DISTINGUISHED FROM PRIVATE CARRIER

HOME INSURANCE CO V AMERICAN STEAMSHIP AGENCIES INC

-COMMON CARRIER BECOMING A PRIVATE CARRIER

-AGREEMENTS IN THE CHARTER PARTY PREVAILS

"Consorcio Pesquero del Peru of South America" shipped freight pre-paid at Chimbate, Peru, 21,740 jute bags of Peruvian fish meal through SS Crowborough. The cargo, consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and insured by Home Insurance Company for $202,505, arrived in Manila on March 7, 1963 and was discharged into the lighters of Luzon Stevedoring Company. When the cargo was delivered to consignee San Miguel Brewery Inc., there were shortages amounting to P12,033.85, causing the latter to lay claims against:

1.Luzon Stevedoring Corporation,

2.Home Insurance Company and the

3.American Steamship Agencies, owner and operator of SS Crowborough.

Home Insurance Company paid SMC and subrogated the latter in enforcing its claims.

American Steamship Agencies denied liability by alleging that under the provisions of the Charter party referred to in the bills of lading, the charterer, not the shipowner, was responsible for any loss or damage of the cargo. Furthermore, it claimed to have exercised due diligence in stowing the goods and that as a mere forwarding agent, it was not responsible for losses or damages to the cargo.

CFI:

1. Absolved LSC having found the latter to have merely delivered what it received from the carrier in the same condition and quality

2. Ordered American steamship agencies

ISSUE:

WON American Steamship Agencies is a common carrier?

WON the stipulation in the charter party of the owner's non-liability valid so as to absolve the American Steamship Agencies from liability for loss?

Sc RULING:

As to the first issue, the court ruled in the negative. It held that The provisions of our Civil Code on common carriers were taken from Anglo-American law.7 Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special person only, becomes a private carrier.8 As a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is not against public policy,9 and is deemed valid.

Such doctrine We find reasonable. The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. The stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent would be void only if the strict public policy governing common carriers is applied. Such policy has no force where the public at large is not involved, as in the case of a ship totally chartered for the use of a single party.

Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to the goods caused by personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy and to secure that she be properly manned, equipped and supplied or by the personal act or default of the owner or its manager. Said paragraph, however, exempts the owner of the vessel from any loss or damage or delay arising from any other source, even from the neglect or fault of the captain or crew or some other person employed by the owner on board, for whose acts the owner would ordinarily be liable except for said paragraph..

The bill of lading state that recovery cannot be had thereunder, for loss or damage to the cargo, against the shipowners, unless the same is due to personal acts or negligence of said owner or its manager, as distinguished from its other agents or employees. In this case, no such personal act or negligence has been proved.

SAN PABLO V PANTRANCO

-FERRY SERVICES (no other CPC required) V INTERISLAND / COASTWISE SERVICES (different CPC required)

PANTRANCO is a domestic corporation engaged in the land transportation business with PUB service for passengers and freight and various certificates for public conveniences CPC to operate passenger buses from Metro Manila to Bicol Region and Eastern Samar.

PANTRANCO wrote to Maritime Industry Authority (MARINA) requesting authority to lease/purchase a vessel named M/V "Black Double" "to be used for its project to operate a ferryboat service from Matnog, Sorsogon and Allen, Samar that will provide service to company buses and freight trucks that have to cross San Bernardo Strait, such request was denied by MARINA for the reason that:

1. Matnog-Allen run is adequately serviced by Cardinal Shipping Corp. and Epitacio San Pablo.

MARINA policies on interisland shipping restrict the entry of new operators to Liner trade routes where these are adequately serviced by existing/authorized operators.

2. Market conditions in the proposed route cannot support the entry of additional tonnage; vessel acquisitions intended for operations therein are necessarily limited to those intended for replacement purposes only. 

