Commercial Laws II: Common Carriers
A. Common Carriers in General
1. Definition of common carrier, Art. 1732 of the New Civil Code (NCC)
Article 1732 of the Civil Code provides that:
PCFA-EBCT-PGB-LWA-FC-OSP
Common carriers are persons, corporations, firms or associations
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.
It has been defined as:
one that holds itself out as ready to engage in the transportation of goods for hire as a public employment and not as a casual occupation.
Article 1732 of the Civil Code avoids any distinction between a person or an enterprise offering transportation on regular and scheduled basis and one offering transportation service on occasional, episodic, and unscheduled basis.
Neither does the law distinguish between a carrier offering its services for the general public, that is, the general community or population and one who offers business only from a narrow segment of the general population.
2. Tests for determining whether a party is a common carrier
First Philippine Industrial Corp. v. CA, 300 SCRA 661:
The tests for determining whether a party, is a common carrier of goods are: EBCGPE-GKBC-MBC-FH
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;
He must undertake to carry goods of the kind to which has business is confined;
He must undertake to carry by the method by which his business is conducted and over his established roads; and
The transportation must be for hire.
National Steel Corporation v. CA, 283 SCRA 45, 61 [1997]:
The Supreme Court reiterated the ruling that the true test of a common carrier is the carriage of goods or passengers, provided it has space for all who opt to avail themselves of its transportation for a fee.
First Philippine Industrial Corp. v. Court of Appeals (300 SCRA 661):
Pipeline operators are common carriers.
The Supreme Court ruled that a corporation that is engaged in the business of transporting oil and other petroleum products through its pipes can be considered a common carrier.
The law does not distinguish as to the means of transportation, as long as it is by land, water, or air.
It does not provide that the transportation of the passengers or goods should be by motor vehicle.
A charter party may transform a common carrier into a private carrier.
However, it must be a bareboat or demise charter where the charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated.
Charter parties fall into three main categories: DTV
Demise or bareboat,
time charter,
voyage charter.
The common carrier is not transformed into a private carrier if the charter party is a contract of affreightment like a voyage charter or a time charter.
Virgines Calvo v. UCPB General Insurance Co., G.R. No. 148496, March 19, 2002:
The petitioner, a customs broker and warehouseman, was declared to be a common carrier in one case although she does not indiscriminately hold her services out to the public but offers the same to select parties with whom she may contract in the conduct of her business.
In the said case, petitioner entered into a contract with SMC to transfer paper and kraft board from the Port Area in Manila to SMCs warehouse in Ermita, Manila.
As a common carrier, she is bound to exercise extraordinary diligence in transporting the goods and is presumed to be negligent when she failed to deliver the same.
Phil. American General Insurance Company v. PKS Shipping Company, G.R. No. 149038, April 9, 2003:
Respondent PKS Shipping Corporation was declared a common carrier although it had a limited clientele.
In the said case, PKS transported 75,000 bags of cement of petitioner DUMC in a barge. The bags of cement sank together with the barge when the latter was being towed by a tug boat.
The Supreme Court declared that PKS was a common carrier because it was engaged in the business of carrying goods for others for a fee.
The regularity of its activities in the area indicates more than just a casual activity on its part. Neither can the concept of a common carrier change merely because individual contracts are executed or entered into with the patrons of the carrier.
Asia Lighterage and Shipping, Inc. v. CA, et al, G.R. No. 147246, Aug. 19, 2003:
The same conclusion was reached in another case involving a company that also transports goods through barges.
The petitioner argued that it is a private carrier allegedly because it has no fixed, and publicly known route, maintains no terminals, and issues no tickets. It points out that it is not obligated to carry, indiscriminately for any person.
The Supreme Court rejected the argument of the petitioner pointing out that the principal business of the petitioner is that of lighterage and drayage and it offers its barges to the public for carrying or transporting by water for compensation.
Petitioner was considered a common carrier whether its carrying of goods is done on an irregular basis rather than scheduled manner and with a limited clientele.
A common carrier need not have a fixed and publicly known route nor does it have to maintain terminals or issue tickets.
Spouses Cruz v. Sun Holidays, Inc., G.R. No. 186312, June 29, 2010:
The operator of a beach resort that accepts clients by virtue of a tour-package contracts that included transportation to and from the Resort and the point of departure in Batangas is considered a common carrier.
Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto.
The constancy of respondent's ferry services in its resort operations is underscored by its having its own boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public.
3. Common carrier vs. private carrier
The term "common or public carrier" is defined in Article 1732 of the Civil Code. The definition extends to carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or both for compensation as public employment and not as casual occupation.
Planters Product, Inc. v. CA, (Sept. 15, 1993):
The distinction between a "common or public carrier" and a '"private or special carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a part of a general business or occupation, although involving the carriage of the goods for a fee, the person or corporation offering such service is a private carrier.
Distinctions: AA-RDS
Availability:
The common carrier holds himself out in common, that is, to all persons who choose to employ him, ready to carry for hire while the private carrier or special carrier agrees in some special case with some private individual to carry for hire.
Agreement:
A private carrier is not bound to carry for any reason, unless it enters a special agreement to do so. A common carrier is bound to carry for all who offer such goods as it is accustomed to carry and tender reasonable compensation for carrying them.
Regulation:
A common carrier is subject to regulation as it is a public service. A private carrier is not.
Diligence Required:
The common carrier is bound to exercise extraordinary diligence while a private carrier owes only diligence of a good father of a family.
Stipulations:
A common carrier cannot stipulate that it is exempt from liability for the negligence of its agents or employees. Such stipulation is void as it is against public policy. A private carrier may validly enter into such stipulation.
4. Contract to Carry vs. Contract of Carriage
In dealing with the contract of common carriage of passengers for purpose of accuracy, there are two (2) aspects of the same, namely:
the contract "to carry (at some future time)," which contract is consensual and is necessarily perfected by mere consent (See Article 1356, Civil Code of the Philippines), and
the contract "of carriage" or "of common carriage" itself which should be considered as a real contract for not until the carrier is actually used can the carrier be said to have already assumed the obligation of a carrier.
5. Parties to a contract of carriage of goods and of passengers
The parties to a contract of transportation would depend on whether it is for carriage of passengers or carriage of goods.
Carriage of Passengers.
The parties in a contract of carriage of passengers are:
the common carrier and
the passenger.
A passenger is defined as one who travels in a public conveyance by virtue of contract, express or implied, with the carrier subject to payment of fare or an equivalent thereof.
Gratuitous or reduced fare.
It should be noted in this connection, however, that a passenger is still considered as such (passenger) even if he is being carried gratuitously or under a reduced fare.
This is subject to the rule in Article 1758 of the Civil Code that provides that when a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid.
Baliwag Transit Corporation v. Court of Appeals:
A complaint for damages against the petitioner bus company was filed by the injured party (a person of legal age) and his parents for the injuries that the said injured party sustained in a vehicular accident when he was a passenger in one of the buses of the petitioner. Later, the injured party received payment from the petitioner's insurer and executed a Release of Claim.
In due course, the complaint was dismissed because the trial court believed that the execution of the Release of Claim discharged the petitioner and its insurance. Only the parents of the injured passenger appealed.
However, the Supreme Court sustained the dismissal, ruling that since the suit was for breach of contract of carriage, the real party-in-interest was the injured passenger because the latter is the contracting party.
Hence, his parents cannot maintain an action because they are not real parties-in-interest in an action for breach of contract of carriage. It is the person whose contractual right has been invaded who must bring every action based on contract.
Sanico v. Colipano:
The Supreme Court explained that only the operator can breach the contract of carriage. Hence, it is only the operator who can be sued by the passenger.
The driver is not a party to the contract. The obligation to carry the passenger to her destination is with the operator.
The Court cited the previous ruling in Soberano v. Manila Railroad Co. to the effect that a complaint for breach of a contract of carriage should be dismissed against the employee who was driving the bus because the parties to the contract of carriage are only the passenger and the bus owner/operator.
There may be cases, however, when the party who contracted with the carrier is not the passenger.
Example:
An employer may hire the services of a bus company to ferry its passengers to a particular destination. This may include bus services that are provided by carriers in bringing employees to and from company premises.
There may likewise be cases when a school will hire the services of common carrier to provide transportation to its students and faculty so that they can attend an event.
These are often covered by written agreements that bind the employer or school and the bus service provider.
Breach of the provisions of the agreement will entitle one party to file an action against the other. However, whether or not there is a written agreement, the carrier owes a duty of extraordinary diligence directly to the passengers.
Carriage of Goods.
The parties when the contract is for carriage of goods are:
the shipper and
the carrier
The shipper is the person who delivers the goods to the carrier for transportation.
The shipper is the person who pays the consideration or on whose behalf payment is made.
Consignee.
The consignee is the person to whom the goods are to be delivered.
The consignee may be the shipper himself as in the case where the goods will be delivered to one of the branch offices of the shipper.
However, the consignee may be a third person who is not actually a party to the contract of carriage.
When Consignee is bound by Contract.
Nevertheless, there are instances when the third-party consignee is bound by the agreement between the shipper and the carrier even if the consignee is not the contracting party.
Everett Steamship Corporation v. Court of Appeals, et al., G.R. No. 122494, October 8, 1998, 297 SCRA 496, 505:
The Supreme Court ruled that the consignee is bound by the terms and conditions of the bill of lading where it was established that he accepted the same and is trying to enforce the agreement.
The Court explained in that while the bill of lading is oftentimes drawn up by the shipper/consignor and the carrier without the intervention of the consignee, however, the latter can be bound by the stipulations of the bill of lading:
"In sum, a consignee, although not a signatory to the contract of carriage between the shipper and the carrier, becomes a party to the contract by reason of either:
the relationship of agency between the consignee and the shipper/consignor;
the unequivocal acceptance of the bill of lading delivered to the consignee, with full knowledge of its contents: or
availment of the stipulation pour autrui, i.e., when the consignee, a third person, demands before the carrier the fulfillment of the stipulation made by the consignor/shipper in the consignee's favor, specifically the delivery of the goods/cargoes shipped.
Sub-contractor.
If the carrier sub-contracts the transportation of goods or hire another to transport the goods, the sub-contractor is not directly liable to the consignee for the loss of the cargo if the cause of action is for breach of contract.
The sub-contractor has no direct contractual relationship with the consignee and he is not part of the contract between the carrier and the consignee.
If at all, the consignee's cause of action against the sub-contractor could only arise from quasi-delict, as a third party suffering damage from the action of another due to the latter's fault or negligence, pursuant to Article 2176 of the Civil Code.
Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine Insurance Co., Inc.:
The sub-contractor, whose employee is the primary suspect in the hijacking or robbery of the shipment, did not have any contractual relationship with the consignee or the shipper.
The sub-contractor was not a party to the contract of carriage, hence, its liability to the consignee, if any, cannot be based on contract.
The carrier remains liable to the shipper/consignee; there is no privity of contract between the shipper/consignee and the sub-contractor.
However, the carrier has the right to be reimbursed by the sub-contractor for whatever damages that it may be made to pay to the consignee due to the fault of the sub-contractor.
The sub-contractor is the carrier of the carrier.
Hence, in the claim for reimbursement, the presumption of negligence that applies to common carriers also applies.
Orient Freight International, Inc. v. Keihin-Everett Forwarding Company Inc.:
Keihin-Everett Forwarding Company, Inc. was hired by Matsushita Communication Industrial Corporation to provide trucking services. The services were sub-contracted by Keihin- Everett to Orient Freight International, Inc. (sub-contractor).
