Transportation Law

Friday - 7:00 p.m. to 9:00 p.m.

Atty. Gerald Yu

Group Leader:

Rhea Ruth V. Rosell

Members:

Vinna Doria Garciano

Rodolfo Demonteverde III
Katraena Moralde
Dessa Ruth Reyes
Razanne Kyra Doctolero
Edlin Endrina

Case 1:

Everett Steamship Corporation vs. C.A., G.R. No. 122494

Facts:

Hernandez Trading Co. imported three crates of bus spare parts from Maruman Trading Company, Ltd.
(Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crates were shipped
from Nagoya, Japan to Manila on board ADELFAEVERETTE, a vessel owned by Everett Steamship
Corporations principal, Everett Orient Lines. The said crates were covered by Bill of Lading No.
NGO53MN.

Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was
missing. This was confirmed and admitted by petitioner in its letter of January 13, 1992 addressed to
private respondent, which thereafter made a formal claim upon petitioner for the value of the lost
cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1,552,500.00) Yen,
the amount shown in an Invoice No. MTM-941, dated November 14, 1991. However, petitioner
offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated under
Clause 18 of the covering bill of lading which limits the liability of petitioner.

Private respondent rejected the offer and thereafter instituted a suit for collection.

the trial court rendered judgment[2] in favor of private respondent, ordering petitioner to pay: (a)
Y1,552,500.00; (b) Y20,000.00 or its peso equivalent representing the actual value of the lost cargo
and the material and packaging cost; (c) 10% of the total amount as an award for and as contingent
attorneys fees; and (d) to pay the cost of the suit.

The Court subscribes to the provisions of Article 1750 of the New Civil Code -
Art. 1750. A contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction or deterioration of the
goods is valid, if it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.
It is required, however, that the contract must be reasonable and just under the circumstances and
has been fairly and freely agreed upon. The requirements provided in Art. 1750 of the New Civil Code
must be complied with before a common carrier can claim a limitation of its pecuniary liability in case
of loss, destruction or deterioration of the goods it has undertaken to transport.
The Court of Appeals deleted the award of attorneys fees but affirmed the trial courts findings with
the additional observation that private respondent can not be bound by the terms and conditions of
the bill of lading because it was not privy to the contract of carriage.

Issues:

I.

Whether or not the consent of the consignee to the terms and conditions of the bill of lading is
necessary to make such stipulations binding upon it

II

Whether or not the carriers limited package liability as stipulated in the bill of lading is applicable

III.

Whether or not private respondent can fully recover the full alleged value of its lost cargo

Ruling:

I.

Yes. In Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), we held that
even if the consignee was not a signatory to the contract of carriage between the
shipper and the carrier, the consignee can still be bound by the contract. Speaking
through Mr. Chief Justice Narvasa, we ruled:
To begin with, there is no question of the right, in principle, of a consignee in
a bill of lading to recover from the carrier or shipper for loss of, or damage to
goods being transported under said bill, although that document may have
been- as in practice it oftentimes is-drawn up only by the consignor and the
carrier without the intervention of the consignee. x x x.
x x x the right of a party in the same situation as respondent here, to recover
for loss of a shipment consigned to him under a bill of lading drawn up only
by and between the shipper and the carrier, springs from either a relation of
agency that may exist between him and the shipper or consignor, or his
status as stranger in whose favor some stipulation is made in said contract,
and who becomes a party thereto when he demands fulfillment of that
stipulation, in this case the delivery of the goods or cargo shipped. In neither
capacity can he assert personally, in bar to any provision of the bill of lading,
the alleged circumstance that fair and free agreement to such provision was
vitiated by its being in such fine print as to be hardly
readable. Parenthetically, it may be observed that in one comparatively
recent case (Phoenix Assurance Company vs. Macondray & Co., Inc., 64 SCRA
15) where this Court found that a similar package limitation clause was
printed in the smallest type on the back of the bill of lading, it nonetheless
 ruled that the consignee was bound thereby on the strength of authority
holding that such provisions on liability limitation are as much a part of a bill
of lading as though physically in it and as though placed therein by
agreement of the parties.

II.