Nevertheless, PANTRANCO still acquired the vessel and wrote the Chairman of the Board of Transportation (BOT) through its counsel, that it proposes to operate a ferry service to carry its passenger buses and freight trucks between Allen and Matnog in connection with its trips to Tacloban City

BOT seek the Ministry of Justice’s opinion (JUSTICE PUNO)

JUSTICE PUNO: rendered an opinion to the effect that there is no need for bus operators to secure a separate CPC to operate a ferryboat service holding as follows:

Further, a common carrier which has been granted a certificate of public convenience is expected to provide efficient, convenient and adequate service to the riding public. (Hocking Valley Railroad Co. vs. Public Utilities Commission, 1 10 NE 521; Louiseville and NR Co. vs. Railroad Commissioners, 58 SO 543) It is the right of the public which has accepted the service of a public utility operator to demand that the service should be conducted with reasonable efficiency. (Almario, supra, citing 73 C.J.S. 990-991) Thus, when the bus company in the case at bar proposes to add a ferry service to its Pasay Tacloban route, it merely does so in the discharge of its duty under its current certificate of public convenience to provide adequate and convenient service to its riders. Requiring said bus company to obtain another certificate to operate such ferry service when it merely forms a part — and constitutes an improvement — of its existing transportation service would simply be duplicitous and superfluous.   7

BOT: A ferry service, in law, is treated as a continuation of the highway from one side of the water over which passes to the other side for transportation of passengers or of travellers with their teams vehicles and such other property as, they may carry or have with them

BOT rendered its decision holding that the ferry boat service is part of its CPC to operate from Pasay to Samar/Leyte by amending PANTRANCO's CPC - subject to the condition that the ferryboat shall be for the exclusive use of Pantranco buses, its passengers and freight trucks, and should it offer itself to the public for hire other than its own passengers, it must apply for a separate certificate of public convenience as a public ferry boat service, separate and distinct from its land transport systems.

ISSUE:

WON THE BOT’S decision that the ferry boat service is part of PANTRANCO’S CPC to operate from Pasay to Samar/Leyte?

WON PANTRANCO’S ferry boat service is a private carrier?

SC RULING:

1ST ISSUE – The court ruled in the negative. Citing the ruling in JAVELLANA case: The term   "ferry" implied the continuation by means of boats, barges, or rafts, of a highway or the connection of highways located on the opposite banks of a stream or other body of water. The term necessarily implies transportation for a short distance, almost invariably between two points, which is unrelated to other transportation

JAVELLANA CASE: the Legislature intended ferry to mean the service either by barges or rafts, even by motor or steam vessels, between the banks of a river or stream to continue the highway which is interrupted by the body of water, or in some cases to connect two points on opposite shores of an arm of the sea such as bay or lake which does not involve too great a distance or too long a time to navigate But where the line or service involves crossing the open sea like the body of water between the province of Batangas and the island of Mindoro   which the oppositors describe thus " the intervening waters between Calapan and Batangas are wide and dangerous with big waves where small boat barge, or raft are not adapted to the service ," then it is more reasonable to regard   said line or service as more properly belonging to interisland or coastwise trade .

Considering the environmental circumstances of the case, the conveyance of passengers, trucks and cargo from Matnog to Allen is certainly not a ferry boat service but a coastwise or interisland shipping service. Under no circumstance can the sea between Matnog and Allen be considered a continuation of the highway. While a ferry boat service has been considered as a continuation of the highway when crossing rivers or even lakes, which are small body of waters - separating the land, however, when as in this case the two terminals, Matnog and Allen are separated by an open sea it can not be considered as a continuation of the highway.- PANTRANCO MUST SECURE ANOTHER CPC

2ND ISSUE - The contention of private respondent PANTRANCO that its ferry service operation is as a private carrier, not as a common carrier for its exclusive use in the ferrying of its passenger buses and cargo trucks is absurd. PANTRANCO does not deny

that it charges its passengers separately from the charges for the bus trips and issues separate tickets whenever they board the MV "Black Double" that crosses Matnog to Allen,   20   PANTRANCO cannot pretend that in issuing tickets to its passengers it did so as a private carrier and not as a common carrier. The Court does not see any reason why inspite of its amended franchise to operate a private ferry boat service it cannot accept walk-in passengers just for the purpose of crossing the sea between Matnog and Allen.

PLANTERS PRODUCTS INC V CA

AFFREIGHTMENT – PUBLIC

BAREBOAT/ DEMISE - PRIVATE

Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines

a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charter 2 was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan. 

Before loading the fertilizer aboard the vessel, four (4) of her holds 4 were all presumably inspected by the charterer's representative and found fit to take a load of urea in bulk pursuant to par. 16 of the charter-party

After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with three (3) layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage. 

Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the consignee's warehouse located some fifty (50) meters from the wharf. Midway to the warehouse, the trucks were made to pass through a weighing scale where they were individually weighed for the purpose of ascertaining the net weight of the cargo. The port area was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining occasionally while the discharge was in progress. 8 The petitioner's warehouse was made of corrugated galvanized iron (GI) sheets, with an opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the ferilizer. 

shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt WAS REPORTED

TC: ruled that M/V Sun Plum is a private carrier but is still liable to pay Planters:

the defendants considered private carriers,   it was still incumbent upon them to prove that the shortage or contamination sustained by the cargo is attributable to the fault or negligence on the part of the shipper or consignee in the loading, stowing, trimming and discharge of the cargo . This they failed to do. By this omission, coupled with their failure to destroy the presumption of negligence against them, the defendants are liable

CA: Court of Appeals reversed the lower court and absolved the carrier from liability for the value of the cargo that was lost or damaged.   16   Relying on the 1968 case of   Home Insurance Co .   v .   American Steamship Agencies, Inc .,   17   the appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK was a private carrier and not a common carrier by reason of the time charterer-party.

In the absence of such presumption,   it was incumbent upon the plaintiff-appellee to adduce sufficient evidence to prove the negligence of the defendant carrier   as alleged in its complaint.

ISSUE:

1. WON a common carrier becomes a private carrier by reason of a charter-party? 2. WON M/V Sun Plum was able to prove that he had exercised that degree of diligence required of him under the law?

SC RULING

1. The court ruled in the NEGATIVE.It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident in the present case considering that the steering of the ship, the manning of the decks, the determination of the course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and crew who were screened, chosen and hired by the shipowner.It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage-

charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer

At any rate, the rule in the United States that a ship chartered by a single shipper to carry special cargo is not a common carrier,   29   does not find application in our jurisdiction, for we have observed that the growing concern for safety in the transportation of passengers and /or carriage of goods by sea requires a more exacting interpretation of admiralty laws, more particularly, the rules governing common carriers.

2. The court ruled in the AFFIRMATIVE.

To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima faciepresumption of negligence.

The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 before the Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After completing the loading of the cargo in bulk in the ship's holds, the steel pontoon hatches were closed and sealed with iron lids, then covered with three (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship's boom.   32

It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel.   33   When M/V "Sun Plum" docked at its berthing place, representatives of the consignee boarded, and in the presence of a representative of the shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI, opened the hatches and inspected the condition of the hull of the vessel. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis.   34

Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo.

The period during which private respondent was to observe the degree of diligence required of it as a public carrier began from the time the cargo was unconditionally placed in its charge after the vessel's holds were duly inspected and passed scrutiny by the shipper, up to and until the vessel reached its destination and its hull was reexamined by the consignee, but prior to unloading.

Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather condition prevalent during its unloading, as was the case at bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due diligence in order to minimize the loss or damage to the goods it carried.

GOVERNMENT REGULATION OF COMMON CARRIERS

KMU V GARCIA

On June 26, 1990; then Secretary of DOTC, Oscar M. Orbos, issued Memorandum Circular No. 90-395 to then LTFRB Chairman, Remedios A.S. Fernando allowing provincial bus operators to charge passengers rates within a range of 15% above and 15% below the LTFRB official rate for a period of one (1) year

On December 5, 1990, private respondent Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an application for fare rate increase. An across-the-board increase of eight and a half centavos (P0.085) per kilometer for all types of provincial buses with a minimum-maximum fare range of fifteen (15%) percent over and below the proposed basic per kilometer fare rate, with the said minimum-maximum fare range applying only to ordinary, first class and premium class buses and a fifty-centavo (P0.50) minimum per kilometer fare for aircon buses, was sought.

On December 14, 1990, public respondent LTFRB rendered a decision granting the fare rate increase

On March 30, 1992, then Secretary of the Department of Transportation and Communications Pete Nicomedes Prado issued Department Order No.92-587 defining the policy framework on the regulation of transport services which contains among others:

Rate and Fare Setting. Freight rates shall be freed gradually from government controls. Passenger fares shall also be deregulated, except for the lowest class of passenger service (normally third class passenger transport) for which the government will fix indicative or reference fares. Operators of particular services may fix their own fares within a range 15% above and below the indicative or reference rate

Pursuant to the DOTC’s department order, LTFRB issued Memorandum Circular which provides in part:

V. Rate and Fare Setting

The control in pricing shall be liberalized to introduce price competition complementary with the quality of service, subject to prior notice and public hearing. Fares shall not be provisionally authorized without public hearing.

