Benedicto v. Intermediate Appellate Court (G.R. No.

70876 July 19, 1990)

FACTS:

Greenhills Wood Industries - bound itself to sell and deliver to Blue Star
Mahogany, Inc. 100,000 board feet of sawn lumber with the understanding that
an initial delivery would be made.
Greenhills resident manager in Maddela, Dominador Cruz, contracted Virgilio
Licuden, the driver of a cargo truck, to transport its sawn lumber to the consignee
Blue Star in Valenzuela, Bulacan; this cargo truck was registered in the name of
Ma. Luisa Benedicto, the proprietor of Macoven Trucking, a business enterprise
engaged in hauling freight the Manager of Blue Star called up Greenhills
president informing him that the sawn lumber on board the subject cargo truck
had not yet arrived in Valenzuela, Bulacan; because of the delay in delivery Blue
Star was constrained to look for other suppliers
Greenhills filed criminal case against driver Licuden for estafa; and a civil case
for recovery of the value of the lost sawn lumber plus damages against Benedicto
Benedicto denied liability as she was a complete stranger to the contract of
carriage, the subject truck having been earlier sold by her to Benjamin Tee; but
the truck had remained registered in her name because Tee have not yet fully
paid the amount of the truck; be that as it may, Tee had been operating the said
truck in Central Luzon from that and Licuden was Tees employee and not hers

ISSUE:
WoN Benedicto, being the registered owner of the carrier, should be held liable for the
value of the undelivered or lost sawn lumber
HELD:
YES. The registered owner liable for consequences flowing from the operations of the
carrier, even though the specific vehicle involved may already have been transferred to
another person. This doctrine rests upon the principle that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume that the
registered owner is the actual or lawful owner thereof It would be very difficult and often
impossible as a practical matter, for members of the general public to enforce the rights
of action that they may have for injuries inflicted by the vehicles being negligently
operated if they should be required to prove who the actual owner is. Greenhills is not
required to go beyond the vehicles certificate of registration to ascertain the owner of
the carrier.

Erezo v. Jepte
Facts:

Defendant-appellant is the registered owner of a six by six truck bearing. On

August, 9, 1949, while the same was being driven by Rodolfo Espino y Garcia, it
collided with a taxicab at the intersection of San Andres and Dakota Streets,
Manila. As the truck went off the street, it hit Ernesto Erezo and another, and the
former suffered injuries, as a result of which he died.
The driver was prosecuted for homicide through reckless negligence. The
accused pleaded guilty and was sentenced to suffer imprisonment and to pay the
heirs of Ernesto Erezo the sum of P3,000. As the amount of the judgment could
not be enforced against him, plaintiff brought this action against the registered
owner of the truck, the defendant-appellant.
The defendant does not deny at the time of the fatal accident the cargo truck
driven by Rodolfo Espino y Garcia was registered in his name. He, however,
claims that the vehicle belonged to the Port Brokerage, of which he was the
broker at the time of the accident. He explained, and his explanation was
corroborated by Policarpio Franco, the manager of the corporation, that the
trucks of the corporation were registered in his name as a convenient
arrangement so as to enable the corporation to pay the registration fee with his
backpay as a pre-war government employee. Franco, however, admitted that the
arrangement was not known to the Motor Vehicle Office.
The trial court held that as the defendant-appellant represented himself to be the
owner of the truck and the Motor Vehicle Office, relying on his representation,
registered the vehicles in his name, the Government and all persons affected by
the representation had the right to rely on his declaration of ownership and
registration. It, therefore, held that the defendant-appellant is liable because he
cannot be permitted to repudiate his own declaration.

Issue:
WoN Jepte should be liable to Erezo for the injuries occasioned to the latter because of
the negligence of the driver even if he was no longer the owner of the vehicle at the time
of the damage (because he had previously sold it to another)
Held:
YES.