However, the case involved the liability of the sub-contractor who, knowing that its truck was hijacked, did not report the same incident but instead reported that the truck was towed to avoid obstruction.
The negligence of the sub-contractor resulted in the cancellation of the contract between Keihin-Everett and Matsushita to the damage and prejudice of Keihin-Everett.
6. Laws governing contracts of carriage/transportation contracts
Common carriers shall be governed by the following laws:
Coastwise Shipping
New Civil Code (Arts. 1732-1766) — primary law;
Code of Commerce — governs suppletorily in absence of Civil Code provisions.
Carriage from Foreign Ports to Philippine Ports
New Civil Code — primary law;
Code of Commerce — all matters not regulated by the Civil Code;
Carriage of Goods by Sea Act — suppletorily to the Civil Code.
Carriage from Philippine Ports to Foreign Ports
The laws of the country to which the goods are to be transported (Art. 1753, Civil Code)
Overland Transportation
New Civil Code — primary law;
Code of Commerce — suppletorily.
Air Transportation
New Civil Code;
Code of Commerce;
For International Carriage - Convention for the Unification of Certain Rules Relating to the International Carriage by Air or "Warsaw Convention" with its amendments.
7. Classification of transport network vehicle services and transport network companies
Transport Network Company or TNC is defined as an O-PATFC-IBTDP-CPD-PV
organization whether a corporation, partnership, or sole proprietor, that provides pre-arranged transportation services for compensation using an internet-based technology application or a digital platform technology to connect passengers with drivers using their personal vehicles.
Transport Network Vehicle Service or TNVS refers to a TNC-accredited private vehicle owner, which is a common carrier, using the internet based technology application or digital platform technology transporting passengers from one point to another, for compensation.
The TNVS cannot operate as a common carrier outside of or independent from the use of the internet-based technology of the TNC or TNCs to which they are accredited.
TNVs and TNCs are expressly considered common carriers.
They are subject to full regulation and supervision by the LTFRB, including but not limited to:
Application and approval/ denial of franchise,
Setting of fares, routes, operating conditions, and
Imposition of fines, suspension, and cancellation of franchise.
Note re: (b) setting of fares:
Case No. CO-EB-2018-04-0039, Accreditation No. 2015-TNC-001:
In 2017, MyTaxi.PH, Inc. (GRAB) filed a case before the LTFRB which did not reach the Supreme Court, LTFRB held that under D.O. 2015-011 then in force, a TNC is not granted unilateral authority to set fares as the same would be constitutive of an undue delegation of legislative authority.
Subsequently, D.O. 2017-011 and D.O. 2018-013 were issued, removing the “confusing language” of D.O. 2015-011 and explicitly stating that rate-fixing authority shall be limited to the LTFRB in accordance with the law.
DOTr D.O. No. 2018 012:
The LTFRB shall grant the TNCs and their accredited TNVS a Certificate of Public Convenience (CPC) upon full compliance of jurisdictional requirements, as may be determined by LTFRB.
The LTFRB shall also set the fare for the TNVS after public hearing or in consultation with the TNCs and TNVS.
LTFRB v. Valenzuela and DBDOYC, Inc. G.R. No. 242860 (2019)]:
Despite the limited market scope of its app, Angkas’ bikers offer transportation services to willing public consumers and these services may be readily accessed by anyone who chooses to download the Angkas app. While they may refuse to offer their service by simply not going online or not logging in, when they do log in, they make their services publicly available.
As such, DBDOYC (Angkas) is a transportation provider and its accredited drivers are common carriers.
What are transportation network companies (TNCs)?
These are persons or entities which use online-enabled platforms to connect passengers with drivers using their personal and non-commercial vehicles. TNCs in the Philippines include Grab and Uber.
Compared to taxicabs, TNCs offer advantages to riders including the ability to request service via mobile map or website, track the location of the driver, and get a receipt via email.
In other words, it provides pre-arranged transportation services for compensation using an internet-based technology application or digital platform technology to connect passengers with drivers using their personal vehicles.
Are TNCs considered common carriers?
The legal status of TNCs is not yet clearly defined. They are currently being regulated by the Land Transportation Franchise Regulatory Board. It is submitted though that they are not common carriers.
TNCs are technology companies that do not provide transportation services and they are not transportation providers.
They merely link customers with third party drivers and are not parties to the transportation contract.
Also, TNC drivers can go "offline" if desired and can decide to accept or reject a ride request according to their personal travel itinerary as opposed to common carriers which engage in continuous offer.
It is further submitted that they are akin to a freight forwarder.
They only arrange the vehicles/vessels for the passengers and as such, should not be treated as common carriers.
They should be held liable for damage though if there is negligence in vetting and choosing the vehicle owners whom the TNCs accredited as part of their system.
What is a transportation network vehicle service?
It refers to a TNC-accredited private vehicle owner, which is a common carrier, using the internet-based technology application or digital platform technology transporting passengers from one point to another, for compensation.
The TNVS cannot operate as a common carrier outside or independent from the use of the internet based technology of the TNCS to which they are accredited.
Q: Kotse Corp. is an entity that provides pre-arranged transportation services for a fee using an online-enabled platform technology that connects passengers with drivers using their own vehicles. (a) Is Kotse Corp. a common carrier? Explain briefly.
Kotse Corporation is a transportation network company (TNC), one which uses online enabled platform technology to connect passengers with drivers using their own vehicles.
Kotse Corporation is not a common carrier because it does not provide transportation service. It is only a transportation provider. It merely links the customers with the third-party drivers and is not a party to the transportation contract.
House Bill 1260 of the 18th Congress, citing Crisostomo v. Court of Appeals (G.R. No. 138334, August 25, 2003), applied by analogy TNC with a travel agency which merely arranges the booking of a person but the actual act of transporting the customer is done by an airline.
Given the nature of its services, Kotse Corporation is also akin to a freight forwarder. It only arranges the means of transportation for the passengers and as such, should not be treated as common carrier.
It should be held liable for damage though if there is negligence in vetting and choosing the vehicle owners whom Kotse accredited as part of its system.
(b) Are the drivers engaged in common carrier service? Explain briefly.
Drivers engaged by TNC, like Kotse Corporation, are considered common carriers. (DOTR D.O. No. 2018-12, dated June 11, 2018)
Alternative answer: No, the TNC drivers can go "offline" if desired and can decide to accept or reject a ride request according to their personal travel itinerary as opposed to common carriers which engage in continuous offer.
Land Transportation Franchise Regulatory Board (LTFRB) and the Department of Transportation v. Hon. Carlos Valenzuela as Presiding Judge of the RTC of Mandaluyong, Branch 213, G.R. No. 242860, March 11, 2019:
The Supreme Court stated that TNC like Angkas, practically functions as a booking agent or at the very least, acts as a third-party liaison for its accredited bikers, while the accountability of the TNVS as a common carrier attaches from the time the TNVS is online and offers its services to the riding public.
Based on this Supreme Court resolution, it seems that it is the TNVS and not the TNC, which is considered a common carrier, and therefore engaged in public service.
It should, however, be pointed out that the issue in the foregoing case is the legality and propriety of the writ of preliminary injunction issued by the RTC of Mandaluyong restraining the LTFRB and DOTR from interfering in the operations of DBDOYC, the petitioner.
In this case, DBDOYC, a private domestic corporation, operates Angkas, an online and on-demand motorcycle-hailing mobile application that pairs drivers of motorcycles with potential passengers without, however, obtaining a certificate of TNC accreditation from the LTFRB. It accredited Angkas drivers and allowed them to operate their transportation services to the public despite their absence of Certificate of Public Convenience. It filed a petition for declaratory relief with the RTC of Mandaluyong to determine the legality of certain issuances of DOTR that affect Its operations, with prayer for injunctive relief.
In essence, the Petitioner argued that it is not a public transportation provider since Angkas is a mere tool that connects the passengers and the motorcycle driver and LTFRB and DOTR have no jurisdiction over them. The court granted the application of DBDOYC and ruled that DBDOYC has the right to enter into an independent contract with its Angkas riders as application provider and petitioner's business not yet subject to any regulation nor prohibited by existing laws. he Supreme Court set aside the preliminary injunction and ordered the RTC to conduct further proceedings to resolve the main petition with dispatch. As of this writing, there is no resolution yet on the petition.
8. Diligence required of common carriers (Art. 1733, NCC)
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 passengers transported by them according to all the circumstances of each case.
Thus, under Article 1735 of the same Code, in all cases other than those mentioned in Article 1734 thereof, the common carrier shall be presumed to have been at fault or to have acted negligently, in case of death or injury to passengers or loss or damage to goods, unless it proves that it has observed the extraordinary diligence required by law.
The notion of common carriers is synonymous with public service under Commonwealth Act No. 146 or the Public Service Act.
Due to the public nature of their business common carriers are compelled to exercise extraordinary diligence since they will be burdened with the externalities or the cost of the consequences of their contract of carriage if they fail to take the precautions expected of them.
Common carriers are mandated to internalize or shoulder the costs under contracts of carriage.
This is so because a contract of carriage is structured in such a way that passengers or shippers surrender total control over their persons or goods to common carriers, fully trusting that the latter will safely and timely deliver them to their destination.
In light of this inherently inequitable dynamic and the potential harm that might befall passengers or shippers if common carriers exercise less than extraordinary diligence, the law is constrained to intervene and impose sanctions on common carriers for the parties to achieve allocative efficiency.
In a contract of carriage, it is presumed that the common carrier is at fault or is negligent when a passenger dies or is injured.
In fact, there is even no need for the court to make an express finding of fault or negligence on the part of the common carrier.
This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence.
Heirs of Jose Marcial K. Ochoa namely: Ruby B. Ochoa, Micaela B. Ochoa and Jomar B. Ochoa v. G & S Transport Corporation, G.R. No. 170071, March 9, 2011:
The fact that the driver of the vehicle was acquitted in the criminal action for reckless imprudence has no bearing on the liability of the carrier arising from breach of contract of carriage.
The trial court is not required to make an express finding of the common carrier's fault or negligence.
The presumption of negligence applies so long as there is evidence showing that:
a contract exists between the passenger and the common carrier; and
the injury or death took place during the existence of such contract.
In such event, the burden shifts to the common carrier to prove its observance of extraordinary diligence, and that an unforeseen event or force majeure had caused the injury.
However, for a common carrier to be absolved from liability in case of force majeure, it is not enough that the accident was caused by a fortuitous event. The common carrier must still prove that it did not contribute to the occurrence of the incident due to its own or its employees' negligence.
Is extraordinary diligence required only in the transportation of passengers and carriage of goods?
No. Common carriers are required to exercise extraordinary diligence in the performance of their obligations under contracts of carriage. This extraordinary diligence must be observed not only in the transportation of goods and services but also in the issuance of the contract of carriage, including its ticketing operations.
The common carrier's obligation to exercise extraordinary diligence in the issuance of the contract of carriage is fulfilled, however, by requiring a full review of the flight schedules to be given to a prospective passenger before payment. Thus, even assuming that the ticketing agent encoded the incorrect flight information, it is incumbent upon the purchaser of the tickets to at least check if all the information is correct before making the purchase. Once the ticket is paid for and printed, the purchaser is presumed to have agreed to all its terms and conditions.
9. Liabilities of common carriers
Who is liable in case of breach of contract of carriage? The operator or the driver or both?
If the cause of action is based on a breach of a contract of carriage, the liability of the owner/operator is direct as the contract is between him and the passenger.
The driver cannot be made liable as he is not a party to the contract of carriage.
