91228, 22 March 1993) …...... 400 Litonjua Shipping vs. National Seamen Board (GR 51910, 10 August 1989) …...... 403 Maritime Agencies & Services vs. CA (GR 77638, 12 July 1990) …...... 406 Ouano vs. CA (GR 95900, 23 July 1992) …...... 411 NFA vs. CA (GR 96453, 4 August 1999) …...... 414 Market Developers vs. IAC (GR 74978, 8 September 1989) …...... 418 Marimperio Compania Naviera vs. CA (GR L-40234, 14 December 1987) …...... 421 O’Farrel vs. Meralco (GR 31222, 29 October 1929) …...... 424 Overseas Factors Inc. vs. South Sea Shipping (GR L-12138, 27 February 1962) …...... 426 Phoenix Assurance Co. Ltd. vs. US Lines GR L-24033, 22 February 1968) …...... 431 Telengtan Bros. & Sons. Vs. CA (GR 110581, 21 September 1994) …...... 434

De la Riva vs. Lizarraga Hermanos (GR L-2464, 7 January 1907) …...... 438 Banco Agricola y Pecuario v. El Dorado Trading …...... [unavailable] PC Ailment v. Macondray …...... [unavailable] Litton v. PNB …...... [unavailable] Oriental Commercial v. La Naviera Filipina …...... [unavailable] Philippine Home Assurance vs. CA (GR 106999, 20 June 1996) …...... 439 A. Magsaysay Inc. vs. Agan (GR L-6393, 31 January 1955) …...... 441 Austria vs. CA (GR 133323, 9 March 2000) …...... 443 Smith Bell vs. CA (GR 56294, 20 May 1991) …...... 445 Manila vs. Atlantic Gulf and Pacific Co. (GR 4510, 19 December 1908) …...... 450

Marine Trading vs. Government (GR 13422, 8 November 1918) …...... 451 A. Urrutia & Co. vs. Baco River Plantation (GR 7675, 25 March 1913) …...... 452 Versoza vs. Lim (GR 20145, 15 November 1923) …...... 458 Government vs. Philippine Steamship Co. (GR 18957, 16 January 1923) …...... 461 Picart vs. Smith (GR L-12219, 15 March 1918) …...... 462 US vs. Smith Bell (GR 1876, 30 September 1905) …...... 464 Philippine Shipping Co. vs. Vergara (GR 1600, 1 June 1906) …...... 465 Chin Guan vs. Compania Maritima (GR 45070, 28 November 1938) …...... 467 Manila Railroad vs. Macondray (GR L-12475, 21 March 1918) …...... 468 Standard Oil Co. of New York vs. Lopez Castelo (GR 13695, 18 October 1921) …...... 470

Jarque vs. Smith Bell (GR 32986, 11 November 1930) …...... 473 Taxicab Operators v. The Board of Transportation [GR L-59234, 30 September 1982] …...... 475 Napocor vs. CA (GR 113103, 13 June 1997) …...... 476 GMCR vs. Bell Telecoms (GR 126496, 30 April 1997) …...... 480 Maceda vs. ERB (GR 95203-05, 18 December 1990) …...... 485 Lagman vs. Manila (GR L-23305, 30 June 1966) …...... 488 Philippine Global Communications vs. Relova (GR L-52819, 2 October 1980) …...... 491 Philippine Global vs. Relova (GR L-60548, 10 November 1986) …...... 492 PLDT vs. NTC (GR 88404, 18 October 1990) …...... 496 RCPI vs. Rodriguez (GR 83768, 28 February 1990) …...... 502