The registered owner, the defendant-appellant herein, is primarily responsible for

the damage caused to the vehicle of the plaintiff-appellee, but he (defendantappellant) has a right to be indemnified by the real or actual owner of the amount
that he may be required to pay as damage for the injury caused to the plaintiffappellant
The Revised Motor Vehicle Law provides that no vehicle may be used or
operated upon any public highway unless the same is properly registered. Not
only are vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered for the current year, but that dealers in

motor vehicles shall furnish the Motor Vehicles Office a report showing the name
and address of each purchaser of motor vehicle during the previous month and
the manufacturer's serial number and motor number.
Registration is required not to make said registration the operative act by which
ownership in vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear any essential relation to
the contract of sale between the parties, but to permit the use and operation of
the vehicle upon any public
The main aim of motor vehicle registration is to identify the owner so that if any
accident happens, or that any damage or injury is caused by the vehicles on the
public highways, responsibility therefore can be fixed on a definite individual, the
registered owner.
A registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against him to
recover for the damage or injury done, against the vendee or transferee of the
vehicle.

Santos v. Sibug
Facts:
Petitioner Adolfo Santos was the owner of a passenger jeep, but hehad no certificate of
public conveyance for the operation of the vehicle as apublic passenger jeep. Santos
then transferred his jeep to the name of Vidadso that it could be operated under the
latters certificate of publicconvenience. In other words, Santos became what is known
as kabitoperator. Vidad executed a re-transfer document presumably to be registeredit
and when it was decided that the passenger jeep of Santos was to bewithdrawn from
kabit arrangement. On the accident date, Abraham Sibug was bumped by the
saidpassenger jeep.
Issue:
Whether the Vidad is liable being the registered owner of the jeepney?
Held:
As the jeep in question was registered in the name of Vidad, thegovernment or any
person affected by the representation that said vehicle isregistered under the name of
the particular person had the right to rely on hisdeclaration of his ownership and
registration. And the registered owner or anyother person for that matter cannot be
permitted to repudiate said declarationwith the objective of proving that the said
registered vehicle is owned byanother person and not by the registered owner. Santos,
as the kabit, should not be allowed to defeat the levy in hisvehicle and to avoid his
responsibility as a kabit owner for he had led thepublic to believe that the vehicle
belongs to Vidad. This is one way of curbingthe pernicious kabit system that facilitates
the commissions of fraud againstthe traveling public.

Lita Enterprises Inc. v. Intermediate Appellate Court

Facts:
Spouses Nicasio Ocampo and Francisca Garcia (privaterespondents) purchased in
installment from the Delta Motor SalesCorporation five (5) Toyota Corona Standard cars
to be used as taxi. Sincethey had no franchise to operate taxicabs, they contracted with
petitioner LitaEnterprise, Inc., through its representative Manuel Concordia, for the use
ofthe latters certificate of public convenience for a consideration of P1, 000.00and a
monthly rental of P200.00/taxicab unit. For the agreement to takeeffect, the cars were
registered in the name of Lita Enterprises, Inc. Thepossession, however, remains with
spouses Ocampo and Garcia whooperated and maintained the same under Acme Taxi,
petitioners trade name. A year later, one of the taxicabs, driven by their employee,
EmeterioMartin, collided with a motorcycle. Unfortunately the driver of the
motorcycle,Florante Galvez died from the injuries it sustained. Criminal case was filed
against Emeterio Martin, while a civil case wasfiled by the heir of the victim against Lita
Enterprises. In the decision of thelower court Lita Enterprises was held liable for
damages for the amount ofP25, 000.00 and P7, 000.00 for attorneys fees. A writ of
execution for the decision followed, 2 of the cars of therespondents spouses were levied
and were sold to a public auction. On March 1973, respondent Ocampo decided to
register his taxicabsin his own name. The manager of petitioner refused to give him
theregistration papers. Thus, making spouses file a complaint against petitioner.In the
decision, Lita Enterprise was ordered to return the three certificate ofregistration not
levied in the prior case. Petitioner now prays that private respondent be held liable to
pay theamount they have given to the heir of Galvez.
Issue:
Whether or not petitioner can recover from private respondent,knowing they are in an
arrangement known as kabit system.
Held:
Kabit system is defined as, when a person who has been granted acertificate of
convenience allows another person who owns a motor vehicle tooperate under such
franchise for a fee. This system is not penalized as a criminal offense but is recognized
as one that is against public policy;therefore it is void and inexistent. It is fundamental
that the court will not aid either of the party to enforcean illegal contract, but will leave
them both where it finds them. Upon thispremise, it was flagrant error on the part of both
trial and appellate courts tohave accorded the parties relief from their predicament.
Specifically Article1412 states that: If the act in which the unlawful or forbidden cause
consists does notconstitute a criminal offense, the following rules shall be observed:
when thefault, is on the part of both contracting parties, neither may recover what hehas
given by virtue of the contract, or demand the performance of the othersundertaking.
The principle of in pari delicto is evident in this case. the proposition isuniversal that no
action arises, in equity or at law, from an illegal contract; nosuit can be maintained for its
specific performance, or to recover the propertyagreed to sold or delivered, or damages
for its property agreed to be sold ordelivered, or damages for its violation. The parties in
this case are in paridelicto, therefore no affirmative relief can be granted to them