The driver, however, may be sued based on quasi-delict and/or criminally if his negligence can be established.
Q: At around 4:00 p.m. of December 25, 2020, Christmas Day Queenie and her child, Paeng, boarded a jeepney being operated by Emil and driven by Amor. Queenie was made to sit on an empty beer case at the edge of the rear entrance/ exit of the jeepney with her sleeping child on her lap. When they reached an uphill incline on the road, the jeepney slid backwards. Queenie pushed both her feet against the step board to prevent herself and her child from being thrown out of the exit, but because the step board was wet, her left foot slipped and was crushed between the step board and the coconut tree which halted the jeepney's backward motion, As a result, Queenie's leg was badly injured and had to be amputated. Queenie then sued Emil and Amor for breach of contract of carriage. Emil and Amor countered that the injuries Queenie sustained were due to her own fault since Amor had instructed everyone not to panic, but Queenie nevertheless tried to disembark which caused her foot to be crushed. If you were the judge, would you hold Emil and Amor solidarily liable? Explain briefly.
I will not hold Emil and Amor solidarily liable. Only Emil, the vehicle operator is liable. The facts of the question are on all fours with the case of Jose Sanico v. Werherlina Colipano, G.R. No. 177116, February 27, 2013 in which the Supreme Court ruled that if the cause of action is based on a breach of a contract of carriage, the liability of the owner/operator is direct as the contract is between him and the passenger.
The driver cannot be made liable as he is not a party to the contract of carriage. The obligation to carry the passenger safely to his destination was with the operator and the elements of a contract of carriage exist between the operator and the passenger. Thus, a complaint for breach of a contract of carriage is dismissible as against the employee who was driving the bus because the parties to the contract of carriage are only the passenger, the bus owner, and the operator.
The driver, however, may be sued based on quasi-delict and/or criminally if his negligence can be established.
Are common carriers liable for injuries to passengers even if they have observed ordinary diligence and care? Explain.
Yes, common carriers are liable to injuries to passengers even if the they observed ordinary diligence and care because the obligation imposed upon them by law is to exercise extraordinary diligence.
Common carriers are bound to carry 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.
Is the presumption of fault or negligence applicable only in case of death or injury to passengers or loss or damage to goods?
No, it also applies in case of any breach in the contract of carriage, such as when the passenger was not able to board despite being given a boarding pass.
Thus, when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date.
If that does not happen, then the carrier opens itself to a suit for breach of contract of carriage.
In an action based on a breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent.
All he has to prove is the existence of the contract and the fact of its non-performance by the carrier, through the latter's failure to carry the passenger to its destination.
It was also held that if a passenger's accommodation is downgraded from first class to economy, the carrier is liable for breach of contract of carriage.
Cathay Pacific Airways, Ltd. vs. Spouses Daniel Vazquez and Maria Luisa Madrigal Vazquez, G.R. No. 150843. March 14, 2003:
The carrier was made liable for insisting on the upgrade of the passenger from business class to first class accommodation.
The Supreme Court held that priority upgrading is a privilege which, like all privileges, can be waived.
By insisting on the upgrade, despite the passengers' waiver, the carrier breached its contract of carriage.
Cases:
Facts:
Ernesto Cendana, a junk dealer, transported used bottles and scrap metal from Pangasinan to Manila using his two six-wheeler trucks.
On return trips, he hauled cargo for various merchants at lower rates.
In November 1970, Pedro de Guzman contracted Cendana to haul 750 cartons of Liberty filled milk from Makati to Urdaneta, Pangasinan.
150 cartons were delivered, but the truck carrying 600 cartons was hijacked in Paniqui, Tarlac, resulting in the loss of the goods.
De Guzman sued Cendana for P22,150, plus damages and attorney's fees, claiming Cendana was a common carrier who failed to exercise extraordinary diligence.
Issues:
Was Cendana a common carrier?
Yes. The Supreme Court held that under Article 1732 of the Civil Code, Cendana was a common carrier despite his principal business being junk dealing. The definition of a common carrier under the law includes those who carry goods for compensation, whether regularly or occasionally, and whether or not they have a certificate of public convenience.
Was Cendana liable for the lost goods?
No. The Supreme Court found that the hijacking, which involved armed men acting with "grave or irresistible threat, violence or force," constituted a fortuitous event. Under Article 1745(6) of the Civil Code, a common carrier is not liable for the loss caused by such acts if they are beyond the carrier's control. As such, Cendana was not liable for the lost cartons.
Facts:
MT Vector and MV DoΓ±a Paz, owned by Sulpicio Lines, Inc., collided near Dumali Point, between Marinduque and Oriental Mindoro, causing a fire and resulting in nearly all passengers and crew on both vessels perishing. Only 24 survivors were rescued from MV DoΓ±a Paz.
An investigation found MT Vector, its operator Francisco Soriano, and Vector Shipping Corporation at fault for the collision.
The families of victims,filed a complaint for damages against Sulpicio Lines, Inc.
Sulpicio then filed a third-party complaint against Vector Shipping Corporation, Francisco Soriano, and Caltex, alleging that Caltex negligently chartered the unseaworthy MT Vector.
Issue:
Whether the charterer of a sea vessel (Caltex) is liable for damages resulting from a collision between the chartered vessel (MT Vector) and a passenger ship (MV DoΓ±a Paz).
Ruling:
Charterer's Liability: Under Philippine Maritime laws, a charterer is not liable for damages resulting from such collisions if the vessel remains under the control of its owner. Caltex, as a mere voyage charterer, had the right to presume the ship's seaworthiness.
Nature of the Contract: The contract between Caltex and Vector was a contract of affreightment (voyage charter), which did not convert the common carrier into a private one.
MT Vector as a Common Carrier: The vessel was deemed a common carrier, and thus, the ship owner retained responsibilities, including ensuring seaworthiness.
No Liability for Caltex: Caltex was found not liable for damages as it acted within its rights as a charterer and was entitled to assume that the vessel met all legal requirements for seaworthiness. The Court affirmed the liability of Vector Shipping Corporation, while absolving Caltex from any obligation to indemnify Sulpicio Lines, Inc.
Facts:
Pag-asa Sales, Inc. contracted Coastwise Lighterage Corporation to transport molasses.
During transport, a barge hit a submerged object, contaminating the cargo.
Pag-asa's insurer, PhilGen, paid for the loss and sued Coastwise.
Issues:
Whether Coastwise was a private carrier (NO).
Petitioner’s contract with Pag-asa Sales, Inc. is identified as a contract of affreightment. Thus, petitioner remained a common carrier and liable as such.
As a common carrier, petitioner is presumed negligent if goods are damaged in transit, unless they prove extraordinary diligence. This presumption was not rebutted.
The damage to the barge was due to hitting a submerged derelict vessel. Evidence showed the vessel’s patron was unlicensed, violating legal requirements. This lack of proper qualification likely contributed to the accident.
Whether PhilGen had subrogation rights (YES).
Since the cargo's insurer, PhilGen, paid for the damages, it was subrogated to the rights of Pag-asa Sales, Inc. against the petitioner in accordance with Article 2207 of the Civil Code.
Facts:
Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), is a customs broker.
Petitioner agreed to transport 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from Manila Port to San Miguel Corporation’s (SMC) warehouse. The cargo was insured by UCPB General Insurance Co., Inc.
On July 14, 1990, the cargo arrived on "M/V Hayakawa Maru" and was transferred to Manila Port Services, Inc. after 24 hours.
Petitioner withdrew the cargo between July 23 and July 25, 1990, and delivered it to SMC’s warehouse.
On July 25, 1990, Marine Cargo Surveyors found damage to 15 reels of semi-chemical fluting paper and 3 reels of kraft liner board, with damage estimated at P93,112.00.
SMC collected the amount from UCPB. UCPB, as the insurer (subrogee), sued petitioner.
Issue:
Whether the Court of Appeals erred in classifying petitioner as a common carrier rather than a private carrier. NO
Petitioner argued that she is a private carrier because she does not offer her services to the public indiscriminately but only to select parties.
Petitioner must be classified as a common carrier because transporting goods is integral to her business. Denying this classification would deprive contracting parties of legal protections afforded to common carriers.
Common carriers must exercise extraordinary diligence in handling and safeguarding goods, as mandated by public policy. The Marine Cargo Survey Report indicated that the goods were in good condition when transferred from the vessel. Petitioner withdrew the cargo without exception and delivered it damaged.
No damage was reported by the arrastre operator when the cargo was withdrawn. Petitioner failed to prove extraordinary diligence or that damage was due to external causes.
Common carriers are not liable for damage if it is due to the nature of the goods or defects in packing. However, the carrier must be aware of or observe defects and accept the cargo without protest. Petitioner accepted the cargo despite visible defects.
Sps. Cruz v. Sun Holidays, Inc., G.R. No. 186312, June 29, 2010
Facts:
On September 11, 2000, the boat M/B Coco Beach III capsized en route from Puerto Galera to Batangas, killing Ruelito Cruz and his wife. They had stayed at Coco Beach Island Resort, owned by Sun Holidays, Inc. (respondent).
Spouses Dante and Leonora Cruz (petitioners) demanded ₱4,000,000 in damages.
Respondent offered ₱10,000, which was declined.
Defense:
Respondent argued it is not a common carrier as it only services Resort guests.
Respondent claimed adherence to safety protocols and attributed the accident to a fortuitous event (a squall).
Captain Bonquin stated the boat met all required conditions before sailing.
Issue: Whether respondent is a common carrier.
Yes, respondent is a common carrier.
The Court defined "common carrier" under Article 1732 of the Civil Code, which includes entities offering transportation services to the public, regardless of the nature or frequency of the service.
Respondent is a common carrier because its ferry services are integral to its main business (resort operations).
The ferry services are available to the public through tour packages, even if no separate fee is charged for them. It is implied that the ferry service costs are included in the tour package price.
If a passenger dies or is injured, the common carrier is presumed negligent, and this presumption is overcome only by proving extraordinary diligence.
The Court found that the weather conditions (squalls) were foreseeable, and the boat had pre-existing engine trouble. The Court held that the respondent did not exercise due diligence and thus failed to prove that the event was entirely beyond its control.
First Philippine Industrial Corporation v. CA, G.R. No. 125948, December 29, 1989
Facts:
Petitioner, First Philippine Industrial Corp. (FPIC), holds a pipeline concession under Republic Act No. 387, originally granted in 1967 and renewed in 1992.
In January 1995, FPIC applied for a mayor's permit in Batangas City.
The City Treasurer required payment of a local tax based on gross receipts for 1993, totaling P956,076.04. FPIC paid P239,019.01 for the first quarter under protest.
FPIC argued that it should be exempt from the local tax under Section 133 of the Local Government Code, claiming that pipeline operations are not subject to local business taxes.
Issue: Whether the petitioner is a common carrier or a transportation contractor. YES
The Supreme Court held that FPIC qualifies as a common carrier.
According to Article 1732 of the Civil Code, a common carrier is defined as any entity engaged in transporting goods or passengers for compensation.
The court found that FPIC’s pipeline operations fit this definition as it transports petroleum products for hire and serves all clients indiscriminately.
Limited clientele does not exclude it from being a common carrier.
Legal Interpretations:
Civil Code (Art. 1732): No distinction between regular and occasional transportation services or between services to the general public and a narrower segment.
Public Service Act: Includes various public services, confirming that common carriers are part of public service.
Petroleum Act (Republic Act 387): FPIC is considered a common carrier under this Act. Pipeline concessionaires must use their facilities for transporting petroleum for others as well.