Yes. A stipulation in the bill of lading limiting the common carriers liability for loss or
destruction of a cargo to a certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the Civil
Code which provide:
ART. 1749. A stipulation that the common carriers liability is limited to the
value of the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.
ART. 1750. A contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has been freely and fairly
agreed upon.
It is required that the stipulation limiting the common carriers liability for loss
must be reasonable and just under the circumstances, and has been freely and fairly
agreed upon.
The bill of lading subject of the present controversy specifically provides, among
others:
18. All claims for which the carrier may be liable shall be adjusted and
settled on the basis of the shippers net invoice cost plus freight and
insurance premiums, if paid, and in no event shall the carrier be liable for
any loss of possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in any
connection with, goods in an amount exceeding One Hundred Thousand Yen
in Japanese Currency (Y100,000.00) or its equivalent in any other currency
per package or customary freight unit (whichever is least) unless the value of
the goods higher than this amount is declared in writing by the shipper
before receipt of the goods by the carrier and inserted in the Bill of Lading
and extra freight is paid as required. (Emphasis supplied)
The above stipulations are, to our mind, reasonable and just. In the bill of lading,
the carrier made it clear that its liability would only be up to One Hundred Thousand
(Y100,000.00) Yen. However, the shipper, Maruman Trading, had the option to
declare a higher valuation if the value of its cargo was higher than the limited liability
of the carrier. Considering that the shipper did not declare a higher valuation, it had
itself to blame for not complying with the stipulations.
The trial courts ratiocination that private respondent could not have fairly and
freely agreed to the limited liability clause in the bill of lading because the said
conditions were printed in small letters does not make the bill of lading invalid.
 Greater vigilance, however, is required of the courts when dealing with contracts
of adhesion in that the said contracts must be carefully scrutinized in order to shield
the unwary (or weaker party) from deceptive schemes contained in ready-made
covenants,[8] such as the bill of lading in question. The stringent requirement which
the courts are enjoined to observe is in recognition of Article 24 of the Civil Code
which mandates that (i)n all contractual, property or other relations, when one of
the parties is at a disadvantage on account of his moral dependence, ignorance,
indigence, mental weakness, tender age or other handicap, the courts must be
vigilant for his protection.
The shipper, Maruman Trading, we assume, has been extensively engaged in the
trading business. It can not be said to be ignorant of the business transactions it
entered into involving the shipment of its goods to its customers. The shipper could
not have known, or should know the stipulations in the bill of lading and there it
should have declared a higher valuation of the goods shipped. Moreover, Maruman
Trading has not been heard to complain that it has been deceived or rushed into
agreeing to ship the cargo in petitioners vessel. In fact, it was not even impleaded in
this case.

III.

No. the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading.

Case 2:

MOF Company, Inc. vs. Shin Yang, G.R. No. 172822

Facts:

Halla Trading Co., a company based in Korea, shipped to Manila secondhand cars and
other articles on board the vessel Hanjin Busan. The bill of lading covering the
shipment, i.e., Bill of Lading No. HJSCPUSI14168303, which was prepared by the
carrier Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin Yang Brokerage
Corp. (Shin Yang) as the consignee and indicated that payment was on a "Freight
Collect" basis, i.e., that the consignee/receiver of the goods would be the one to pay
for the freight and other charges in the total amount of P57,646.00.

The shipment arrived in Manila Thereafter, petitioner MOF Company, Inc. (MOF),
Hanjins exclusive general agent in the Philippines, repeatedly demanded the
payment of ocean freight, documentation fee and terminal handling charges from
Shin Yang. The latter, however, failed and refused to pay contending that it did not
cause the importation of the goods, that it is only the Consolidator of the said
shipment, that the ultimate consignee did not endorse in its favor the original bill of
lading and that the bill of lading was prepared without its consent.

Issue:
Whether or not Shin Yang Brokerage Corporation is bound to the stipulations on the
bill of lading.

Ruling:

In the instant case, there was on acceptance on the part of Shin Yang Brokerage Corp.
as the party to the bill of lading. It consistently denied in all of its pleadings that it
authorized Halla Trading, Co. to ship the goods on its behalf; or that it got hold of the
bill of lading covering the shipment or that it demanded the release of the cargo.
In order to have a valid acceptance on the bill of lading and therefore bound the
stipulations provided therein, the following requisites must be present.

a) There exist an agency between the consignee and the shipper or carrier;
b) When the consignee demanded the fulfilment of the stipulation in the bill of
lading and
c) There is unequivocal acceptance of the bill of lading delivered to him with full
knowledge of the contents

None of the above requisites were present in the case.

Case 3:

Dangwa Transportation Co., vs. C.A., 202 SCRA 574

Facts:

INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA CUDIAMAT,

NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the
late Pedrito Cudiamat represented by Inocencia Cudiamat, filed a complaint for damages against
Dangwa Transportation Co. for the death of Pedrito Cudiamat due to a vehicular accident which
occurred on March 25, 1985 at Sapid, Mankayan, Benguet. It was alleged that petitioner Theodore
Lardizabal was driving a passenger bus belonging to petitioner corporation in a reckless and
imprudent manner and without due regard to traffic rules and regulation, as well as safety to persons
and property. It ran over its passenger, deceased Pedro Cudiamat. It was further alleged that instead
of bringing deceased Pedrito immediately to the nearest hospital, the said driver first brought his
other passengers and cargo to their respect destinations.