A. On the General Structure of Rates

1. The existing authorized fare range system of plus or minus 15 per cent for provincial buses and jeepneys shall be widened to 20% and -25% limit in 1994 with the authorized fare to be replaced by an indicative or reference rate as the basis for the expanded fare range .

Sometime in March, 1994, private respondent PBOAP, availing itself of the deregulation policy of the DOTC allowing provincial bus operators to collect plus 20% and minus 25% of the prescribed fare without first having filed a petition for the purpose and without the benefit of a public hearing, announced a fare increase of twenty (20%) percent of the existing fares. Said increased fares were to be made effective on March 16, 1994.

ISSUE:

1. WON rate & fare setting may be delegated to puv operators?2. WON the establishment of a presumption of public need in favor of an applicant for a proposed transport service without

having to prove public necessity, is illegal

SC RULING:

The Court ruled in the negative. It held that

Section 16(c) of the Public Service Act, as amended, reads:

ec. 16. Proceedings of the Commission, upon notice and hearing . — The Commission shall have power,   upon proper notice and hearing   in accordance with the rules and provisions of this Act, subject to the limitations and exceptions mentioned and saving provisions to the contrary

xxx xxx xxx

(c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedules thereof, as well as commutation, mileage kilometrage, and other special rates which shall be imposed, observed, and followed thereafter by any public service: Provided, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days thereafter, upon publication and notice to the concerns operating in the territory affected: Provided, further, That in case the public service equipment of an operator is used principally or secondarily for the promotion of a private business, the net profits of said private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates. (Emphasis ours).

xxx xxx xxx

Under the foregoing provision, the Legislature delegated to the defunct Public Service Commission the power of fixing the rates of public services. Respondent LTFRB, the existing regulatory body today, is likewise vested with the same under Executive Order No. 202 dated June 19, 1987. Section 5(c) of the said executive order authorizes LTFRB "to determine, prescribe, approve and periodically review and adjust, reasonable fares, rates and other related charges, relative to the operation of public land transportation services provided by motorized vehicles."

In the case at bench, the authority given by the LTFRB to the provincial bus operators to set a fare range over and above the authorized existing fare, is illegal and invalid as it is tantamount to an undue delegation of legislative authority.   Potestas delegata non delegari potest . What has been delegated cannot be delegated. This doctrine is based on the ethical principle that such a delegated power constitutes not only a right but a duty to be performed by the delegate through the instrumentality of his own judgment and not through the intervening mind of another.   10   A further delegation of such power would indeed constitute a negation of the duty in violation of the trust reposed in the delegate mandated to discharge it directly.   11   The policy of allowing the provincial bus operators to change and increase their fares at will would result not only to a chaotic situation but to an anarchic state of affairs. This would leave the riding public at the mercy of transport operators who may increase fares every hour, every day, every month or every year, whenever it pleases them or whenever they deem it "necessary" to do so.

Moreover, rate making or rate fixing is not an easy task. It is a delicate and sensitive government function that requires dexterity of judgment and sound discretion with the settled goal of arriving at a just and reasonable rate acceptable to both the public utility and the public.

Given the complexity of the nature of the function of rate-fixing and its far-reaching effects on millions of commuters, government must not relinquish this important function in favor of those who would benefit and profit from the industry. Neither should the requisite notice and hearing be done away with. The people, represented by reputable oppositors, deserve to be given full opportunity to be heard in their opposition to any fare increase.

2 nd issue - By its terms, public convenience or necessity generally means something fitting or suited to the public need.   16   As one of the basic requirements for the grant of a CPC, public convenience and necessity exists when the proposed facility or service meets a reasonable want of the public and supply a need which the existing facilities do not adequately supply

17   Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must be consistently borne in mind. Also, existing operators in subject routes must be given an opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he has undertaken torender.   18   And all this will be possible only if a public hearing were conducted for that purpose.

Otherwise stated, the establishment of public need in favor of an applicant reverses well-settled and institutionalized judicial, quasi-judicial and administrative procedures. It allows the party who initiates the proceedings to prove, by mere application, his affirmative allegations. Moreover, the offending provisions of the LTFRB memorandum circular in question would in effect amend the Rules of Court by adding another disputable presumption in the enumeration of 37 presumptions under Rule 131, Section 5 of the Rules of Court. Such usurpation of this Court's authority cannot be countenanced as only this Court is mandated by law to promulgate rules concerning pleading, practice and procedure. 