Bureau of Internal Revenue Ruling: FPIC is classified as a common carrier and is not subject to withholding tax.
Local Government Code (Sec. 133(j)): The definition of common carrier includes any mode of transportation (land, water, air) and does not necessitate motor vehicles.
The legislative intent behind Section 133 was to prevent duplication of taxes, such as the (3%) percent common carrier’s tax already paid under national law.
Facts:
Estela L. Crisostomo contracted Caravan Travel and Tours International, Inc. for a "Jewels of Europe" tour package, with a total cost of P74,322.70.
Petitioner missed her flight for the tour due to incorrect information provided by Meriam Menor, a respondent's employee, leading her to miss the entire "Jewels of Europe" tour.
Crisostomo agreed to a substitute "British Pageant" tour, making an additional partial payment of US$300.
Upon return, Crisostomo demanded a refund of P61,421.70, the difference between the two tours' costs. Respondent refused, citing non-refundable payments as per industry practice.
respondent, as a common carrier, was required to exercise extraordinary diligence. She claimed her negligence was merely contributory and sought a refund for the unavailed tour.
Issue: Whether respondent did not observe the standard of care required of a common carrier when it informed her wrongly of the flight schedule. NO
The Supreme Court ruled that the respondent is not a common carrier but a travel agency, thus not obligated to observe extraordinary diligence under the law.
The Court determined that the respondent's duty was to act as a "good father of a family," exercising reasonable care.
The Court found that Menor's alleged negligence was not sufficiently proven, noting that her absence as a witness was due to her working abroad, not intentional suppression of evidence.
The respondent fulfilled its contractual obligations, including delivering the travel documents in advance and ensuring proper booking.
The Court concluded that Crisostomo's failure to read her travel documents was the primary reason for missing the flight.
Facts:
Spouses Teodoro and Nanette PereΓ±a operated a transportation service for students using a KIA Ceres van.
The van, driven by Clemente Alfaro, collided with a PNR train, killing 15-year-old Aaron Zarate.
The collision occurred at an unmanned railroad crossing where the van followed a bus and was struck by an oncoming train.
The Zarates, parents of Aaron, sued the PereΓ±as, Alfaro, PNR, and the train operator for damages due to breach of contract and negligence.
Issue: Whether the PereΓ±as and PNR were jointly and severally liable for damages. NO
The PereΓ±as were considered common carriers, and thus, required to exercise extraordinary diligence in ensuring passenger safety.
The Court held that the PereΓ±as failed to rebut the presumption of negligence as they did not present sufficient evidence to prove they exercised the required extraordinary diligence.
The van driver’s negligence, including taking an unauthorized route, playing loud music, and failing to stop before crossing the tracks, was established.
The PNR was also found negligent for failing to implement safety measures at the crossing, despite being aware of the risks.
Both the PereΓ±as and the PNR were held to be joint tortfeasors, and their combined negligence caused the death of Aaron Zarate.
Marubeni American Corporation shipped 3,150 metric tons of wheat to General Milling Corporation, insured by Prudential Guarantee and Assurance, Inc.
Asia Lighterage and Shipping, Inc. was contracted to deliver the cargo from the vessel to the consignee's warehouse in Manila.
900 metric tons were loaded onto barge PSTSI III, but transport was delayed due to a typhoon.
The barge sustained damage during the storm and eventually sank, resulting in the total loss of the remaining cargo.
The consignee filed claims, and the insurer indemnified the consignee, then sought recovery from Asia Lighterage.
Issues:
Whether Asia Lighterage is a common carrier: YES
The Court ruled that Asia Lighterage is a common carrier based on the definition in Article 1732 of the Civil Code, which does not require the carrier to have fixed routes, terminals, or issue tickets.
Whether Asia Lighterage exercised extraordinary diligence: NO
Common carriers must exercise extraordinary diligence over goods. Despite claiming the typhoon as force majeure, Asia Lighterage failed to prove the typhoon was the sole cause of the loss. The barge sustained earlier damage, and the patchwork repairs were insufficient. The decision to proceed despite knowledge of the incoming typhoon and the subsequent sinking due to human negligence, not the typhoon, established a lack of due diligence.
Facts:
Kinsho-Mataichi Corporation shipped 197 metal containers of tin-free steel from Kobe, Japan, to San Miguel Corporation (SMC) in Manila via M/V Golden Harvest owned by Westwind Shipping Corporation.
The shipment was insured by UCPB General Insurance Co., Inc.
Upon arrival in Manila, six containers were damaged during unloading by Asian Terminals, Inc. (ATI), and nine more were found damaged upon delivery to SMC’s warehouse by the Orient Freight International, Inc. (OFII).
SMC filed claims against UCPB, Westwind, ATI, and OFII.
UCPB paid the claim and then sued the parties involved.
Issues:
Whether Westwind, and not ATI, is responsible for the six damaged containers/skids at the time of its unloading. YES
The Supreme Court held that the carrier's responsibility continues until the goods are fully unloaded and delivered to the consignee or their agent. Thus, Westwind was liable as the unloading was incomplete when the damage occurred.
Whether OFII is liable for the additional nine damaged containers/skids. YES
The Court held that OFII, as a customs broker, is considered a common carrier and must exercise extraordinary diligence. Since OFII failed to prove it took such care, it was presumed negligent and held liable for the nine additional damaged containers.
The extraordinary diligence required of common carriers extends until the cargo is fully delivered.
A customs broker can be considered a common carrier if the transportation of goods is part of its services, and it must exercise extraordinary diligence.
The responsibility for damages during unloading rests with the carrier until the process is fully completed.
B. Vigilance over Goods (Arts. 1734 to 1754, NCC)
1. Liability from loss; presumption of negligence
The liability of the common carrier with respect to vigilance over goods, in general, are as follows:
Common carriers are responsible for the loss, destruction, or deterioration of the goods [Art. 1734, Civil Code].
In fact, they are liable even in those cases where the cause of the loss or damage is unknown.
If the goods are lost, destroyed, or deteriorated, common carriers are presumed to have been at fault or to have acted negligently. [Art. 1735, Civil Code].
Note: Two-pronged analysis in determining liability:
Whether or not the cause of the loss, destruction, or deterioration is included under Art. 1734;
If not, whether the common carrier exercised extraordinary diligence or not.
Presumption of Negligence General Rule:
General Rule: Common carriers are responsible for the loss, destruction, or deterioration of the goods.
Exception: Common carriers are not liable when such loss, destruction, or deterioration is due to any of the following causes only: NAA-CD-O
Flood, storm, earthquake, lightning, or other natural disaster or calamity;
Act of the public enemy in war, whether international or civil;
Act or omission of the shipper or owner of the goods;
The character of the goods or defects in the packing or in the containers;
Order or act of competent public authority [Art. 1734, Civil Code].
In all other cases of loss, destruction, or deterioration, the common carrier is presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence [Art. 1735, Civil Code].
To avail of the exceptions or defenses, the following are the common requisites:
Any of them is the proximate and only cause of the loss, damage or deterioration.
The carrier did not negligently incur delay or deviated from the stipulated or usual route without just cause
2. Exemption from liability
1. Natural Disaster or Calamity
Requisites:
The natural disaster must have been the proximate and only cause of the loss;
The common carrier must exercise due diligence to prevent or minimize the loss before, during and after the occurrence of the flood, storm, or natural disaster [Art. 1739, Civil Code]; and
The common carrier must not have negligently incurred delay [Art. 1740, Civil Code].
Eastern Shipping Lines v. IAC, G.R. No. L-69044 (1987):
Fire may not be considered a natural disaster or calamity because it arises almost invariably from some act of man or by human means.
It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity.
Storm.
The presence of the storm is determined by the velocity of the wind.
According to Beaufort's wind scale, a storm has a wind velocity of 64 to 74 miles per hour. According to Philippine Weather Bureau, to classify the wind as a storm, the velocity must be from 55 to 74 miles per hour.
In air transportation, the cancellation of the flight due to typhoon does not amount to a breach of contract of carriage because typhoon is an extraordinary and unavoidable event provided the airline did not act in bad faith, fraudulent, reckless or oppressive manner.
Fortuitous event/force majeure is a defense of the common carrier under Article 1174 and not under Article 1734.
The essential characteristics of fortuitous event are:
the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will;
it must be impossible to foresee the event which constitutes the 'caso fortuito,' or if it can be foreseen, it must be impossible to avoid;
the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and
the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.
Hijacking.
Hijacking may or may not be considered as a fortuitous event/force majeure.
Hijacking is not one of the defenses of a common carrier under Article 1734 but it could free the common carrier from liability under Article 1174 as a fortuitous event/force majeure if it is coupled by grave or irresistible force and without negligence on the part of the common carrier.
Fire.
Fire may be considered fortuitous event under Article 1174.
However, it may not be considered a fortuitous event/force majeure that would free the common carrier from liability under Article 1174 if it arises due to act of man or by human means or when there is negligence on the part of the common carrier.
If the fire was caused by the negligence of the employee of the common carrier, fire is not an exempting circumstance and the common carrier is liable.
Fire is considered fortuitous event/force majeure if the common carrier is not guilty of negligence, has advised the consignee of the arrival of the cargoes and has given the consignee a reasonable time to release the cargoes before the fire broke out.
Mechanical Defects.
Mechanical defects are not one of the defenses under Article 1734, neither they are considered force majeure under Article 1174 that would free the common carrier from liability.
Tire blow-out.
The proof that the tire is new and of good quality is not sufficient proof that the common carrier is not negligent if said tire explodes. It is the burden of the common carrier to prove that the cause of the blowout was a fortuitous event.
It is not incumbent upon the plaintiff to prove that the cause of the blowout is not caso fortuito.
The common carrier is not exempt for accident due to the breakage of a faulty drag-link spring, steering knuckle, or defective brakes.
2. Act of Public Enemy
Requisites:
The act of the public enemy was committed either in an international or civil war [Art. 1734 (2), Civil Code];
The act of the public enemy must have been the proximate and only cause; and
The common carrier must exercise due diligence to prevent or minimize the loss before, during and after the act of the public enemy causing the loss, destruction or deterioration of the goods [Art. 1739, Civil Code].
It presupposes the actual existence of war.
It refers to the government of the foreign nation at war with the country to which the carrier belongs, though not necessarily with that to which the owner of the goods owes allegiance.
Example:
If a ship from the United States is sailing through waters near a war between Russia and Ukraine, Russia can capture and seize the ship, even if the owner of the cargo is from a neutral country like Canada.
Thieves, rioters, robbers, and insurrectionists, though at war with social order, are not in a legal sense classed as public enemies, but are merely private depredators for whose acts a carrier is answerable.
Pirates on the high seas, however, stand as an exception to this rule.
They are considered the enemies of all civilized nations, and indeed of the human race, and consequently their depredations on a common carrier will excuse him from liability.
A public enemy is a citizen of another country against which the Philippine government is at war.
The Congress, by a vote of two-thirds of both Houses in joint session assembled, voting separately, shall have the sole power to declare the existence of a state of war.
3. Act or omission of shipper or owner
The act or omission of the shipper must have been the proximate and only cause of the loss, destruction, or deterioration of the goods.
If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause being the negligence of the common carrier, the latter shall be liable for the damages, which shall, however, be equitably reduced.
Compania Maritima v. Vicente Concepcion:
The shipper misdeclared the weight of the payloader as 2.5 tons instead of 7.5 tons.
The common carrier, without checking the correct weight of the pay loader despite the fact that the weighing was done by another party, used the 5-ton capacity lifting operator.