Teja Marketing v. Intermediate Appellate Court

Facts:
Pedro Nale bought from Teja Marketing a motorcycle with completeaccessories and a
sidecar. A chattel mortgage was constituted as a securityfor the payment of the balance
of the purchase price. The records of theLand Transportation Commission show that the
motorcycle sold to thedefendant was first mortgaged to the Teja Marketing by Angel
Jaucian thoughthe Teja Marketing and Angel Jaucian are one and the same, because it
wasmade to appear that way only as the defendant had no franchise of his ownand he
attached the unit to the plaintiffs MCH Line. The agreement also ofthe parties here was
for the plaintiff to undertake the yearly registration of themotorcycle with the Land
Transportation Commission. The plaintiff, howeverfailed to register the motorcycle on
that year on the ground that the defendantfailed to comply with some requirements such
as the payment of theinsurance premiums and the bringing of the motorcycle to the LTC
forstenciling, the plaintiff said that the defendant was hiding the motorcycle fromhim.
Lastly, the plaintiff also explained that though the ownership of themotorcycle was
already transferred to the defendant, the vehicle was stillmortgaged with the consent of
the defendant to the Rural Bank of Camaliganfor the reason that all motorcycle
purchased from the plaintiff on credit wasrediscounted with the bank. Teja Marketing
made demands for the payment of the motorcycle butjust the same Nale failed to
comply, thus forcing Teja Marketing to consult alawyer and file an action for damage
before the City Court of Naga in theamount of P546.21 for attorneys fees and P100.00
for expenses of litigation.Teja Marketing also claimed that as of 20 February 1978, the
total account ofNale was already P2, 731, 05 as shown in a statement of account;
includesnot only the balance of P1, 700.00 but an additional 12% interest per annumon
the said balance from 26 January 1976 to 27 February 1978; a 2% servicecharge; and
P546.21 representing attorneys fees. On his part, Nale did notdispute the sale and the
outstanding balance of P1,700.00 still payable toTeja Marketing; but contends that
because of this failure of Teja Marketing tocomply with his obligation to register the
motorcycle, Nale suffered damageswhen he failed to claim any insurance indemnity
which would amount to no less than P15,000.00 for the more than 2 times that the
motorcycle figured inaccidents aside from the loss of the daily income of P15.00 as
boundary feebeginning October 1976 when the motorcycle was impounded by the LTC
fornot being registered. The City Court rendered judgment in favor of TejaMarketing,
dismissing the counterclaim, and ordered Nale to pay TejaMarketing On appeal to the
Court of First Instance of Camarines Sur, thedecision was affirmed in toto. Nale filed a
petition for review with theIntermediate Appellate Court. On 18 July 1983, the appellate
court set asidethe decision under review on the basis of doctrine of "pari delicto,"
andaccordingly, dismissed the complaint of Teja Marketing, as well as thecounterclaim
of Nale; without pronouncements as to costs. Hence, thepetition for review was filed by
Teja Marketing and/or Angel Jaucian.
Issue:
Whether the defendant can recover damages against the plaintiff?
Held:
Unquestionably, the parties herein operated under an arrangement,commonly known as
the "kabit system" whereby a person who has beengranted a certificate of public