WHEREFORE, in view of the foregoing, the instant petition is hereby GRANTED and the challenged administrative issuances and orders, namely: DOTC Department Order No. 92-587, LTFRB Memorandum CircularNo. 92-009, and the order dated March 24, 1994 issued by respondent LTFRB are hereby DECLARED contrary to law and invalid insofar as they affect provisions therein (a) delegating to provincial bus and jeepney operators the authority to increase or decrease the duly prescribed transportation fares; and (b) creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the oppositor.

Francisco Tatad, John Osmena and Rodolfo Biazon, petitioners, vs. Hon. Jesus Garcia, in his capacity as the Secretary of the Department of Transportation & Communications, and EDSA LRT CORPORATION, LTD., respondents. 

Facts: 

This is a petition under Rule 65 of the Revised Rules of Court to prohibit respondents from further implementing the “Revised and Restated Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA and the Supplemental Agreement to the same project. 

Petitioners Francisco Tatad, John Osmena and Rodolfo Biazon are members of the Philippine Senate and are suing in their capacities as Senators and as taxpayers. Respondent Jesus Garcia was then Secretary of the DOTC, while private respondent EDSA LRT CORPORATION, Ltd. is a private corporation organized under the laws of Hongkong. 

In 1989, DOTC planned to construct a light railway transit line along EDSA, which shall traverse the cities of Pasay, Quezon, Mandaluyong and Makati. The objective is to provide a mass transit system along EDSA and to alleviate the congestion in the metropolis. 

On March 15, 1990, then DOTC Secretary Oscar Orbos, acting upon a proposal to construct the EDSA LRT III on a Build-Operate-Transfer (BOT) basis, had invited Elijahu Levin from the Eli Levin Enterprises, Inc to send a technical team to discuss the project with the DOTC. 

On July 9, 1990, RA No. 6957 referred to as the Build-Operate-Transfer (BOT) was signed by then President Corazon Aquino. The said Act provides for two schemes for the financing, construction and operation of government projects through private initiative and investment: BOT or Build-Transfer (BT). 

In accordance with the provisions of RA 6957 and to set the EDSA LRT III project underway, the Prequalification Bids and Awards Committee and the Technical Committee were formed. 

The prequalification criteria totalling 100% are as follows: a.) Legal aspects – 10%; b.) Management/Organizational capability – 30%; c.) Financial capability- 30%; and d.) Technical capability – 30%. 

Of the 5 applicants, only the EDSA LRT Consortium “met the requirements of garnering at least 21 points per criteria, except for Legal aspects, and obtaining an over-all passing mark of at least 82 points.” The Legal aspects referred to provided that the BOT/BT contractor-applicant meet the requirements specified in the Constitution and other pertinent laws. 

Subsequently, Sec. Orbos was appointed Executive Secretary to the President of the Philippines and was replaced by Nicomedes Prado. The latter recommended the award of the EDSA LRT III project to the sole complying bidder, the EDSA LRT Consortium, and requested for authority to negotiate with the said firm for the contract pursuant to the BOT Law. Authority was granted to proceed with the negotiations. The EDSA LRT Consortium submitted its proposal to DOTC. 

Finding the proposal to be in compliance with the bid requirements, DOTC and EDSA LRT Corporation, Ltd., in substitution of the EDSA LRT Consortium, entered into an “An Agreement to Build, Lease and Transfer a Light Rail Transit System for EDSA” under the terms of the BOT Law. 

Secretary Prado, thereafter, requested presidential approval of the contract. 

Exec. Sec. Franklin Drilon, who replaced Sec. Orbos, informed Sec. Prado that the President could not grant the requested approval for failure to comply with the requirements of the BOT Law. 

In view whereof, Sec. Drilon, the DOTC and private respondent re-negotiated the agreement. On April 22, 1992, the parties entered into a “Revised and Restated Agreement to Build, Lease and Transfer and Light Rail Transit System for EDSA. On May 6, 1992, DOTC, represented by Sec. Jesus Garcia, Sec. Prado and private respondent entered into a Supplemental Agreement to the April Revised Agreement so as to clarify their respective rights and responsibilities. 

The two agreements were approved by President Fidel Ramos. 

According to the agreements, the EDSA LRT III will use light rail vehicles from the Czech and Slovak Federal Republics and will have a maximum carrying capacity of 450,000 passengers a day. The system will have its own power facility. It will also have 13 passenger stations and one depot in 16-hectare government property at North Avenue. 