The payloader fell and resulted in total loss.
The Court ruled th.at the common carrier is liable but its liability is equitably reduced due to the contributory negligence or fault of the shipper.
4. Character of Goods Requisites
Requisites:
It must be the proximate and only cause of loss, destruction, or deterioration.
The loss, destruction, or deterioration of the goods is due to the character of the goods or defects in the packing or in the containers [Art. 1734 (4), Civil Code]; and
The common carrier must exercise due diligence to forestall or lessen the loss [Art. 1742, Civil Code].
Southern Lines v. CA, G.R. No. L 16629 (1962):
If the fact of improper packing is known to the carrier or its servants or apparent upon ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for loss or injury
As provided in COGSA, the carrier shall not be liable for:
Loss or wastage due to the inherent defect, quality or vice of goods;
Insufficiency of packing;
Insufficiency or inadequacy of the marks;
Latent defects not discoverable by due diligence.
The common carrier has the duty to prevent or minimize the loss even if it was not at fault. However, if the fact of the improper packing or defect in the container is known to the carrier or employees or apparent upon ordinary observation, this defect would not fall under exception and the carrier is liable.
To exempt the common carrier from liability, the container must be defective and not only made of inferior quality.
The word "defectiveness" is not synonymous with "inferiority."
"Defect" is the want or absence of something necessary for completeness or perfection; a lack or absence of something essential to completeness; a deficiency in something essential to the proper use for the purpose for which a thing is to be used.
On the other hand, inferior means of poor quality, mediocre, or second rate. A thing may be of inferior quality but not necessarily defective.
5. Order of Competent Authority
Requisites:
There must be an order or act of competent public authority through which the goods are seized or destroyed [Art. 1734 (5), Civil Code]; and
The said public authority must have had the power to issue the order [Art. 1743, Civil Code].
Ganzon v. CA, G.R. No. L-48757 (1988):
To be exempted from liability, the intervention of the competent public authority must be of a character that would render impossible the fulfillment by the carrier of the obligation
The public authority must have power or authority to issue an order to seize or destroy the goods and not just apparent power or authority.
Other factors that affect the liability of the common carrier.
Doctrine of the Last Clear Chance.
Last clear chance is a doctrine in the law of torts which states that the contributory negligence of the party injured will not defeat the claim for damages if it is shown that the defendant might, by the exercise of reasonable care and prudence, have avoided the consequences of the negligence of the injured party.
The person who had the last clear chance to avoid the mishap is considered in law. solely responsible for the consequences thereof.
This refers to a situation wherein both parties involved in the accident are negligent and the one who has the last clear chance of avoiding injury but failed to avoid it, is liable for such injury or damage.
This doctrine does not apply in the case of breach of contract of carriage. It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations, for it would be inequitable to exempt the negligent driver and its owner on the ground that the other driver was likewise guilty of negligence.
Emergency Rule.
Emergency rule means that the "one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless the emergency in which he finds himself is brought about by his own negligence.
Illustration:
Two boys suddenly intruded into the lane of the car.
The act of the driver of avoiding them which resulted in an accident does not make the driver guilty of negligence.
Proximate Cause.
The common carrier is liable for loss, destruction or deterioration of the goods, death or injury of the passenger if the proximate cause is the fault and negligence of the common carrier.
The contributory negligence of the shipper, owner, or passenger would not exempt but would equitably reduce the common carrier's liability. Proximate cause has been defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.
And more comprehensively, the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at he moment of his act or default that an injury to some person might probably result therefrom.
The presumption of fault or negligence yields the moment it is proven that the common carrier had observed extraordinary diligence.
Requirement of Absence of Negligence
If the common carrier is found to have acted negligently, it is precluded from invoking the exempting causes under Art. 1734, and will be liable for damages suffered by the goods it carried if such damages arise from its negligence.
The exempting circumstance should be the proximate and only cause of the loss, destruction, or deterioration of the goods for the common carrier to be exempted from liability on any of the following grounds:
Natural Disaster/Calamity
Act of Public Enemy
Character of the Goods
Presumption of Negligence.
There is a presumption that the common carriers are at fault or negligent if the goods are lost, destroyed or deteriorated.
The presumption of fault or negligence is established the moment there is evidence showing that:
a contract of carriage exists; and
the loss, damage or destruction to the goods took place during the existence of such contract.
Negligence.
Article 1173, Civil Code.
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 Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract 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.
3. Delay in delivery of cargo
Art. 1740, Civil Code:
To be free from responsibility on the ground of natural disaster/calamity, the common carrier should not have negligently incurred in delay.
The obligation of the carrier to carry cargo includes the duty not to delay their transportation, so that if the carrier is guilty of delay in the shipment of the cargo, causing damages to consignee, it will be liable.
General Rule: The natural disaster shall free the common carrier from responsibility in case of loss, damage and deterioration of the cargoes.
Exception: There is a presence of intentional delay without reason or delay due to negligence on the part of the common carrier.
The common carrier is free from liability for loss, damage or deterioration of the goods due to natural disaster if the delay is considered ordinary or reasonable delay.
Maersk Line v. Court of Appeals, 0.R. No. 94761, May 17, 1993.:
The Supreme Court held that the oft-repeated rule regarding a carrier's liability for delay is that in the absence of a special contract, a carrier is not an insurer against delay in transportation of goods.
When a common carrier undertakes to convey goods, the law implies a contract that they shall be delivered at destination within a reasonable time, in the absence, of any agreement as to the time of delivery.
The ruling in Maersk is the more accepted view.
Effects of delay as to the liability of the common carrier.
The carrier is liable for any loss or damage, including any pecuniary loss or loss of profit, which the passenger may have suffered by reason of delay.
Article 698 of the Code of Commerce addresses what happens when a voyage is interrupted due to:
Fortuitous event: Passengers must pay for the portion of the trip already completed, but they cannot claim compensation for any losses or damages.
Vessel's disability: Passengers have the right to claim indemnity (compensation). If a passenger chooses to wait for the vessel's repair, they won't be charged extra for the passage, but they will need to cover their own living expenses during the delay.
In case the vessel is not able to depart on time and the delay is unreasonable, the passenger may opt to have his/ her ticket immediately refunded without any refund service fee from the authorized issuing/ticketing Office
In case of unreasonable delay, the common carrier is liable and the natural disaster will not free it from liability.
4. Contributory negligence
If the shipper or owner merely contributed to the loss, destruction, or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.
On the other hand, even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.
The liability of the common carrier shall be equitably reduced when the loss, destruction, or deterioration of the goods when:
The negligence of the common carrier was the proximate cause thereof; and
The shipper or owner merely contributed to such loss, destruction, or deterioration
The "Proximate Cause" principle is the one that applies in determining the liability of the common carrier.
If the proximate cause of the loss,destruction or deterioration of the goods is due to the negligence or fault of the common carrier, the latter shall be liable for damages regardless whether there is a contributory fault or negligence on the part of the shipper or owner.
The effect of the contributory act of the shipper or owner is simply to equitably reduce the liability of the common carrier and not to absolve it.
The rule is different in the case of collision under the Code of Commerce.
Article 82i of the Code of Commerce 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 occasioned to their cargoes
This presupposes that there is a proximate cause and there is a contributory cause of collision but Article 827 states that each vessel shall bear its own damage and both are solidarily liable for the losses and damages to their cargoes.
The Doctrine of Contributory Negligence does not apply either in case the party at fault cannot be determined.
In this case, each shall suffer its own damages and both shall be solidarily liable for the damages/losses to their cargoes.
Negligence is failure to observe the degree of care, precaution, and vigilance that the circumstances justly demand, resulting to the injury of the other party.
Contributory negligence is a conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.
5. Duration of liability
Instances when carrier has responsibility to exercise extraordinary diligence:
From the time the goods are unconditionally placed in the possession of, and received by the carrier or its authorized agent, until the same are delivered actually and constructively by the carrier to the consignee or to the person who has a right to receive them;
When goods are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu
During storage in a warehouse of the carrier at the place of destination, until consignee has been advised of the arrival of the goods and has had reasonable opportunity to remove or dispose them [Art 1738, Civil Code].
In dealing with the contract of common carriage of passengers for purpose of accuracy, there are two (2) aspects of the same, namely:
the contract "to carry (at some future time)," which contract is consensual and is necessarily perfected by mere consent (See Article 1356, Civil Code of the Philippines), and
the contract "of carriage" or "of common carriage" itself which should be considered as a real contract for not until the carrier is actually used can the carrier be said to have already assumed the obligation of a carrier.
Note: The distinction is important in determining when the common carrier is required to exercise extraordinary responsibility. The birth of the contract is not necessarily the birth of the duty to exercise extraordinary responsibility.
5.1. Delivery of goods to common carrier
Delivery means unconditionally placing the goods in the possession of the carrier and the carrier receiving them for transportation [Art. 1736, Civil Code].
Unconditionally placing the goods in the possession of the carrier means the shipper cannot get them back from the common carrier at will.
Thus, the liability of the carrier as common carrier and its duty of extraordinary diligence begins with the actual delivery of the goods, not:
When the common carrier received the goods not for transportation but only for safekeeping; or
When a receipt or bill of lading is formally executed, since the issuance of a bill of lading is not necessary to complete delivery and acceptance.
In a contract of carriage for goods, when does the obligation to exercise extraordinary diligence commence and when does it end?
The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them.
Westwind Shipping Corporation v. UCPB General Insurance Co., G.R. No 2002289, November 25, 2013:
It was held that the liability of a common carrier does not cease by mere transfer of custody of the cargo to the arrastre operator. Like the duty of seaworthiness, the duty of care of the cargo is non-delegable and the carrier is accordingly responsible for the acts of the master, the crew, the stevedore, and his other agents. The fact that a consignee is required to furnish persons to assist in unloading a shipment may not relieve the carrier of its duty as to such unloading.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. Since the damage to the cargo was incurred during the discharge of the shipment and while under the supervision of the carrier, the latter is liable for the damage caused to the cargo.
5.2. Actual or constructive delivery
The extraordinary responsibility of the common carrier ends when, subject to Art. 1738, the goods are delivered actually or constructively by the carrier to:
The consignee; or
The person who has a right to receive them, such as agents, brokers, and the like.
Art. 1738 provides that the extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has:
Been advised of the arrival of the goods; and
Had reasonable opportunity thereafter to remove them or otherwise dispose of them.
There is actual delivery by the common carrier when possession has been turned over to the consignee or to his duly authorized agent.
There is constructive delivery when a notice of arrival of the goods is given to the consignee or to his duly authorized representative and reasonable time is given him to remove the goods but he failed or refused to receive or claim the same.
There is no delivery contemplated under Article 1736, if during the discharging operation, spillages occurred or the fuel oil backflowed.
This is true even if the cargo like diesel oil has already entered the depot or shore tank of the consignee when the back.flow which resulted to the losses of the diesel oil occurred because the delivery operation was not yet finished or completed.
To constitute delivery, the consignee must have the opportunity to receive the shipment and the shipment is already under the consignee's control and disposal.
Lu Do v. Binamira, G.R. No. L-9840 (1957):
Delivery of the cargo to the customs authorities is not delivery to the consignee or “to the person who has a right to receive them” as contemplated in Art. 1736 because in such case the goods are still in the hands of the government and the owner cannot exercise dominion over them.
However, the parties may agree to limit the liability of the carrier considering that the goods still have to go through the inspection of the customs authorities before they are actually turned over to the consignee. It is unfair that the carrier be made responsible for what may happen during the interregnum.