convenience allows another person who ownsmotor vehicles to operate under such
franchise for a fee. A certificate ofpublic convenience is a special privilege conferred by
the government. Abuseof this privilege by the grantees thereof cannot be countenanced.
The "kabit system" has been identified as one of the root causes of theprevalence of
graft and corruption in the government transportation offices.Although not out rightly
penalized as a criminal offense, the kabit system isinvariably recognized as being
contrary to public policy and, therefore, voidand in existent under Article 1409 of the Civil
Code. It is a fundamentalprinciple that the court will not aid either party to enforce an
illegal contract,but will leave both where it finds then. Upon this premise it would be error
toaccord the parties relief from their predicament.

Lim v. Court of Appeals

Facts:
Private respondent herein purchased an Isuzu passenger jeepney from Gomercino
Vallarta, a holder of a certificate of public convenience for the operation of a public utility
vehicle. He continued to operate the public transport business without transferring the
registration of the vehicle to his name. Thus, the original owner remained to be the
registered owner and operator of the vehicle. Unfortunately, the vehicle got involved in a
road mishap which caused it severe damage. The ten-wheeler-truck which caused the
accident was owned by petitioner Lim and was driven by co-petitioner Gunnaban.
Gunnaban admitted responsibility for the accident, so that petitioner Lim shouldered the
costs of hospitalization of those wounded, compensation for the heirs of the deceased
passenger and the restoration of the other vehicle involved. He also negotiated for the
repair of the private respondent's jeepney but the latter refused and demanded for its
replacement. Hence, private respondent filed a complaint for damages against
petitioners. Meanwhile, the jeepney was left by the roadside to corrode and decay. The
trial court decided in favor of private respondent and awarded him his claim. On appeal,
the Court of Appeals affirmed the decision of the trial court. Hence, petitioner filed this
petition.
Issue:
WoN the new owner of a passenger jeepney who continued to operate the same under
the so-called kabit system and in the course thereof met an accident has the legal
personality to bring the action for damages against the erring vehicle.
Held:
YES. According to the Court, the thrust of the law in enjoining the kabit system is not
much as to penalize the parties but to identify the person upon whom responsibility may
be fixed in case of an accident with the end view of protecting the riding public. In the
present case, it is once apparent that the evil sought to be prevented in enjoining the
kabit system does not exist. First, neither of the parties to the pernicious kabit system is
being held liable for damages. Second, the case arose from the negligence of another
vehicle in using the public road to whom no representation, or misrepresentation, as
regards the ownership and operation of the passenger jeepney was made and to whom
no such representation, or misrepresentation, was necessary. Thus it cannot be said that
private respondent Gonzales and the registered owner of the jeepney were in estoppel
for leading the public to believe that the jeepney belonged to the registered owner. Third,
the riding public was not bothered nor inconvenienced at the very least by the illegal
arrangement. On the contrary, it was private respondent himself who had been wronged
and was seeking compensation for the damage done to him. Certainly, it would be the
height of inequity to deny him his right. Hence, the private respondent has the right to
proceed against petitioners for the damage caused on his passenger jeepney as well as
on his business

