Notes:

A contract of air carriage is a peculiar one. Imbued with public interest, common carriers are required by law to
carry passengers 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. A contract to transport passengers is quite different in
kind and degree from any other contractual relation. And this because its business is mainly with the traveling
public. It invites people to avail of the comforts and advantages it offers. The contract of carriage, therefore,
generates a relation attended with a public duty. Failure of the carrier to observe this high degree of care and
extraordinary diligence renders it liable for any damage that may be sustained by its passengers.

=================================================================================

 Loadstar Shipping Co., Inc. vs. CA and the Manila Insurance Co., Inc. GR No. 131621, September 28, 1999

Facts:

On 19 November 1984, Loadstar Shipping Co Inc (Loadstar) received on board its vessel, the M/V Cherokee, 705
bales of lawanit hardwood, 27 boxes and crates of tile wood assemblies, and 49 bundles of mouldings. The goods
were insured with Manila Insurance Co (MIC) against all risks. The vessel was insured by Prudential Guarantee &
Assurance Inc (PGAI). On 20 November 1984, on its way to Manila from the port of Nasipit, Agusan del Norte, the
vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, MIC, as
subrogee of the consignee of the goods, sued Loadstar and PGAI, alleging that the sinking of the vessel was due
to the fault and negligence of Loadstar and its employees. MIC also asked that PGAI be ordered to pay the
appropriate portion of the insurance proceeds from the loss of the vessel directly to MIC. Loadstar denied any
liability for the loss of the goods and claimed that the sinking of its vessel was due to force majeure. PGAI argued
that MIC had no cause of action against it, Loadstar being the insured. In any event, PGAI was later dropped as a
defendant after it paid the insurance proceeds to Loadstar.

The trial Court held in favour of MIC. Loadstar appealed to the Court of Appeals (CA). The CA affirmed the trial
Court's ruling, observing that Loadstar cannot be considered a private carrier on the sole ground that there was
only a single shipper on that fateful voyage. The CA noted that the charter of the vessel was limited to the ship,
but Loadstar retained control over its crew. As a common carrier, it is the Code of Commerce, not the Civil Code,
which should be applied in determining the rights and liabilities of the parties. The vessel was not seaworthy
because it was undercrewed on the day of the voyage. If it had been seaworthy, it could have withstood the
'natural and inevitable action of the sea' on 20 November 1984, when the condition of the sea was moderate.
The vessel sank, not because of force majeure, but because it was not seaworthy. Loadstar's allegation that the
sinking was probably due to the 'convergence of the winds' was not duly proven at the trial. The 'limited liability'
rule, therefore, is not applicable considering that, in this case, there was an actual finding of negligence on the
part of the carrier.

Issue:

Whether or not Loadstar is a common carrier

Held:

Loadstar is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and
this public character is not altered by the fact that the carriage of the goods in question was periodic, occasional,
episodic or unscheduled. The records do not disclose that the M/V Cherokee, on the date in question, undertook
to carry a special cargo or was chartered to a special person only. There was no charterparty. The bills of lading
failed to show any special arrangement, but only a general provision to the effect that the M/V Cherokee was a
'general cargo carrier'. The bare fact that the vessel was carrying a particular type of cargo for one shipper, which
appears to be purely coincidental, is not reason enough to convert the vessel from a common to a private carrier,
especially where, as here, it was shown that the vessel was also carrying passengers.
The M/V Cherokee was not seaworthy when it embarked on its voyage on 19 November 1984. The vessel was
not even sufficiently crewed at the time. For a vessel to be seaworthy, it must be adequately equipped for the
voyage and crewed with a sufficient number of competent officers and crew. The failure of a common carrier to
maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty
prescribed in art 1755 of the Civil Code.

Neither do we agree with Loadstar's argument that the “limited liability” theory should be applied in this case.
The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or
agent. Loadstar was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to
sail despite knowledge of an approaching typhoon. In any event, it did not sink because of any storm that may be
deemed as force majeure, in as much as the wind condition in the area where it sank was determined to be
moderate. Since it was remiss in the performance of its duties, Loadstar cannot hide behind the 'limited liability'
doctrine to escape responsibility for the loss of the vessel and its cargo.

Nor is there merit to the contention that the claim in this case was barred by prescription. MIC's cause of action
had not yet prescribed at the time it was concerned. In as much as neither the Civil Code nor the Code of
Commerce states a specific prescriptive period on the matter, the Carriage of Goods by Sea Act (COGSA) - which
provides for a one-year period of limitation on claims for loss of, or damage to, cargoes sustained during transit -
may be applied suppletorily to the case at bar. This one-year prescriptive period also applies to the insurer of the
goods: see Filipino Merchants Insurance Co Inc v Alejandro, 145 SCRA 42 (1986). In this case, the period for filing
the action for recovery has not yet elapsed. Moreover, a stipulation reducing the one-year period is null and void;
it must, accordingly, be struck down.