Asian Terminals, Inc. v. Philam Insurance Co., G.R. No. 181163 (2013):
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier.
Nedlloyd Lijnen B.V. Rotterdam v. Glow Laks Enterprises, Ltd. G.R. No. 156330 (2014):
The common carrier remains liable to the consignee when the goods were lost because the ports authorities released them to unauthorized persons, absent a stipulation in the bill of lading.
5.3. Temporary loading or storage
General Rule: Extraordinary diligence over the goods remains even when the goods are temporarily unloaded or stored in transit.
Exception: The duty to observe such diligence ceases when shipper or owner makes use of the right of stoppage in transitu [Art 1737, Civil Code].
Stoppage in transitu is the act by which the unpaid vendor of goods stops their progress and resumes possession of them constructively, while they are during transit from him to the purchaser and not yet actually delivered to the latter.
Basis: Under Art. 1530, when the buyer of the goods becomes insolvent, the unpaid seller who has parted with the possession of the goods, at any time while they are in transit, may resume the possession of the goods as he would have had if he had never parted with the possession.
When the right of stoppage in transitu is exercised, the common carrier holds the goods in the capacity of an ordinary bailee or warehouseman upon the theory that the exercise of the right of stoppage in transitu terminates the contract of carriage. Hence, only ordinary diligence is required.
The obligation of the carrier remains in full force and effect even when the goods are temporarily unloaded or stored in transit unless the shipper or owner has made use of the right of stoppage in transit.
It continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.
6. Stipulation for limitation of liability
What is the effect of a stipulation regarding the exercise of diligence to less than extraordinary?
In the carriage of goods, the carrier and shipper may agree on the observance of diligence to a degree less than extraordinary (but not total exemption nor diligence less than ordinary) provided the stipulation is:
in writing, signed by the shipper or owner;
supported by a valuable consideration other than the service rendered by the carrier; and
reasonable, just, and not contrary to public policy.
When is the obligation of the common carrier to observe extraordinary diligence in the carriage of goods reduced to ordinary diligence?
The obligation of the common carrier to observe extraordinary diligence in the carriage of goods is reduced to ordinary diligence in the following cases:
When the seller exercised his right of stoppage in transit;
If there is stipulation between the shipper and the carrier, subject to the conditions stated above;
For hand-carried baggage;
If the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier is only required to exercise due diligence to forestall or lessen the loss.
6.1. Void stipulations
Any of the following or similar stipulations shall be considered unreasonable, unjust, and contrary to public policy: R-LR-DD-ET
That the goods are transported at the risk of the owner or shipper;
That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
That the common carrier need not observe any diligence in the custody of the goods;
That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported;
That the common carrier shall not be responsible for the acts or omission of his or its employees;
That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence, or force, is dispensed with are diminished;
That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane, or other equipment used in the contract of carriage.
In number 6:
A stipulation is not valid if the liability of the common carrier for the acts of thieves is dispensed with or diminished.
Likewise, the stipulation is not valid if the acts of robbers who do not act with grave or irresistible threat, violence or force is dispensed with or diminished.
It means that a mere reduction of the liability of the common carrier in these particular situations would invalidate the stipulation; more so if it would completely set the common carrier free from liability.
Example:
The stipulation therefore allowing the owner or shipper to recover 90% only of the value of the goods lost to thieves or robbers who do not act with grave threat or violence is not valid, being unreasonable and unjust.
In number 7:
What is prohibited is to completely free the common carrier from liability for loss, destruction and deterioration on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.
A stipulation that merely reduces the responsibility or liability of the common carrier in case of loss, destruction or deterioration of goods on account of defective condition of the car, ship, and airplane is valid.
Example:
It is valid to stipulate that the amount that will be recovered by the shipper or owner is only 90% of the value of the goods in case of loss or damage due t.o the defective condition of the vehicle, ship, or airplane unless a higher amount was declared.
If the charter party provides that the carrier undertakes to carry a special cargo or chartered to a special person only, such provision makes the common carrier a private carrier.
As a private carrier, a stipulation of the parties exempting the owner of the vessel from liability for the negligence of its agent is not against public policy and is deemed valid.
Sweet Lines v. Hon. Bernardo Teves, G.R. No. L-37750, May 19, 1978:
A Condition was printed at the back of the tickets which provides that any and all actions arising out of the ticket, irrespective of where it is issued, shall be filed before the courts of Cebu City.
Is this stipulation valid and enforceable? Were the passengers deemed to have acceded to it when they purchased the tickets and took the carrier's vessel for passage and thus amounted to effective waiver of venue?
The condition is void and unenforceable for two (2) reasons:
First, it is not just and fair to bind passengers to the conditions printed in fine letter at the back of the tickets.
It is hardly proper to expect the passengers to examine their tickets after they received them from crowded counters.
No reasonable opportunity is given to them in order to carefully examine the said condition prior to the purchase of the tickets.
Moreover, it must be noted that shipping companies are franchise holders of certificates of public convenience and therefore possess a virtual monopoly of the business of transporting passengers.
As such, they may dictate the terms of passage, leaving the passengers with no choice but to buy tickets and avail of their vessels and facilities.
Second, it subverts the public policy on transfer of venue of proceedings since the same will prejudice the rights and interests of innumerable passengers.
Although venue may be changed by agreement, such an agreement will not be held valid where it practically negates the action of the claimants.
Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the said city, he would most probably decide not to file the action at all.
6.2. Limitation of liability to fixed amount
May a common carrier limit its liability to a fixed amount in case of loss or damage to goods?
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.
The Court ruled that the conditions are not "fairly and freely agreed" upon if said conditions were printed at the back of the ticket stub in letters so small that they are hard to read especially if the parties and the passengers and even the common carrier's itself do not sign the ticket.
The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just, and in consonance with public policy.
The lack of competition has to be considered because it may cause undue influence and could affect reasonableness of the stipulation.
Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.
The legal effect of the presumption under Article 1752 is that unless disputed, the plaintiff is not required to present evidence and the trial court is not required to make an express finding of the common carrier's fault or negligence.
A mere proof of injury relieves the passengers from establishing the fault or negligence of the carrier or its employees.
In such event, the burden of proof lies with the common carrier to prove its observance of extraordinary diligence, and that an unforeseen event or force majeure had caused the injury.
The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration.
It is immaterial which country the collision or damage occurred.
In the shipment from foreign country to the Philippines, the primary law that governs is the Civil Code of the Philippines but the parties could validly stipulate that the primary law that will govern the liability of the common carrier is the Carriage of Goods by Sea Act.
If the shipper or owner of the goods was made to agree to limit the liability of the common carrier because otherwise the latter will not carry the goods, such stipulation may be annulled by the shipper or owner for the reason that it lacks the element of legal consent on the part of the shipper or owner of the goods.
This contract entered into under this circumstance is not void but merely voidable under Article 1390(2) of the Civil Code.
This contract is binding, unless annulled by a proper court.
It is susceptible of ratification.
A stipulation of this sort even if entered into with a valid consent of the shipper or owner, the same needs to be supported by valuable consideration other than the service rendered by the common carrier as provided under Article 1744.
6.3. Limitation of liability in the absence of declaration of greater value
May a common carrier limit its liability to the value of the goods?
Yes, a stipulation that the common carrier's 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.
Pursuant to such provision:
where the shipper is silent as to the value of his goods, the carrier's liability for loss or damage thereto is limited to the amount specified in the contract of carriage and
where the shipper states the value of his goods, the carrier's liability for loss or damage thereto is limited to that amount.
A stipulation in a contract of carriage that the carrier will not be liable beyond a specified amount unless the shipper declares the goods to have a greater value is generally deemed to be valid and will operate to limit the carrier's liability, even if the loss or damage results from the carrier's negligence.
It is the duty of the shipper to disclose, rather than the carrier's to demand the true value of the goods and silence on the part of the shipper will be sufficient to limit recovery in case of loss to the amount stated in the contract of carriage.
It is valid to stipulate limiting the liability of the common carrier to the value of the goods appearing in the bill of lading which may be lesser than the real value of the goods.
However, the stipulation limiting the liability of the common carrier to the value appearing in the bill of lading or less than the actual value of the goods is not valid if the cause of loss is through the acts of thieves or robbers who did not employ grave or irresistible threat or violence.
The limitation printed in the bill of lading is not binding if the shipper or owner declares a higher value.
The stipulation printed in the bill of lading is valid but it is not binding if the shipper or owner declares a higher value.
The declared value must prevail.
An arraste operator, although not a common carrier, can avail of limited liability by virtue of the Management Contract it signed with the Bureau of Customs.
The stipulation in the Management Contract entered into by the Bureau of Customs and the arrastre operator is in the nature of pour autrui.
The stipulation pour autrui must be accepted, expressly or impliedly by the consignee to make it binding to him.
Limited liability under Article 22 in conjunction with Article 26 of the Warsaw Convention. In case of delay, the limited liability does not apply.
The provision limiting the liability of the air transportation company for damage, loss or delay in transporting of the goods is inapplicable if the bag was not delivered to the passenger during the whole trip.
Even if the bag was later on delivered to the passenger after his trip, the common carrier is still liable for the breach of contract because if failed to comply with its undertaking to transport the goods from the place of embarkation to the ultimate point of destination.
The subsequent delivery of the luggage does not mean that there was only delay in the delivery of the luggage or bag.
The baggage is considered lost as it was not delivered to the passenger for purposes of the trip. Hence. the limited liability in case of delay under the Warsaw Convention does not apply.
The stipulated limited liability of the common carrier is subject to waiver.
The limited liability of the common carrier is subject to waiver such as when the common carrier failed to raise timely objections during the trial when questions and answers regarding the actual claims and damages sustained by the passenger were asked.
If the insurer paid the insured based on the actual value of the goods, how much can the insurer recover from the common carrier?
As to the insurance company, it must be noted that after paying the claim of the insured, the former is merely subrogated to the rights of the latter.
As subrogee, it can recover only the amount that is recoverable by the insured.
Since the right of the insured, in case of loss or damage to the goods, is restricted by the provisions in the bill of lading, a suit by the insurer necessarily is subject to like limitations.
What are the usual stipulations often made in a bill of lading regarding the liability of the common carrier?
Three (3) kinds of stipulations have often been made in a bill of lading.
The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence.
The second is one providing for an unqualified limitation of such liability to an agreed valuation.
And the third is one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight.
According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable.
A stipulation limiting the sum that may be recovered by the shipper or owner to 90% of the value of the goods in case of loss due to theft is void.
Such stipulation is considered unreasonable, unjust, and contrary to public policy under Article 1745 of the Civil Code.
7. Liability for baggage of passengers
Checked-in baggage
Baggage in possession of strangers
What is the liability of a common carrier for baggage of passengers?
If the baggage is in the custody of the common carrier (checked-in), the latter is obliged to observe extraordinary diligence.
The presumption of negligence applies against the common carrier. Articles 1733 to 1753 of the Civil Code apply.
But if the baggage is in the custody of the passenger (handcarried), the carrier is liable as a depositary provided that
notice was given to him or his employees; and
the passenger took the necessary precautions which the carrier had advised relative to the care and vigilance of the baggage.
The baggage in transit is deemed as a necessary deposit.
The diligence required of the carrier/depositary is merely ordinary diligence.
The responsibility of the common carrier shall include the loss of, or injury to the hand carried baggage caused by the employees of the carrier as well as strangers, but not that which may proceed from any force majeure.
In case of loss owing to the fault of the passenger, the carrier will not be held liable.
ls actual notification required before the common carrier becomes liable for lost belongings that remained in the custody or the passenger?