KABIT SYSTEM:
The kabit system is an arrangement whereby a person who has been granted a
certificate of public convenience allows other persons who own motor vehicles to
operate them under his license, sometimes for a fee or percentage of the earnings.
Although the parties to such an agreement are not outrightly penalized by law, the kabit
system is invariably recognized as being contrary to public policy and therefore void and
inexistent under Art. 1409 of the Civil Code. In the early case of Dizon v. Octavio the
Court explained that one of the primary factors considered in the granting of a certificate
of public convenience for the business of public transportation is the financial capacity of
the holder of the license, so that liabilities arising from accidents may be duly
compensated. The kabit system renders illusory such purpose and, worse, may still be
availed of by the grantee to escape civil liability caused by a negligent use of a vehicle
owned by another and operated under his license. If a registered owner is allowed to
escape liability by proving who the supposed owner of the vehicle is, it would be easy for
him to transfer the subject vehicle to another who possesses no property with which to
respond financially for the damage done. Thus, for the safety of passengers and the
public who may have been wronged and deceived through the baneful kabit system, the
registered owner of the vehicle is not allowed to prove that another person has become
the owner so that he may be thereby relieved of responsibility. Subsequent cases affirm
such basic doctrine. It would seem then that the thrust of the law in enjoining the kabit
system is not so much as to penalize the parties but to identify the person upon whom
responsibility may be fixed in case of an accident with the end view of protecting the
riding public. The policy therefore loses its force if the public at large is not deceived,
much less involved.

Magboo v. Bernardo
Facts:
Urbano and Emilia Magboo are the parents of Cesar Magboo, a childof 8 years old, who
lived with them and was under their custody until hisdeath on 24 October 1956 when he
was killed in a motor vehicle accident, thefatal vehicle being a passenger jeepney owned
by Delfin Bernardo. At thetime of the accident, said passenger jeepney was driven by
Conrado Roque.The contract between Roque and Bernardo was that Roque was to pay
toBernardo the sum of P8.00, which he paid to Bernardo, for privilege of drivingthe
jeepney, it being their agreement that whatever earnings Roque couldmake out of the
use of the jeepney in transporting passengers from one pointto another in the City of
Manila would belong entirely to Roque. As aconsequence of the accident and as a result
of the death of Cesar Magboo insaid accident, Roque was prosecuted for homicide thru
reckless imprudencebefore the CFI Manila. Roque was sentenced to 6 months of arresto
mayor,with the accessory penalties of the law; to indemnify the heirs of thedeceased in,
with subsidiary imprisonment in case of insolvency, and to paythe costs. Pursuant to
said judgment Roque served his sentence but he wasnot able to pay the indemnity
because he was insolvent. An action was filedby the spouses Magboo against Bernardo
is for enforcement of his subsidiaryliability. The trial court ordered Bernardo to pay the.
Bernardo appealed to the Court of Appeals, which certified the case to the Supreme
Court on theground that only questions of law are involved.
Issue:
Whether or not an employer-employee relationship between thejeepney operator and
the driver?
Held:
An employer-employee relationship exists between a jeepney ownerand a driver under a
boundary system arrangement. The features whichcharacterize the boundary system namely the fact that the driver does notreceive a fixed wage but gets only the excess of
the amount of fares collectedby him over the amount he pays to the jeep-owner, and the
gasolineconsumed by the jeep is for the amount of the driver - are not sufficient
towithdraw the relationship between them from that of employee and
employer.Consequently, the jeepney owner is subsidiary liable as employer
inaccordance with Art.103, Revised Penal Code.II

Sps. Hernandez v. Sps. Dolor

Facts:

At about 3:00 p.m., Lorenzo Menard "Boyet" Dolor, Jr. was driving an owner-type
jeepney owned by her mother, Margarita, towards Anilao, Batangas. As he was
traversing the road at Barangay Anilao East, Mabini, Batangas, his vehicle
collided with a passenger jeepney driven by petitioner Juan Gonzales and owned
by his co-petitioner Francisco Hernandez, which was travelling towards Batangas
City.
Boyet Dolor and his passenger, Oscar Valmocina, died as a result of the
collision. Fred Panopio, Rene Castillo and Joseph Sandoval, who were also on
board the owner-type jeep, which was totally wrecked, suffered physical injuries.
The collision also damaged the passenger jeepney of Francisco Hernandez and
caused physical injuries to its passengers, namely, Virgie Cadavida, Fiscal
Artemio Reyes and Francisca Corona.
Consequently, respondents commenced an action 4 for damages against
petitioners alleging that driver Juan Gonzales was guilty of negligence and lack of
care and that the Hernandez spouses were guilty of negligence in the selection
and supervision of their employees.
Petitioners countered that the proximate cause of the death and injuries
sustained by the passengers of both vehicles was the recklessness of Boyet
Dolor, the driver of the owner-type jeepney, who was driving in a zigzagging
manner under the influence of alcohol. Petitioners also alleged that Gonzales
was not the driver-employee of the Hernandez spouses as the former only leased
the passenger jeepney on a daily basis. The Hernandez spouses further claimed
that even if an employer-employee relationship is found to exist between them,
they cannot be held liable because as employers they exercised due care in the
selection and supervision of their employee.

Issue:
WoN spouses Hernandez are solidarily liable with Juan Gonzales although they were not
in the passenger jeepney driven by the latter when the accident happened
Held:
YES.
Article 2180 states that the obligation imposed by article 2176 is demandable not
only for one's own acts or omissions, but also for those of persons for whom one
is responsible.
Moreover, Article 2180 should be read with Article 2194 of the same Code, which
categorically states that the responsibility of two or more persons who are liable
for quasi-delict is solidary. In other words, the liability of joint tortfeasors is
solidary. Verily, under Article 2180 of the Civil Code, an employer may be held
solidarily liable for the negligent act of his employee.
The next question is whether Julian Gonzales is an employee of the Hernandez
spouses. An affirmative answer will put to rest any issue on the solidary liability of
the Hernandez spouses for the acts of Julian Gonzales. The Hernandez spouses
maintained that Julian Gonzales is not their employee since their relationship

relative to the use of the jeepney is that of a lessor and a lessee. They argue that
Julian Gonzales pays them a daily rental of P150.00 for the use of the jeepney.
In essence, petitioners are practicing the "boundary system" of jeepney operation
albeit disguised as a lease agreement between them for the use of the jeepney.
We hold that an employer-employee relationship exists between the Hernandez
spouses and Julian Gonzales.
Indeed to exempt from liability the owner of a public vehicle who operates it
under the "boundary system" on the ground that he is a mere lessor would be not
only to abet flagrant violations of the Public Service Law, but also to place the
riding public at the mercy of reckless and irresponsible drivers reckless
because the measure of their earnings depends largely upon the number of trips
they make and, hence, the speed at which they drive; and irresponsible because
most if not all of them are in no position to pay the damages they might cause.

