TRANSPORTATION LAW l Atty.
Glenn Capanas l For the exclusive use of EH 404 2016-2017
GENERAL CONSIDERATIONS
CASES
Cathay Pacific v. Reyes
Facts:
Wilfredo Reyes made a travel reservation with Sampaguita Travel
(TRAVEL AGENCY) for his family’s trip to Australia. Upon booking and
confirmation of their flight schedule, Reyes paid for the airfare and was
issued 4 Cathay Pacific roundtrip tickets. They were able to fly to
Australia without a hitch. A week before they were scheduled to fly back
home, Reyes confirmed their return flight with Cathay Pacific and was
advised that the reservation was still okay as scheduled. However, on
the day of their flight, Reyes was informed by a staff of Cathay Pacific
that they did not have confirmed reservations, and only his mother-in-
law’s flight was confirmed. Nevertheless, they were allowed to board the
flight to Hongkong due to adamant pleas from Wilfredo.
When they arrived in Hongkong, they were again informed of the same
problem. Unfortunately this time, the Reyeses were not allowed to board
because the flight to Manila was fully booked. Only the mother-in-law
was allowed to proceed to Manila from Hongkong. On the following day,
the Reyeses were finally allowed to board the next flight bound for
Manila.
Upon arriving in the Philippines, Reyes went to Sampaguita Travel to
report the incident. He was informed by Sampaguita Travel that it was
actually Cathay Pacific which cancelled their bookings. Thus, Reyes
demanded for damages from Cathay Pacific.
The RTC initially ruled against Reyes, saying that they were in
possession of valid tickets but did not have confirmed reservations for
their return trip. Upon appeal, the CA ordered Cathay Pacific to pay each
of the Reyes P25,000 as nominal damages.
Issue: Whether a contract of carriage was perfected.
Ruling:
Contract of carriage between the Reyeses and Cathay Pacific
Yes. The determination of whether or not the award of damages is
correct depends on the nature of the respondents’ contractual relations
with Cathay Pacific and Sampaguita Travel. It is beyond dispute that
respondents were holders of Cathay Pacific airplane tickets and they
made the booking through Sampaguita Travel.
Respondents’ cause of action against Cathay Pacific stemmed from a
breach of contract of carriage. Respondents entered into a contract of
carriage with Cathay Pacific. As far as respondents are concerned, they
were holding valid and confirmed airplane tickets. The ticket in itself is
a valid written contract of carriage whereby for a consideration, Cathay
Pacific undertook to carry respondents in its airplane for a round-trip
flight from Manila to Adelaide, Australia and then back to Manila. In fact,
Wilfredo called the Cathay Pacific office in Adelaide one week before his
return flight to re-confirm his booking.
Respondents are not privy to whatever misunderstanding and confusion
that may have transpired in their bookings. On its face, the airplane
ticket is a valid written contract of carriage. This Court has held that
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 he does not, then the carrier opens itself to a suit for breach of
contract of carriage.
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Contract of services between Sampaguita Travel and the
Reyeses
In contrast, the contractual relation between Sampaguita Travel and
respondents is a contract for services. The object of the contract is
arranging and facilitating the latter’s booking and ticketing. It was even
Sampaguita Travel which issued the tickets.
There was indeed failure on the part of Sampaguita Travel to exercise
due diligence in performing its obligations under the contract of services.
It was established by Cathay Pacific, through the generation of the
PNRs, that Sampaguita Travel failed to input the correct ticket number
for Wilfredo’s ticket. Cathay Pacific even asserted that Sampaguita
Travel made two fictitious bookings for Juanita and Michael. Thus, the
negligence of Sampaguita Travel renders it also liable for damages.
LRTA v. Natividad
Facts:
Nicanor Navidad entered the EDSA LRT station drunk, after purchasing
a token around 7pm. While he was standing on the platform near the
LRT tracks, a security guard assigned in the area approached him. An
altercation between the two ensued that led to a fist fight, where
Navidad fell on the LRT tracks at the exact moment an LRT train was
coming in. He was struck by the moving train and killed instantaneously.
His widow along with the children filed a complaint for damages against
the security guard, the operator of the LRT Train which ran over
Navidad, the LRTA, the Metro Transit Org and Prudent Security for the
death of her husband. The Trial Court rendered a ruling against security
agency and the security guard. However, on appeal, the CA exonerated
them and instead held the LRTA and the operator of the train liable.
Issue: Whether or not there was a perfected contract of carriage
between Navidad and LRTA
Held:
Yes. A contract of carriage was deemed created from the moment
Navidad paid the fare at the LRT station and entered the premises of
the latter, entitling Navidad to all the rights and protection under a
contractual relation. The appellate court had correctly held LRTA and
Roman liable for the death of Navidad in failing to exercise extraordinary
diligence imposed upon a common carrier. While the deceased might
not have then as yet boarded the train, a contract of carriage theretofore
had already existed when the victim entered the place where passengers
were supposed to be after paying the fare and getting the corresponding
token therefor.