Private respondents shall undertake and finance the entire project required for a complete operational light rail transit system. Target completion date is approximately 3 years from the implementation date of the contract. Upon full and partial completion and viability thereof, private respondent shall deliver the use and possession of the completed portion to DOTC which shall operate the same. DOTC shall pay private respondent rentals on aj monthly basis through an Irrevocable Letter of Credit. The rentals shall be determined by an independent and internationally accredited inspection firm to be appointed by the parties. 

As agreed upon, private respondent’s capital shall be recovered from the rentals to be paid by the DOTC which, in turn, shall come from the earnings of the EDSA LRT III. After 25 years and DOTC shall have completed payment of the rentals, ownership of the project shall be transferred to the latter for a consideration of only US $1.00. 

In their petition, petitioners argued that the agreement of April 22, 1992, as amended by the Supplemental Agreement of May 6, 1993, in so far as it grants EDSA LRT COPORTATION, LTD., a foreign corporation, the ownership of EDSA LRT III, a public utility, violates the constitution, and hence, is unconstitutional. They contend that the EDSA LRT III is a public utility, and the ownership and operation thereof is limited by the Constitution to Filipino citizens and domestic corporations, not foreign corporations like private respondent. 

Issue: 

Whether or not the EDSA LRT III assumes all the obligations and liabilities of a common carrier. 

Held: 

What private respondent owns are the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do not by themselves constitute a public utility. What constitutes a public utility is not their ownership but their use to serve the public. 

Section 11 of Article XII of the Constitution provides: 

No franchise, certificate or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive character or for a longer period than 50 years. 

The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. The devotion of property to serve the public may be done by the owner or by the person in control thereof who may not necessarily be the owner thereof. 

While private respondent is the owner of the facilities necessary to operate the EDSA LRT III, it admits that it is not enfranchised to operate a public utility. In view of this incapacity, private respondent and DOTC agreed that on completion date, private respondent will immediately deliver possession of the LRT system by of lease for 25 years, during which period DOTC shall operate the same as a common carrier and private respondent shall provide technical maintenance and repair services to DOTC. 

Since DOTC shall operate the EDSA LRT III, it shall assume all the obligations and liabilities of a common carrier. For this purpose, DOTC shall indemnify and hold harmless private respondent from any losses, damages, injuries or death which may be

claimed in the operation or implementation of the system, except losses, damages, injury or death due to defects in the EDSA LRT III on account of the defective condition of equipment or facilities or the defective maintenance of such equipment facilities. 

Wherefore, the petition is DISMISSED. 

Samar Mining Co., Inc. v. Nordeutscher Lloyd and C.F. Sharp & Co., Inc.G.R. No. L-28673 October 23, 1984

Cuevas, J.

FACTS: Samar Mining Co. imported 1 crate Optima welded wedge wire sieves through a vessel owned by Nordeutscher Lloyd (port of

loading: Germany) Upon arrival of its vessel at the port of Manila, the importation was unloaded and delivered in good order and condition to the

bonded warehouse of AMCYL; the goods were, however, never delivered to, nor received by, the consignee at the port of destination — Davao.

ISSUE: WON the appellants are liable for the loss of the good under the bill of lading covering the subject shipment

HELD: No. bill of lading - operates both as a receipt for the goods and as a contract to transport and deliver the same as stipulated therein in discharging the goods from the ship at the port of Manila, and delivering the same into the custody of AMCYL, the bonded

warehouse, appellants were acting in full accord with the contractual stipulations contained in the bill of lading; the delivery of the goods to AMCYL was part of appellants’ duty to transship the goods from Manila to their port of destination-Davao

transship - to transfer for further transportation from one ship or conveyance to another Sec. 1, par. 3 of Bill of Lading No. 18 provides: “The carrier shall not be liable in any capacity whatsoever for any delay, loss or

damage occurring before the goods enter ship’s tackle to be loaded or after the goods leave ship’s tackle to be discharged, transshipped or forwarded.”

Sec. 11 also provides: “Whenever the carrier or m aster may deem it advisable or in any case where the goods are placed at carrier’s disposal at or consigned to a point where the ship does not expect to load or discharge, the carrier or master may, without notice, forward the whole or any part of the goods before or after loading at the original port of shipment, ... This carrier, in making arrangements for any transshipping or forwarding vessels or means of transportation not operated by this carrier shall be considered solely the forwarding agent of the shipper and without any other responsibility whatsoever even though the freight for the whole transport has been collected by him. ... Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the shipper and at risk and expense of the goods and the carrier shall not be liable for detention nor responsible for the acts, neglect, delay or failure to act of anyone to whom the goods are entrusted or delivered for storage, handling or any service incidental thereto.”