Eastern Shipping Lines v. Intermediate Appellate Court

Facts:
On December 4, 1981, two fiber drums of riboflavin were shipped fromYokohama, Japan
for delivery vessel "SS EASTERN COMET" owned bydefendant Eastern Shipping Lines
under a bill of lading. The shipment wasinsured under plaintiffs Marine Insurance Policy.
Upon arrival of the shipmentin Manila on December 12, 1981, it was discharged unto the
custody ofdefendant Metro Port Service, Inc. The latter excepted to one drum, said tobe
in bad order, which damage was unknown to plaintiff. On January 7, 1982 defendant
Allied Brokerage Corporation receivedthe shipment from defendant Metro Port Service,
Inc., one drum opened andwithout seal. On January 8 and 14, 1982, defendant Allied
BrokerageCorporation made deliveries of the shipment to the consignees
warehouse.The latter excepted to one drum which contained spillages, while the rest
ofthe contents was adulterated/fake. Plaintiff contended that due to the losses/damage
sustained by saiddrum, the consignee suffered losses totaling P19, 032.95, due to the
fault andnegligence of defendants. Claims were presented against defendants whofailed
and refused to pay the same. As a consequence of the lossessustained, plaintiff was
compelled to pay the consignee P19, 032.95 underthe aforestated marine insurance
policy, so that it became subrogated to allthe rights of action of said consignee against
defendants.
Issue:
Whether or not a claim for damage sustained on a shipment of goods can be a solidary
or joint and several, liability of the common carrier, thearrastre operator and the customs
broker?
Held:
The common carriers duty to observe the requisite diligence in theshipment of goods
lasts from the time the articles are surrendered to orunconditionally placed in the
possession of, and received by, the carrier fortransportation until delivered to, or until the
lapse of a reasonable time fortheir acceptance by, the person entitled to receive them
(Arts. 1736-1738,Civil Code). When the goods shipped either are lost or arrive in
damagedcondition, a presumption arises against the carrier of its failure to observe
thatdiligence, and there need not be an express finding of negligence to hold itliable (Art.
1735, Civil Code). There are, of course, exceptional cases whensuch presumption of
fault is not observed but these cases, enumerated inArticle 1734 of the Civil Code, are
exclusive, not one of which can be appliedto this case. As to The question of charging
both the carrier and the arrastreoperator with the obligation of properly delivering the
goods to the consignee,the legal relationship between the consignee and the arrastre
operator is akinto that of a depositor and warehouseman while the relationship between
theconsignee and the common carrier is similar to that of the consignee and thearrastre
operator. Since it is the duty of the arrastre to take good care of thegoods that are in its
custody and to deliver them in good condition to theconsignee, such responsibility also
devolves upon the carrier. Both thearrastre and the carrier are therefore charged with the
obligation to deliver thegoods in good condition to the consignee. A factual finding of
both theSupreme Court and the appellate court was that there was sufficient evidence
that the shipment sustained damage while in the successive possession ofappellants.

Accordingly, the liability imposed on Eastern Shipping Lines, Inc.,the sole petitioner in
this case, is inevitable regardless of whether there areothers solidarily liable with it

National Development Co. v. Court of Appeals

Facts:

In accordance with a memorandum agreement entered into between defendants

NDC and MCP (Maritime Company of the Philippines) on September 13, 1962,
defendant NDC as the first preferred mortgagee of three ocean going vessels
including one with the name 'Doa Nati' appointed defendant MCP as its agent to
manage and operate said vessel for and in its behalf and account
On February 28, 1964 the E. Philipp Corporation of New York loaded on board
the vessel 'Doa Nati' at San Francisco, California, a total of 1,200 bales of
American raw cotton consigned to the order of Manila Banking Corporation,
Manila and the People's Bank and Trust Company acting for and in behalf of the
Pan Asiatic Commercial Company, Inc., who represents Riverside Mills
Corporation. Also loaded on the same vessel at Tokyo, Japan, were the cargo of
Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking
Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of
aluminum foil
En route to Manila the vessel Doa Nati figured in a collision on April 15, 1964 at
Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which
550 bales of aforesaid cargo of American raw cotton were lost and/or destroyed,
of which 535 bales as damaged were landed and sold on the authority of the
General Average Surveyor for Yen 6,045,-500 and 15 bales were not landed and
deemed lost
On April 22, 1965, the Development Insurance and Surety Corporation filed
before the then Court of First Instance of Manila an action for the recovery of the
sum of P364,915.86 plus attorney's fees of P10,000.00 against NDC and MCP

Issue:
Which laws govern loss or destruction of goods due to collision of vessels outside
Philippine waters, and the extent of liability as well as the rules of prescription provided
thereunder.
Held:
PHILIPPINE LAWS.
In the case at bar, it has been established that the goods in question are
transported from San Francisco, California and Tokyo, Japan to the Philippines
and that they were lost or damaged due to a collision which was found to have
been caused by the negligence or fault of both captains of the colliding vessels.
It is evident that the laws of the Philippines will apply, and it is immaterial that the
collision actually occurred in foreign waters.
Under Article 1733 of the Civil Code, common carriers from the nature of their
business and for reasons of public policy are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them according to all circumstances of each case. Accordingly,
under Article 1735 of the same Code, in all cases other than those mentioned is
Article 1734 thereof, the common carrier shall be presumed to have been at fault
or to have acted negligently, unless it proves that it has observed the

extraordinary diligence required by law.