 Gatchalian vs. Delim, GR No. 56487, October 21, 1991, 203 SCRA 126

Facts:

On July 11, 1973, petitioner Reynalda Gatchalian boarded as paying passenger a minibus owned by respondents.
While the bus was running along the highway, a “snapping sound” was heard, and after a short while, the bus
bumped a cement flower pot, turned turtle and fell into a ditch. The passengers were confined in the hospital,
and their bills were paid by respondent’s spouse on July 14. Before Mrs. Delim left, she had the injured
passengers sign an already prepared affidavit waiving their claims against respondents. Petitioner was among
those who signed. Notwithstanding the said document, petitioner filed a claim to recover actual and moral
damages for loss of employment opportunities, mental suffering and inferiority complex caused by the scar on
her forehead. Respondents raised in defense force majeure and the waiver signed by petitioner. The trial court
upheld the validity of the waiver and dismissed the complaint. The appellate court ruled that the waiver was
invalid, but also that the petitioner is not entitled to damages.

Issues:

(1) Whether there was a valid waiver

Held:

(1) We agree with the majority of the Court of Appeals who held that no valid waiver of her cause of action had
been made by petitioner. A waiver, to be valid and effective, must in the first place be couched in clear and
unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which legally
pertains to him. A waiver may not casually be attributed to a person when the terms thereof do not explicitly and
clearly evidence an intent to abandon a right vested in such person.

The circumstances under which the Joint Affidavit was signed by petitioner Gatchalian need to be considered.
Petitioner testified that she was still reeling from the effects of the vehicular accident when the purported waiver
in the form of the Joint Affidavit was presented to her for signing; that while reading the same, she experienced
dizziness but that, seeing the other passengers who had also suffered injuries sign the document, she too signed
without bothering to read the Joint Affidavit in its entirety. Considering these circumstances, there appears
substantial doubt whether petitioner understood fully the import of the Joint Affidavit (prepared by or at the
instance of private respondent) she signed and whether she actually intended thereby to waive any right of
action against private respondent.

Finally, because what is involved here is the liability of a common carrier for injuries sustained by passengers in
respect of whose safety a common carrier must exercise extraordinary diligence, we must construe any such
purported waiver most strictly against the common carrier. To uphold a supposed waiver of any right to claim
damages by an injured passenger, under circumstances like those exhibited in this case, would be to dilute and
weaken the standard of extraordinary diligence exacted by the law from common carriers and hence to render
that standard unenforceable. We believe such a purported waiver is offensive to public policy.

(2) In case of death or injuries to passengers, a statutory presumption arises that the common carrier was at fault
or had acted negligently "unless it proves that it [had] observed extraordinary diligence as prescribed in Articles
1733 and 1755." To overcome this presumption, the common carrier must show to the court that it had exercised
extraordinary diligence to present the injuries. The standard of extraordinary diligence imposed upon common
carriers is considerably more demanding than the standard of ordinary diligence. A common carrier is bound to
carry its passengers safely "as far as human care and foresight can provide, using the utmost diligence of a very
cautious person, with due regard to all the circumstances".

The records before the Court are bereft of any evidence showing that respondent had exercised the
extraordinary diligence required by law. The obvious continued failure of respondent to look after the
roadworthiness and safety of the bus, coupled with the driver's refusal or neglect to stop the mini-bus after he
had heard once again the "snapping sound" and the cry of alarm from one of the passengers, constituted wanton
disregard of the physical safety of the passengers, and hence gross negligence on the part of respondent and his
driver.

(3) At the time of the accident, she was no longer employed in a public school. Her employment as a substitute
teacher was occasional and episodic, contingent upon the availability of vacancies for substitute teachers. She
could not be said to have in fact lost any employment after and by reason of the accident. She may not be
awarded damages on the basis of speculation or conjecture.

Petitioner's claim for the cost of plastic surgery for removal of the scar on her forehead, is another matter. A
person is entitled to the physical integrity of his or her body; if that integrity is violated or diminished, actual
injury is suffered for which actual or compensatory damages are due and assessable. Petitioner Gatchalian is
entitled to be placed as nearly as possible in the condition that she was before the mishap. A scar, especially one
on the face of the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving
raise to a legitimate claim for restoration to her conditio ante.

Moral damages may be awarded where gross negligence on the part of the common carrier is shown.
Considering the extent of pain and anxiety which petitioner must have suffered as a result of her physical injuries
including the permanent scar on her forehead, we believe that the amount of P30,000.00 would be a reasonable
award. Petitioner's claim for P1,000.00 as attorney's fees is in fact even more modest.