The aforequoted are valid stipulations between the parties insofar as they exempt the carrier from liability for loss or damage to the goods while the same are not in the latter’s actual custody.

Art. 1738 is not applicable – it contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were still awaiting transshipment to their port of destination, and were stored in the warehouse of a third party when last seen and/or heard of.

Art. 1736 – applicable; it provides that the carrier may be relieved of the responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the carrier to the consignee, or to the person who has a right to receive them

actual delivery – the ceding of corporeal possession by the seller, and the actual apprehension of corporeal possession by the buyer or by some person authorized by him to receive the goods as his representative for the purpose of custody or disposal

there is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods

there was actual delivery to the consignee through its duly authorized agent, the carrier two undertakings of Nordeutscher Lloyd according to the Bill of Lading: 1. for the transport of goods from Germany to Manila; 2.

transshipment of the same foods from Manila to Davao in between these undertakings, Nordeutscher Lloyd’s personality changes from that of carrier to that of agent of the consignee; the

character of appellant’s possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter’s agent

in effect, there was actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards.

An agent who carries out the orders and instructions of the principal without being guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal to accomplish the object of the agency. (see Art. 1889)

NOTE:

20 At the hiatus between these two undertakings of appellant which is the moment when the subject goods are discharged in Manila, its personality changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from that point onwards. This is the full import of Article 1736, as applied to the case before Us .

GOVERNING LAW

EASTERN SHIPPING LINES V IAC

Facts: On June, 1977 M/S ASIATICA, a Vessel operated by Eastern Shipping Lines was bound for Manila from Kobe, Japan. It loaded , 5,000 pieces of colorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. Both were insured from marine risks with Development Insurance and Surety Corp. It also took 128 cartoons of garment fabrics and accessories in 2 containers consigned to Mariveles Apparel Corp and 2 Cases of surveying instruments consigned to Aman Enterprises and General Merchandise. The shipments were insured with DOWA Fire and Marine Insurance Co. and Nisshin Fire and marine Insurance Co. respectably. En Route from Kobe to Manila the vessel caught fire and sank losing all its shipment. The insurance companies paid for the insurance of the above mentioned shipments. They Then instituted a case to redeem the insurance that they paid to the various companies against Eastern Shipping Lines. They contend that Eastern should not be exempted from liability because it was not able to exercise due diligence in preventing the occurrence of the fire as well as its unseaworthiness. 

Eastern Shipping invoked the Carriage of Goods by Sea Act as a defense wherein it is said to be exempt from the said liability. The Fire was said to be one of the exempting circumstance under the act. It also contended that it the fire occurred as a fortuitous event such as a natural disaster or calamity which leads them to conclude that they should not be made liable. 

Issues: Which law should govern the case is it the Civil Code provisions or the specific law which is the Carriage of Goods by Sea Act? Who has the burden of proof to show the negligence of the carrier? 

Held: It is the law of the country to which the goods are to be transported which shall apply in this case. The Carriage of Goods by Sea Act will be supplementary to the Civil Code provision. 

Common carriers are bound to observe extraordinary diligence when transporting goods. Common carriers are responsible for the loss, destruction, or deterioration of the goods unless it is due to the ff events: flood, storm, earthquake, lightning, or other natural disaster or calamity. In this case fire may not be considered a

natural disaster or calamity. This is because the occurrence may be due to an act by man or the actual fault of the carrier. The common carrier is presumed to have been at fault or have acted negligently unless it proves that it has observed the extraordinary diligence required by law. Evidence presented by the witness failed to establish the extraordinary diligence which was required of the carrier. The fire started 24 hours before discovery and upon discovery it was already too big to suppress. It appears that after the cargoes were stored no regular inspections were done to see to it that the cargoes are well kept. The crew could not even explain how the fire started. Because of this the carrier was not able to prove that it has exercised extraordinary diligence making it liable of the costs and damages. Even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the Civil Code, it is required under Article 1739 of the same Code that the "natural disaster" must have been the "proximate and only cause of the loss," and that the carrier has "exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster. " This Petitioner Carrier has also failed to establish satisfactorily. They are bound to pay the insurance companies as well as 5K for attorney’s fees.