It appears, however, that collision falls among matters not specifically regulated
by the Civil Code, so that no reversible error can be found in respondent court's
application to the case at bar of Articles 826 to 839, Book Three of the Code of
Commerce, which deal exclusively with collision of vessels.
More specifically, Article 826 of the Code of Commerce provides that where
collision is imputable to the personnel of a vessel, the owner of the vessel at
fault, shall indemnify the losses and damages incurred after an expert appraisal.
But more in point to the instant case is Article 827 of the same Code, which
provides that if the collision is imputable to both vessels, each one shall suffer its
own damages and both shall be solidarily responsible for the losses and
damages suffered by their cargoes.
Significantly, under the provisions of the Code of Commerce, particularly Articles
826 to 839, the shipowner or carrier, is not exempt from liability for damages
arising from collision due to the fault or negligence of the captain. Primary liability
is imposed on the shipowner or carrier in recognition of the universally accepted
doctrine that the shipmaster or captain is merely the representative of the owner
who has the actual or constructive control over the conduct of the voyage

Both the owner and agent of the offending vessel are liable for the damage done
where both are impleaded that in case of collision, both the owner and the agent
are civilly responsible for the acts of the captain; that while it is true that the
liability of the naviero in the sense of charterer or agent, is not expressly provided
in Article 826 of the Code of Commerce, it is clearly deducible from the general
doctrine of jurisprudence under the Civil Code but more specially as regards
contractual obligations in Article 586 of the Code of Commerce. Moreover, the
Court held that both the owner and agent (Naviero) should be declared jointly
and severally liable, since the obligation which is the subject of the action had its
origin in a tortious act and did not arise from contract Consequently, the agent,
even though he may not be the owner of the vessel, is liable to the shippers and
owners of the cargo transported by it, for losses and damages occasioned to
such cargo, without prejudice, however, to his rights against the owner of the
ship, to the extent of the value of the vessel, its equipment, and the freight.

British Airways Inc. v. Court of Appeals

Facts:
On April 16, 1989, Mahtani is on his way to Bombay, India fromManila. His trip was
Manila-Hong Kong via PAL and then Hong Kong-Indiavia British Airways. Prior to his
departure, he checked in two pieces ofluggage containing his clothing and other
personal effects, confident that thesame would be transferred to his BA flight.
Unfortunately, when he arrived in India, he discovered that his luggagewas missing. The
RTC awarded Mahtani damages which was affirmed by CA.
Issue:
Whether or not in a contract of air carriage a declaration by thepassenger is needed to
recover a greater amount?
Held:
American jurisprudence provides that an air carrier is not liable for theloss of baggage in
an amount in excess of the limits specified in the tariffwhich was filed with the proper
authorities, such tariff being binding on thepassenger regardless of the passengers lack
of knowledge thereof or assentthereto. This doctrine is recognized in this jurisdiction.
The inescapable conclusion that BA had waived the defense of limitedliability when it
allowed Mahtani to testify as to the actual damages heincurred due to misplacement of
his luggage, without any objection. It is a well-settled doctrine that where the proponent
offers evidencedeemed by counsel of the adverse party to be inadmissible for any
reason,the latter has the right to object. However, such right is a mere privilegewhich can
be waived. Necessarily, the objection must be made at the earliestopportunity, in case of
silence when there is opportunity to speak mayoperate as a waiver of objections