Telefast Communications vs. Castro (GR 73867, 29 February 1988) …...... 505 RCPI vs. CA (GR 79578, 13 March 1991) …...... 507 Zulueta vs. Pan American World Airways (GR L-28589, 8 January 1973); Res. …...... 509 Lopez vs. Pan American World Airways (GR L-22415, 30 March 1966) …...... 516 Pan American World Airways vs. IAC (GR L-70462, 11 August 1988) …...... 521 Luna vs. CA (GR 100374-75, 27 November 1992) …...... 524 Santos vs. Northwest Orient Airlines (GR 101538, 23 June 1992) …...... 526 Tan vs. Northwestern Airlines (GR 135802, 3 March 2000) …...... 532 American Airlines vs. CA (GR 116044-45, 9 March 2000) …...... 533 Yu Eng Cho vs. Pan American World Airways (GR 123560, 27 March 2000) …...... 535 {200-11} Rizal Surety & Insurance vs. Macondray & Co. (GR L-24064, 29 February 1968) …...... 540 The American Insurance Co. vs. Compania Maritima (GR L-24515, 18 November 1967) …...... 541 Mitsui vs. CA (GR 119571, 11 March 1998) …...... 542 Mayer Steel Pipe vs. CA (GR 124050, 19 June 1997) …...... 544 Barrios vs. Go Thong (GR L-17192, 30 March 1963) …...... 545 Wallace vs. Pujalte Co. (GR 10019, 29 March 1916) …...... 547 Atlantic Gulf & Pacific Co. vs. Uchida Kisen Kaisha (GR 15871, 7 November 1921) …...... 549 Erlanger & Galinger vs. Swedish East Asiatic (GR 10051, 9 March 1916) …...... 552 Pestano vs. Sumayang (GR 139875, 4 December 2000) …...... 561

This collection contains one hundred ninety eight (198) out of two hundred nine (209) assigned cases summarized in this format by Michael Vernon M. Guerrero (as a junior law student) during the First Semester, school year 2004-2005 in the Transportation Law class under Atty. Porfirio Panganiban at the Arellano University School of Law (AUSL). Compiled as PDF, July 2011.

Berne Guerrero entered AUSL in June 2002 and eventually graduated from AUSL in 2006. He passed the Philippine bar examinations immediately after (April 2007). www.berneguerrero.com Haystacks (Berne Guerrero)

[1], also [173]

Caltex vs. Sulpicio Lines (GR 131166, 30 September 1999) First Division, Pardo (J): 3 concur, 1 took no part

Facts: MT Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation, which is engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and crude oil. On the other hand, the MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the route of Manila/ / / Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week. On 19 December 1987, motor tanker MT Vector left Limay, Bataan, enroute to Masbate, loaded with 8,800 barrels of petroleum products shipped by Caltex, by virtue of a charter contract between Vector Shipping and Caltex. The next day, the passenger ship MV Doña Paz left the port of Tacloban headed for Manila with a complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated in the Coast Guard Clearance, but possibly carrying an estimated 4,000 passengers. At about 10:30 p.m. of 20 December 1987, the two vessels collided in the open sea within the vicinity of Dumali Point between and . All the crewmembers of MV Doña Paz died, while the two survivors from MT Vector claimed that they were sleeping at the time of the incident. Only 24 survived the tragedy after having been rescued from the burning waters by vessels that responded to distress calls. Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel. On 22 March 1988, the board of marine inquiry after investigation found that the MT Vector, its registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and responsible for its collision with MV Doña Paz.

On 13 February 1989, Teresita and Sotera Cañezal, filed with the RTC Manila, a complaint for “Damages Arising from Breach of Contract of Carriage” against Sulpicio Lines, Inc. Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping Corporation and Caltex (Philippines), Inc. On 15 September 1992, the trial court rendered decision dismissing the third party complaint against Caltex.

On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc. (CA-GR CV 39626), on 15 April 1997, the Court of Appeal modified the trial court’s ruling and included petitioner Caltex as one of the those liable for damages. Hence the petition.

The Supreme Court granted the petition and set aside the decision of the Court of Appeals, insofar as it held Caltex liable under the third party complaint to reimburse/indemnify Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The Court affirmed the decision of the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal damages as set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys’ fees and costs the latter is adjudged to pay plaintiffs-appellees in the case.

1. The respective rights and duties of a carrier depends on the nature of the contract of carriage The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or similar contract on the other. In the case at bar, Caltex and Vector entered into a contract of affreightment, also known as a voyage charter.

2. Charter party and contract of affreightment defined A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment is one by which the owner of a

Transportation Law, 2004 ( 1 ) Haystacks (Berne Guerrero) ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight.

3. Kinds of contract of affreightment A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship’s store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship.

4. Charterer’s liability: Bareboat charter vs. Contract of affreightment Under a demise or bareboat charter, the charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.