Petitioners however alleged that they had observed and continuously observed the extraordinary
diligence required in the operation of the transportation company and the supervision of the
employees. Petitioner likewise averred that it was the victims own carelessness and negligence which
gave rise to the subject incident. Petitioners averred that the deceased did not inform petitioner
driver that the latter wished to board the bus, and yet the latter continued to recklessly board into the
moving vehicle.

The trial court however ruled in favor of respondents. The Court of Appeals reversed the decision.
Hence this petition.

Issue:

Whether or not petitioner is guilty of negligence.

Ruling:

The Court held in affirmative.

The testimonies of the witnesses showed that that the bus was at full stop when the victim boarded
the same. They further confirmed the conclusion that the victim fell from the platform of the bus
when it suddenly accelerated forward and was run over by the rear right tires of the vehicle. Under
such circumstances, it cannot be said that the deceased was guilty of negligence.

It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is
moving slowly. An ordinarily prudent person would have made the attempt board the moving
conveyance under the same or similar circumstances. The fact that passengers board and alight from
slowly moving vehicle is a matter of common experience both the driver and conductor in this case
could not have been unaware of such an ordinary practice.

Further, the victim herein, by stepping and standing in the platform of the bus, is already considered a
passenger and is entitled all the right and protection pertaining to such a contractual relation. Hence it
has been held that that duty to which the carrier passenger owes to tis patrons extends to persons
boarding cars as well as those alighting therefrom.

Common carriers, from the nature of their business and reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported by the according to all the
circumstances of each case. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence very cautious persons, with a due regard for
all the circumstances.

It has also been repeatedly held that in an action based on a contract of carriage, the court need not
make an express finding of fault or negligence on the part of the carrier in order to hold it responsible
to pay the damages sought by the passenger. By contract of carriage, the carrier assumes the express
obligation to transport the passenger to his destination safely and observe extraordinary diligence
with a due regard for all the circumstances, and any injury that might be suffered by the passenger is
right away attributable to the fault or negligence of the carrier. This is an exception to the general rule
that negligence must be proved, and it is therefore incumbent upon the carrier to prove that it has
exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.

Case 4:

Korean Airlines Co. Vs. C.A., 234 SCRA 717

Facts:

Juanito C. Lapuz was contracted for employment in Jeddah, Saudi Arabia for a period of one year.
Lapuz was supposed to leave on November 8, 1980, via Korean Airlines (KAL). Initially, he was "wait-
listed," which meant that he could only be accommodated if any of the confirmed passengers failed to
show up at the airport before departure. When two of such passengers did not appear, Lapuz and
another person by the name of Perico were given the two unclaimed seats.

Lapuz was allowed to check in his belongings at the check-in counter of KAL. He passed through the
customs, immigration, and check-up, was cleared for departure, and even rode in the shuttle bus for
boarding. However, when he was at the third or fourth rung of the stairs, a KAL officer pointed to him
and shouted "Down! Down!" and was thus barred from taking the flight. When he later asked for
another booking, his ticket was cancelled by KAL. Consequently, he was unable to report for his work
in Saudi Arabia within the stipulated 2-week period and so lost his employment.
KAL, on the other hand, alleged that Pan Pacific Recruiting Services Inc. coordinated with KAL for the
departure of 30 contract workers, of whom only 21 were confirmed and 9 were wait-listed passengers.
One of the seats was given to Perico, who was one of the supervisors of the hiring company in Saudi
Arabia, while the other seat was won through lottery by Lapuz. However, only one seat became
available and so, Perico alone was allowed to board.

The Regional Trial Court (RTC) adjudged KAL as liable for damages.

The Court of Appeals (CA) affirmed the judgment with modifications.

Issue:

Whether or not there was a breach of contract of carriage between KAL and Lapuz.

Ruling:

The status of Lapuz as standby passenger was changed to that of a confirmed passenger when his
name was entered in the passenger manifest of KAL. His clearance through immigration and customs
clearly shows that he had indeed been confirmed as a passenger. KAL thus committed a breach of the
contract of carriage between them when it failed to bring Lapuz to his destination.