NATIONAL DEVELOPMENT CO V CA

NATIONAL DEVELOPMENT CORPORATION (NDC) appointed MARITIME COMPANY OF THE PHILIPPINES (MCP) as its agent to manage and operate the vessel DONA NATI for and in its behalf and account. Thus, on February 28, 1964 the E. Philipp Corporation of New York loaded on board the vessel "Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to the order of Manila Banking Corporation, Manila and the People's Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation (Exhs. K-2 to K7-A & L-2 to L-7-A). Also loaded on the same vessel at Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum foil (Exhs. M & M-1). En route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m. on April 15, 1964 at Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which 550 bales of aforesaid cargo of American raw cotton were lost and/or destroyed, of which 535 bales as damaged were landed and sold on the authority of the General Average Surveyor for Yen 6,045,-500 and 15 bales were not landed and deemed lost (Exh. G). The damaged and lost cargoes was worth P344,977.86 which amount, the plaintiff as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed. Thus, the plaintiff had paid as insurer the total amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost or damaged cargoes. Hence, plaintiff filed this complaint to recover said amount from the defendants-NDC and MCP as owner and ship agent respectively, of the said 'Dofia Nati' vessel

Development Insurance and Surety Corporation (DISC) filed before the then Court of First Instance of Manila an action for the recovery of the sum of P364,915.86 plus attorney's fees of P10,000.00 against NDC and MCP.

NDC's : the Carriage of Goods by Sea Act should apply to the case at bar and not the Civil Code or the Code of Commerce. Under Section 4 (2) of said Act, the carrier is not responsible for the loss or damage resulting from the "act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship."

TC: ordered MCP and NDC to pay jointly and solidarity to DISC the sum of P364,915.86 plus the legal rate of interest to be computed from the filing of the complaint on April 22, 1965, until fully paid and attorney's fees of P10,000.00.

CA: affirmedTC’s decision

ISSUE:

1. WON COGSA should apply to the case at bar and not the Civil Code or the Code of Commerce?

SC RULING:

The court ruled in the negative. It held that the Court has decided in Eastern Shipping Lines Inc. v. IAC (1 50 SCRA 469-470 [1987]) where it was held under similar circumstance "that the law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of commerce and by laws (Article 1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory to the provision of the Civil Code.

In the case at bar, it has been established that the goods in question are transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or due to a collision which was found to have been caused by the negligence or fault of both captains of the colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

Under Article 1733 of the Civil Code, common carriers from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to all circumstances of each case. Accordingly, under Article 1735 of the same Code, in all other than those mentioned is Article 1734 thereof, the common carrier shall be presumed to have been at fault or to have acted negigently, unless it proves that it has observed the extraordinary diligence required by law.

It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent courses application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels.

More specifically, Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the owner of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. But more in point to the instant case is Article 827 of the same Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes.

Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the shipowner or carrier, is not exempt from liability for damages arising from collision due to the fault or negligence of the captain. Primary liability is imposed on the shipowner or carrier in recognition of the universally accepted doctrine that the shipmaster or captain is merely the representative of the owner who has the actual or constructive control over the conduct of the voyage

AS TO MCP’S LIABLITY: it is clearly deducible from the general doctrine of jurisprudence under the Civil Code but more specially as regards contractual obligations in Article 586 of the Code of Commerce that the liability of the   naviero   is in the sense of charterer or agent. Moreover, the Court held that both the owner and agent ( Naviero ) should be declared jointly and severally liable, since the obligation which is the subject of the action had its origin in a tortious act and did not arise from contract

AS TO THE EXTENT OF THEIR LIABILITY: MCP insists that their liability should be limited to P200.00 per package or per bale of raw cotton as stated in paragraph 17 of the bills of lading. Also the MCP argues that the law on averages should be applied in determining their liability.

MCP's contention is devoid of merit. The declared value of the goods was stated in the bills of lading and corroborated no less by invoices offered as evidence ' during the trial. Besides, common carriers, in the language of the court in Juan Ysmael & Co., Inc. v. Barrette et al., (51 Phil. 90 [1927]) "cannot limit its liability for injury to a loss of goods where such injury or loss was caused by its own negligence." Negligence of the captains of the colliding vessel being the cause of the collision, and the cargoes not being jettisoned to save some of the cargoes and the vessel, the trial court and the Court of Appeals acted correctly in not applying the law on averages (Articles 806 to 818, Code of Commerce).