There is no need of actual notification to the carrier because by allowing the passenger to board the vessel with his belongings without any protest, the common carrier became sufficiently notified to such belongings.
The common carrier is not only liable for the baggage delivered to them but also for the baggage not actually delivered to it but in the possession of the passengers.
C. Safety of Passengers (Arts. 1755 to 1763, NCC)
A passenger is one who has entered into a contract of carriage express or implied, with a carrier.
The common carrier is bound to carry or transport the passenger using extraordinary diligence.
As far as its employees are concerned, the common carrier is liable for the death or injuries to the passengers through the negligence or willful acts of its employees.
It is not enough to free itself from liability by the mere fact that it exercised all the diligence of a good father of a family in the selection and supervision of its employees.
The law also requires the common carrier to protect its passengers against the act or negligence of other passengers or of strangers or assailants both inside and outside the unit of the common carrier as in the case when the bystander hurled stone to the bus that hit its passenger, and the degree of diligence that the common carrier is required to observe is not extraordinary diligence but only diligence of the good father of the family.
1. Nature of responsibility/liability
The liability of the common carrier with respect to the safety of passengers, in general, are as follows
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 [Art. 1755, Civil Code];
There is no hard and fast rule in determining the exercise of an extraordinary diligence. It is qualified by the phrase "as far as uman care and foresight can provide." What constitutes compliance with said duty is adjudged "with due regard to all the circumstances."
It would depend on the circumstances of each case and the response of the person on a given circumstance. Some factors that may be considered are the worthiness of the carrier to do its business to transport, the promptness of the action taken to prevent the accident and the suddenness of the incident without a chance to deliberate what action to take. Whether the incident could be foreseen or not shall also be considered.
Depending on these factors, the action of a prudent and very cautious person may vary. The presence of any of these conditions may affect the action of a prudent and very cautious person.
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 [Art. 1756, Civil Code].
Bachelor Express v. CA, G.R. No. 85691 (1990):
It is not enough that the accident was caused by force majeure, the common carrier must still prove that it was not negligent in causing the injuries resulting from such accident.
Bachelor Express illustrates that force majeure is not itself a defense; the exercise of the diligence required by law is the defense.
Certain instances wherein the common carrier was held liable:
Defects in the automobile – passenger has neither the choice nor control over the selection and use of the carrier’s equipment and appliances.
Defect in an appliance purchased by the carrier from a manufacturer – the manufacturer is considered as an agent of the common carrier.
Injuries suffered by a crew member or employee – utmost diligence is not only for the safety of passengers, but also for the members of the crew or the complement operating the carrier
Injuries suffered by an individual whose presence was called for by the contract of carriage (e.g. stevedore)
A common carrier is not liable for its failure to deliver the passenger to the agreed destination because of sovereign acts.
Extraordinary Diligence in Carriage by Sea.
The vessel must be seaworthy.
The shipper or passenger is not required to inquire into the vessel's seaworthiness, genuineness of its licenses and compliance with maritime laws. It is presumed that the common carriers possess all the legal requirements to operate.
The term seaworthiness was explained to refer to the strength, durability and engineering skill made a part of a ship's construction and continued maintenance, together with a competent and sufficient crew, which would withstand the vicissitudes and dangers of the elements which might reasonably be expected or encountered during her voyage without loss or damage to her particular cargo.
The vessel must be fit.
Relative to its construction, the fitness is determined based on the length and nature of the voyage.
It is fit if it can be expected to meet the normal hazards of the journey.
The vessel must be adequately equipped and properly manned.
The vessel must be adequately equipped.
With regards of passenger carrying vessel, the Maritime Industry Authority requires that the vessel must have adequate exit, life boats, life vests, and other similar items.
The vessel must be sufficiently manned by competent and licensed officers and crew.
The competence of the captain or master of the vessel is required under Article 609 of the Code of Commerce.
The common carrier and its personnel must transport the passengers to their destinations safely as far u human ca.re and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances.
The ship captain/master was considered negligent for lack of foresight due to his failure to ascertain beforehand the direction of reported storm and weather condition.
The common carrier is liable for the injury/death even after the passenger’s disembarkation. The presence of the passenger one hour after disembarkation to retrieve his cargo is reasonable and he is still considered a passenger.
Extraordinary Diligence in Carriage of passengers by Land.
The vehicle must be roadworthy.
The vehicle must be adequately equipped and properly manned.
The common carrier must comply with the safety requirements of LTO.
The vehicle must be sufficiently manned by competent and licensed personnel
The common carrier and its personnel must transport the passengers to their destinations safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances.
Observance of Traffic Rules
Conduct inspection.
Extraordinary Diligence in Carriage by Air.
The aircraft must be airworthy.
R.A. No. 779 provides that "airworthiness means that an aircraft, its engines, propellers, and other components and accessories, are of proper design and construction, and are safe for air navigation purposes, such design and construction being consistent with accepted engineering practice and in accordance with aerodynamic laws and aircraft science.
Aircraft must be fit to transport cargoes and passengers.
The plane must also be sufficiently strong and equipped to carry passengers.
Must have competent and well trained crew
The airplane must be adequately equipped.
The common carrier and its personnel must transport the passengers to their destinations safely as far as human care and foresight can provide, w.ing the utmost diligence of a very cautious person, with due regard for all the circumstances.
2. Duration of liability
As in the contract of carriage of goods, the perfection of the contract of carriage of passengers does not necessarily coincide with the commencement of the duty of extraordinary diligence.
It may occur at the same time or later.
It ends when the passenger alights at the point of destination and after he has reached a reasonably safe place.
Buses, jeepneys, and street cars.
It begins when the common carrier stops because by stopping near the riders, it is in effect making a continuous offer to riders to ride) and the riders attempt to board because by doing so, it implies that the passengers accepted the offer.
The contract of carriage is perfected at that very moment.
Trains.
It begins from the time the person purchased a ticket/token and presents himself at the proper place to be transported.
Boat/Ship.
It begins at the time the person with bona fide intention of taking passage, places himself in the care of the carrier or its employees and is accepted as a passenger.
It ends from the time the passenger alights at the point of destination and reached the reasonable opportunity to leave the carrier's premises.
Air.
It begins the moment the person had checked in at the departure counter, passed through the Customs and Immigration and proceeded to the ramp of the aircraft.
It ends when the passenger alights at the point of destination until the passenger has the reasonable opportunity to leave the carrier's premises.
Del Prado v. Manila Electric Company, G.R. No. L-29462 (1929):
Based on jurisprudence, the duty that the carrier of passengers owes to its patrons extends to persons boarding the cars as well as those alighting therefrom.
This is also reflected in Art. 17, Warsaw Convention, which applies to international air carriage.
It provides that the liability of a common carrier for injury to the passenger lasts from embarkation to disembarkation, including the period when the passenger is on board the aircraft.
In maritime commerce, Art. 698, Code of Commerce relates to the period of the voyage:
In case a voyage already begun should be interrupted:
The passengers shall be obliged to pay the fare in proportion to the distance covered; and
Have the following reliefs:
In case of delay in the departure of the vessel, the passengers have:
The right to remain on board;
If the delay is not due to a fortuitous event or force majeure, the right to be furnished with food for the account of the vessel;
If the delay should exceed ten days: Passengers requesting the same shall be entitled to the return of the fare; and
If it is due exclusively to the fault of the captain or ship agent, they may also demand indemnity for losses and damages.
A vessel exclusively devoted to the transportation of passengers must take them directly to the port or ports of destination, no matter what the number of passengers may be, making all the stops indicated in its itinerary.
1. Waiting for Carrier or Boarding of Carrier
The duty that the carrier of passengers owes to its patrons extends to persons boarding the cars as well as those alighting therefrom.
It is the duty of common carriers of passengers to stop their conveyances at a reasonable length of time to afford passengers an opportunity to board and enter:
Carriers are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so
However, a person boarding a moving car must be taken to assume the risk of injury from boarding the car under his view.
Nonetheless, he cannot fairly be held to assume the risk that the motorman, having the situation in view, will increase the peril by accelerating the speed of the car before he is planted safely on the platform.
The extraordinary responsibility of common carriers commences:
With respect to carriage of passengers by trains:
The moment the person who purchases the ticket from the carrier presents himself at the proper place and in a proper manner to be transported with a bona fide intent to ride the coach
With respect to carriage of passengers by sea:
As soon as the person with bona fide intention of taking passage places himself in the care of the carrier or its employees and is accepted as passenger.
2. Arrival at Destination
The relation of carrier and passenger does not cease at the moment the passenger flights from the carrier’s vehicle at a place selected by the carrier at the point of destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier’s premises.
What is a reasonable time or a reasonable delay within this rule is to be determined from all the circumstances such as the kind of common carrier, the nature of its business, the customs of the place, and so forth, and therefore precludes a consideration of the time element per se without taking into account such other factors.
The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioner’s vessel:
A person who, after alighting from a train, walks along the station platform is considered still a passenger;
A passenger, who has alighted at his destination and is proceeding by the usual way to leave the company’s premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has been shot, and he in good faith, returns to relieve his brother, is deemed reasonably and necessarily delayed and thus continues to be a passenger entitled as such to the protection of the railroad and company and its agents.
In the cases of a shipper, the passengers of vessels are allotted a longer period of time to disembark from the ship than other common carriers such as a passenger bus, since such vessels are capable of accommodating a bigger volume of both passenger and baggage as compared to the capacity of a regular commuter bus.
Consequently, a ship passenger will need at least an hour as is the usual practice, to disembark from the vessel and claim his baggage
The carrier necessarily would still have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers until they have reached their final destination.
Note: Despite the Court’s pronouncement in PAL v. CA, note that common carriers are bound to observe extraordinary diligence in the ‘safety’ of its passengers.
The law does not mention the words ‘comfort’ and ‘convenience.’
3. Presumption of negligence
Art. 1756, Civil Code:
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.
The common carriers are presumed to be at fault to have acted negligently in case of death of or injury to passengers.
This presumption of fault or negligence applies only in the case of passengers of the common carrier.
It does not apply to persons who are not passengers who suffered injury or who died due the fault or negligence of the common carrier.
Example:
If the common carrier bumped a pedestrian which resulted in his injuries or even death, the presumption of fault or negligence against the common carrier does not apply except if at the time of the accident the common carrier or any carrier for that matter was violating the traffic rules.
In that case, there is presumption of fault or negligence but the presumption derived not from Article 1756 but from Article 2185 which provides that,
Any vehicle including the common carrier is also presumed negligent or at fault if it bumped at the rear of another vehicle.
The presumption applies by mere fact that the passenger died or suffered injury regardless of the cause of death or injury.
It applies if the cause of death or injury is due to the act of common carrier's employee, co-passenger or even stranger, whether done inside the common carrier's unit or outside as when the bystander hurled a stone at the left side of the bus which hit the passenger above his left eye.
Article 1756 is an exception to the general rule that negligence must be proved because of the presumption of fault and negligence on the part of the common carrier.
This presumption could be rebutted by showing that:
The fortuitous event was the proximate cause,
The carrier has observed extraordinary diligence for the safety of the passengers.
The common carrier will not be liable even if death occurred or injury was suffered by the passenger if it has proven that it has exercised extraordinary diligence.
4. Limitations of liability; validity of stipulations
General Rule:
The responsibility of a common carrier for the safety of passengers cannot be dispensed with or lessened by stipulation by the posting of notices, by statements on tickets, or otherwise [Art. 1757, Civil Code].