5. Categories of charter parties Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter.

6. Bareboat, but not voyage charter, transforms common carrier into private carrier Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment (Coastwise Lighterage Corp. vs. CA) A public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. (Planters Products vs. CA). In the case at bar, the charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which retains the character of the vessel as a common carrier.

7. Common carrier defined A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. In the case at bar, MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code (Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers for passengers or goods or both, by land, water, or air for compensation, offering their services to the public).

8. Article 1732, Common carrier, construed Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as “a sideline”). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such services on a an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the “general public,” i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. Article 1733 deliberately refrained from making such distinctions.

9. Responsibility of carrier before voyage; Seaworthiness

Transportation Law, 2004 ( 2 ) Haystacks (Berne Guerrero)

Under Section 3 of the Carriage of Goods by Sea Act, (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to (a) Make the ship seaworthy; (b) Properly man, equip, and supply the ship; among others. Carriers are deemed to warrant impliedly the seaworthiness of the ship. 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 the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code.

10. Article 1173 of the New Civil Code Article 1173 of the Civil Code provides that “the fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Article 1171 and 2201 paragraph 2, shall apply. If the law does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.”

11. Negligence defined Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct of human affairs, would do (Southeastern College vs. CA).

12. Reason for the applicability of Section 3 COGSA, and Article 1755 NCC to carriers, not shipper and passengers; Ordinary diligence required of shippers The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness. The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in “public service.” The Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the persons, the time and the place. Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the vessel’s seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. By the same token, passengers cannot be expected to inquire every time they board a common carrier, whether the carrier possesses the necessary papers or that all the carrier’s employees are qualified. Such a practice would be an absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation. In the case at bar, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes.

13. Caltex not liable for damages Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic incident occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence. Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold petitioner liable for damages.

Transportation Law, 2004 ( 3 ) Haystacks (Berne Guerrero)

[2], also [10]

First Philippine Industrial Corp. vs. CA (GR 125948, 29 December 1998) Second Division , Martinez (J): 3 concur

Facts: First Philippine Industrial Corporation (FPIC) is a grantee of a pipeline concession under RA 387, as amended, to contract, install and operate oil pipelines. The original pipeline concession was granted in 1967 and renewed by the Energy Regulatory Board in 1992. Sometime in January 1995, FPIC applied for a mayor’s permit with the Office of the Mayor of Batangas City. However, before the mayor’s permit could be issued, the City Treasurer required FPIC to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code. The City Treasurer assessed a business tax on the petitioner amounting to P956,076.04 payable in four installments based on the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In order not to hamper its operations, FPIC paid the tax under protest in the amount of P239,019.01 for the first quarter of 1993. On 8 March 1994, the City Treasurer denied the protest contending that petitioner cannot be considered engaged in transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code.

On 15 June 1994, FPIC filed with the RTC Batangas City a complaint for tax refund with prayer for writ of preliminary injunction against the City of Batangas and Adoracion Arellano in her capacity as City Treasurer (Civil Case 4293). On 3 October 1994, the trial court rendered a decision dismissing the complaint.

PFIC assailed the aforesaid decision before the Supreme Court via a petition for review. On 27 February 1995, the Supreme Court referred the case to the Court of Appeals for consideration and adjudication (CA-GR SP 36801). On 29 November 1995, the CA rendered a decision affirming the trial court’s dismissal of petitioner’s complaint. FPIC’s motion for reconsideration was denied on 18 July 1996. Hence, the petition for review on certiorari.

At first, the petition was denied due course in a Resolution dated 11 November 1996. FPIC moved for a reconsideration which was granted by the Supreme Court in a Resolution of 22 January 1997. Thus, the petition was reinstated. Finally, the Supreme Court granted the petition, and thus reversed and set aside the decision of the Court of Appeals.

1. Common Carrier defined (broad definition) A “common carrier” may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or property from place to place, for compensation, offering his services to the public generally.

2. Common Carrier defined (Article 1732) Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.”

3. Test for determining whether a party is a common carrier of goods a. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; b. He must undertake to carry goods of the kind to which his business is confined; c. He must undertake to carry by the method by which his business is conducted and over his established roads; and d. The transportation must be for hire.

Transportation Law, 2004 ( 4 )