This Court has held that a contract to transport passengers is different in kind and degree from any
other contractual relation. The business of the carrier is mainly with the travelling public. It invites
people to avail themselves of the comforts and advantages it offers. The contract of air carriage
generates a relation attended with a public duty. Passengers have the right to be treated by the
carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be
protected against personal misconduct, injurious language, indignities and abuses from such
employees. So it is that any discourteous conduct on the part of these employees toward a passenger
gives the latter an action for damages against the carrier.

The evidence presented by Lapuz shows that he had indeed checked in at the departure counter,
passed through customs and immigration, boarded the shuttle bus and proceeded to the ramp of
KAL's aircraft. In fact, his baggage had already been loaded in KAL's aircraft, to be flown with him to
Jeddah. The contract of carriage between him and KAL had already been perfected when he was
summarily and insolently prevented from boarding the aircraft.

Case 5:

LRTA vs. Navidad, G.R. 145804

Facts:

On 14 October 1993, about half an hour past seven oclock in the evening, Nicanor Navidad, then
drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare).
While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard
assigned to the area approached Navidad. A misunderstanding or an altercation between the two
apparently ensued that led to a fist fight. At the exact moment that Navidad fell, an LRT train,
operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he
was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her
children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro
Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA and Roman
filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent. Prudent, in its
answer, denied liability and averred that it had exercised due diligence in the selection and supervision
of its security guards.
Issue:

Whether or not a contract of carriage had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the corresponding token therefor.

Ruling:

Yes.
Law and jurisprudence dictate that a common carrier, both from the nature of its business and for
reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the
safety of passengers.4 The Civil Code, governing the liability of a common carrier for death of or injury
to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances.
"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755."

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

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

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

Such duty of a common carrier to provide safety to its passengers so obligates it not only during the
course of the trip but for so long as the passengers are within its premises and where they ought to be
in pursuance to the contract of carriage.

The foundation of LRTAs liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required
of the common carrier.

Synthesis:

Limited liability of carriers and a contract of carriage are the two common denominators among the
five case summaries.

In Everett Steamship Corporation vs. C.A., the Court ruled that:

A stipulation in the bill of lading limiting the common carriers liability for loss or
destruction of a cargo to a certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the Civil
Code which provide:
ART. 1749. A stipulation that the common carriers liability is limited to the
value of the goods appearing in the bill of lading, unless the shipper or
owner declares a greater value, is binding.
 ART. 1750. A contract fixing the sum that may be recovered by the owner or
shipper for the loss, destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has been freely and fairly
agreed upon.
In MOF Company, Inc. vs. Shin Yang, it was held that in order to have a valid
acceptance on the bill of lading and therefore bound the stipulations provided
therein, the following requisites must be present.

d) There exist an agency between the consignee and the shipper or carrier;
e) When the consignee demanded the fulfilment of the stipulation in the bill of
lading and
f) There is unequivocal acceptance of the bill of lading delivered to him with full
knowledge of the contents

In Dangwa Transportation Co., vs. C.A., the Court held that in an action based on a
contract of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to pay the
damages sought by the passenger. By contract of carriage, the carrier assumes the
express obligation to transport the passenger to his destination safely and observe
extraordinary diligence with a due regard for all the circumstances, and any injury
that might be suffered by the passenger is right away attributable to the fault or
negligence of the carrier. This is an exception to the general rule that negligence
must be proved, and it is therefore incumbent upon the carrier to prove that it has
exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil
Code.

In Korean Airlines Co. Vs. C.A., the Court ruled that a contract to transport passengers is different in
kind and degree from any other contractual relation. The business of the carrier is mainly with the
travelling public. It invites people to avail themselves of the comforts and advantages it offers. The
contract of air carriage generates a relation attended with a public duty. Passengers have the right to
be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They
are entitled to be protected against personal misconduct, injurious language, indignities and abuses
from such employees. So it is that any discourteous conduct on the pasrt of these employees toward a
passenger gives the latter an action for damages against the carrier.

Finally, in LRTA vs. Navidad, it was held that the contract of carriage and its obligation to indemnify the
victim arises from the breach of that contract by reason of its failure to exercise the high diligence
required of the common carrier.

Thus, the bottom line of all of the issues would be the definition of a contract itself. Article 1305 of the
New Civil Code provides:

Art. 1305. A contract is a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service. (1254a)

Furthermore, Article 1318 of the New Civil Code provides:

Art. 1318. There is no contract unless the following requisites concur:

(1) Consent of the contracting parties;

(2) Object certain which is the subject matter of the contract;

(3) Cause of the obligation which is established. (1261)

Lest we forget, the basics - the law on obligations and contracts in studying
Transportation Law.