Exception:
When a passenger is carried gratuitously, a stipulation limiting the common carrier’s liability for negligence is valid [Art. 1758, Civil Code].
Exception to the exception:
Even when a passenger is carried gratuitously, a stipulation limiting the common carrier’s liability for willful acts or gross negligence is invalid [Art. 1758, Civil Code].
The reduction of fare does not justify any limitation of the common carrier’s liability [Art. 1758, Civil Code].
Gratuitous Passenger:
Extraordinary diligence is required of the common carrier to observe even if the passenger is considered gratuitous or non paying passenger.
The only effect of being a gratuitous or non paying passenger is that it allows the parties to validly enter into a stipulation limiting its liability of the common carrier for negligence.
The stipulation refers to the degree of diligence that will be observed by the common carrier in transporting the gratuitous passenger.
This degree of diligence may be lowered by stipulation but such stipulation is not valid if the cause of the death or injury is the willful acts or gross negligence of the common carrier or its employees.
The stipulation does not include the lowering or fixing the amount that will be paid to the gratuitous passenger in case of injury or death.
This stipulation limiting the liability of the common carrier for negligence is not valid if the passenger merely enjoys a reduction of fare as he is not legally considered as a gratuitous passenger.
5. Responsibility for acts of others
5.1. Employees
General Rule:
Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s 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 does not cease:
Even upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees [Art. 1759, Civil Code];
By stipulation, by the posting of notices, nor by statements on the tickets eliminating or limiting said liability [Art. 1760, Civil Code].
Ratio: The servant is clothed with delegated authority and charged with the duty to execute the carrier’s undertaking to carry the passenger safely.
Also, the defense of diligence in the selection and supervision of employees does not obtain because the liability is not based on quasi-delict, but on culpa contractual.
However, there must be a reasonable connection between the act and the contract of carriage.
Note:
The employee must be on duty at the time of the act.
It is enough that the assault happens within the course of the employee’s duty.
It is no defense for the carrier that the act was done in excess of authority or in disobedience of the carrier’s orders.
Exception:
A common carrier is not responsible for acts falling under force majeure.
When a party is unable to fulfill his obligation because of force majeure, he cannot be held liable for damages for non performance.
5.2. Strangers and other passengers
General Rule:
A common carrier is not liable for injuries inflicted by strangers or co-passengers.
Exception:
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 carrier’s employees, through the exercise of the diligence of a good father of a family, could have prevented or stopped the act or omission [Art. 1763, Civil Code].
The act or omission could be prevented or stopped with the exercise of the diligence of a good father of a family by the common carrier's employees.
The common carrier's employees did not exercise the diligence of a good father of a family to prevent or stop the act or omission. The diligence required of the common carrier to prevent or stop the act or omission is only diligence of the good father of the family and not extraordinary diligence.
There is no irresistible threat or force that prevents the common carrier's employees from exercising that degree of diligence in order to stop or prevent the act or omission.
The common carrier or its employee has not incurred negligence.
Example:
A man who was unarmed boarded a bus and thereafter held up the co-passengers.
The common carrier is liable because the act of the unarmed man could be prevented or stopped with the exercise of diligence of a good father of a family by the employees of the common carrier. There is no irresistible threat or force that would prevent them from exercising such diligence.
Inspection of passengers and his bags is not mandatory in land and sea transportation.
The common carrier cannot be charged with negligence if it failed to inspect the cargo or do body search of the passenger.
The obligation imposed by law on the employees of the common carrier to observe the diligence of the good father of the family to prevent the act or omission of other passengers or strangers does not mean that they will conduct bodily search and inspection of the baggage of each passenger that is boarding their land or sea transportation unless there is something that will rouse suspicion that the men are armed or will carry out an unlawful activity or there is an intelligence report regarding the presence of criminal or terrorist group.
The common carrier is not liable for the act of the co passenger if the act cannot be prevented by the exercise of the diligence of a good father of the family. The carrier cannot be charged of negligence if its employees did not conduct bodily inspection of its passengers and inspection of their baggage provided there is no indication that will rouse suspicion that the men are armed or will carry out an unlawful activity.
Note:
The law speaks of injuries suffered by the passenger but not death.
However, there appears to be no reason why the common carrier should not be held liable under such circumstances.
The word “injuries” should be interpreted to include death [Agbayani].
Under Art. 1763, a tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier.
The negligence for which a common carrier is held responsible is the negligent omission by the carrier’s employees to prevent the tort from being committed when the same could have been foreseen and prevented by them through the exercise of the diligence of a good father of a family
Common carriers should be given leeway in assuming that the passengers they take in will not bring anything that would prove dangerous to himself, as well as his co-passengers, unless there is something that will indicate that a more stringent inspection should be made.
6. Contributory negligence
The passenger must observe the diligence of a good father of a family to avoid injury to himself [Art. 1761, Civil Code].
The passenger like the common carrier has also an obligation to observe a diligence to ensure that he reaches his destination safely.
He must observe all necessary precautions to avoid injury to him because the common carrier is not an insurer against all risk of travel.
The law requires the passenger to observe the diligence of a good father of the family to avoid injury to him.
The concept of diligence of a good father of a family "connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted with a similar situation.
If the cause of death or injury is due to failure of the passenger to observe the diligence of a good father of the family and without the negligence of the carrier, the latter is not liable.
Example:
The common carrier was not liable for breach of contract of carriage when the passenger negligently thrust his arm out of the bus window and was hit by another bus recklessly driven and resulted to injury.
The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced [Art. 1762, Civil Code].
The presence of contributory negligence presupposes the existence of negligence which is the proximate cause of death or injury.
Article 1762 provides that contributory negligence of the passenger does not free the common carrier from liability for death or injuries caused to the passenger if the proximate cause is the negligence of the common carrier.
The contributory negligence of the passenger merely reduces equitably the amount of damages.
However, when the negligence of the passenger was the proximate cause of the injury, the passenger is barred from recovery, and the common carrier is exempted from liability.
7. Liability for quasi-delict
The passenger may also file a case of culpa aquiliana or quasi-delict against the common carrier and his driver.
The common carrier may be liable for breach of contract of carriage but not the driver or train operator because he has no contract with the passenger.
The driver or train operator may be liable for his own fault or negligence.
Defense of the common carrier.
The defense of due diligence in the selection and supervision of employee is a complete defense of the common carrier.
In all these cases (culpa contractual, culpa criminal, and culpa aquiliana), when the common carrier was held to pay damages for the injured passenger, he may ask reimbursement from his driver in a proper case.
Culpa Criminal or Criminal Negligence.
This is an action against the driver.
It is a criminal case against the driver for reckless imprudence resulting in physical injuries or death.
This action cannot be lodged against the common carrier.
Quantum of evidence: Proof beyond reasonable doubt.
Subsidiary liability of the common carrier.
The civil liability of the driver is direct and primary under Article 100 of the Revised Penal Code while the liability of the common carrier is subsidiary.
It means that if the driver is insolvent or the passenger cannot recover the monetary award that is the only time that the passenger can recover from the common carrier in the case.
He has to file a motion supported by the Sheriffs return of judgment in execution that the driver is insolvent.
8. Liability of common carriers for injury to stevedores
Westwind Shipping Corporation v. UCPB General Insurance Co., G.R. No 2002289, November 25, 2013:
It was held that the liability of a common carrier does not cease by mere transfer of custody of the cargo to the arrastre operator.
Like the duty of seaworthiness, the duty of care of the cargo is non-delegable and the carrier is accordingly responsible for the acts of the master, the crew, the stevedore, and his other agents. The fact that a consignee is required to furnish persons to assist in unloading a shipment may not relieve the carrier of its duty as to such unloading.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. Since the damage to the cargo was incurred during the discharge of the shipment and while under the supervision of the carrier, the latter is liable for the damage caused to the cargo.
Stevedoring refers to the handling of the cargo in the holds of the vessel or between the ship's tackle and the holds of the vessel.
It is the carriage of goods from the pier to the hold of the vessel.
The responsibility of the stevedore ends upon loading and stowing of the cargo in the vessel.
A stevedoring company is not a common carrier and is not obligated to observe extraordinary diligence in the vigilance over the goods. It is merely a service provider. It is charged with loading and stowing of cargoes.
It is different from the arrastre operator.
Sulpicio Lines, Inc. v. Jacinto L. Pamalaran, et al. G.R. No. 106279, July 14, 1995:
The common carrier is liable for the injury or death of a gratuitous passenger.
Sulpicio Lines entered into a contract of carriage with ALC for the transport of latter's timber. Several stevedores who were hired by ALC boarded the barge of Sulpicio Lines, Inc., to put the lumber on board. Sulpicio Lines knows the presence and role of the stevedores in its barge and consented to their presence.
Leoncio Pamalaran, one of the stevedores entered the storeroom and died of gas poisoning generated by the copra stored therein.
Sulpicio Lines, Inc., is liable as a common carrier. While the "cargadores" including Pamalaran did not pay an amount of money as fare, the undisputed fact is that all of them were in the boat with the knowledge and consent of the patron.
For their services, they were permitted to be in the boat. The services rendered were the valuable consideration in exchange for the transportation fare.
D. Common Provisions
1. Extent of liability for damages (Art. 1764, NCC)
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.
The damages that may be awarded shall be in accordance with the provisions of Articles 2195 to 2235 of the Civil Code.
Damages may be awarded because of the obligations which arise from law, contracts, acts or omissions punished by law, and quasi-delict.
Article 1764 expressly provides that in case of death of a passenger caused by the breach of contract of carriage, the provision of Article 2206 shall apply.
Article 2206 provides that the amount of damages for death shall be at least three thousand pesos even though there may have been mitigating circumstances.
The amount was gradually increased and the amount is now Php50,000.00
What is the extent of damages awarded in case of death or injury among the passengers?
Article 1764 in relation to Article 2206 of the Civil Code, holds the common carrier in breach of its contract of carriage for the death of a passenger, and it is liable to pay the following:
indemnity for death,
indemnity for loss of earning capacity, and
moral damages.
In determining the reasonableness of the damages awarded under Article 1764 in conjunction with Article 2206 of the Civil Code, the factors to be considered are:
life expectancy (considering the health of the victim and the mortality table which is deemed conclusive) and loss of earning capacity;
pecuniary loss, loss of support and service; and
moral and mental sufferings.
The loss of earning capacity is based mainly on the number of years remaining in the person's expected life span. In turn, this number is the basis of the damages that shall be computed and the rate at which the loss sustained by the heirs shall be fixed.
The formula for the computation of loss of earning capacity is as follows:
Net earning capacity = Life expectancy x [Gross Annual Income - Living Expenses (50% of gross annual income)]
where life expectancy= 2/3 (80 - the age of the deceased).
Example:
If prior to his death at the age of 60 years old, he was earning P10 million gross income, his loss of earning capacity is computed as follows:
Life expectancy = 2/3 x (80 - 60) = 13.33
Net earning capacity 13.33 x (P10 million P5 million or P5 million) = P66,666,666.70 million.
General Rule: Documentary evidence is required to prove loss of earning capacity.
Exception: The injured passenger's testimonial evidence falls under the second exception, viz.:
By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when
the deceased is self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the deceased's line of work no documentary evidence is available; or
the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.
Loss of earning capacity should be computed not at the time the injured passenger testified about his injury but at the time he sustained it.
2. State regulation of common carriers (Art. 1765, NCC)
Article 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section.
Article 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.
Who may regulate common carriers?
Local government units (LGUs)
Land Transportation Office (LTO)
Land Transportation Franchising and Regulatory Board (LTFRB)
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