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances. Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but for
so long as the passengers are within its premises and where they ought
to be in pursuance to the contract of carriage. The statutory provisions
render a common carrier liable for death of or injury to passengers (a)
through the negligence or willful acts of its employees or b) on account
of willful acts or negligence of other passengers or of strangers if the
common carrier’s employees through the exercise of due diligence could
have prevented or stopped the act or omission.
In case of such death or injury, a carrier is presumed to have been at
fault or been negligent, and by simple proof of injury, the passenger is
relieved of the duty to still establish the fault or negligence of the carrier
or of its employees and the burden shifts upon the carrier to prove that
the injury is due to an unforeseen event or to force majeure. The liability
of the common carrier and that of the independent contractor is solidary.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017

De Guzman v. Court of appeals

CONSIGNEE AS A PARTY
Common carrier but not liable due to fortuitous event
CONSIGNEE AS A PARTY
Facts:
He is the person to whom the goods are to be delivered. He may be
the shipper himself or a third person.
Ernesto Cendana (RESPONDENT) is a junk dealer who buys used bottles
and scrap metal in Pangasinan and would bring them to Manila for
General rule: A consignee, if he is not the shipper, is not considered
resale, using 2 six-wheeler trucks. On the return trip to Pangasinan, he
a party to the contract of carriage
would have a side-line of loading his vehicles with cargo which various
merchants wanted delivered to Pangasinan. For such service, he
Exceptions:
charged freight rates which were commonly lower than regular
commercial rates.
1. There is a relationship of agency between the consignor and the
consignee;
One Pedro de Guzman (PETITIONER) contracted with respondent the
2. There is an unequivocal acceptance of the bill of lading delivered
hauling of 750 cartons of milk. However, only 150 boxes of milk were
to the consignee with full knowledge of its contents; or
delivered. The other 600 never reached petitioner, since the truck used
3. Consignee demands before the carrier the fulfillment of the
was hijacked by armed men. Thus, petition filed an action for damages.
stipulation made by the consignor in favor of consignee, specifically
Petitioner claims that respondent failed to exercise extraordinary
the delivery of goods or the availment of a stipulation pour autrui.
diligence required by law of a common carrier. However, respondent
denied that he was a common carrier and claims that the loss having
In the above mentioned cases, though the consignee is not a signatory
been due to force majeure, he cannot be held responsible.
to the contract of carriage he becomes a party thereto. (MOF v. Shin
Yang Brokerage)
The trial court ruled in favor of petitioner but upon appeal, the CA
reversed the same, ruling that respondent transported return loads of
WHO IS A PASSENGER freight as a causal occupation – a side-line to his scrap iron business
and not as a common carrier. Hence, this appeal.
Passenger
One who travels in a public conveyance by virtue of contract, express or
Issues:
implied, with the carrier as to the payment of fare or that which is
1. Whether respondent is a common carrier.
accepted as an equivalent thereof
2. Whether respondent is liable to pay for the value of the
undelivered merchandise.
Still considered as a passenger even if:
A. Carried gratuitously, or
Ruling:
B. With a reduced fare
Whether respondent is a common carrier.
Moreover, the following requisites must be met for one to be considered
a passenger:
Yes. Art. 1732 provides that common carriers are persons, corporations,
firms or associations engaged in the business of carrying or transporting
In aircrafts
passengers or goods or both, by land, water, or air for compensation,
A. Contract to carry – Mere meeting of minds as to subject matter and
offering their services to the public.
consideration is enough
The above article makes no distinction between one whose principal
B. Contract of carriage – checked in at the departure counter, passed
business activity is the carrying of persons or goods or both, and one
the customs, boarded the shuttle bus and proceeded to the ramp
who does such carrying only as an ancillary activity (in local Idiom as "a
and the baggage loaded
sideline"). It also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or
In trains – (TIPS)
scheduled basis and one offering such service on an occasional, episodic
A. Must purchase a ticket;
or unscheduled basis. Neither does Article 1732 distinguish between a
B. Present himself at the proper place and in a proper manner for
carrier offering its services to the "general public," i.e., the general
transportation
community or population, and one who offers services or solicits
C. With the bona fide intention to use the facilities of the carrier; and
business only from a narrow segment of the general population.
D. Possess sufficient fare (LRTA v. Navidad)
Thus, respondent is properly characterized as a common carrier even
In buses, jeepneys and street cars
though he merely "back-hauled" goods for other merchants from Manila
Once a public utility bus stops, it is in effect making a continuous offer
to Pangasinan, although such back-hauling was done on a periodic or
to bus riders. Thus, one attempting to board the conveyance is a
occasional rather than regular or scheduled manner, and even though
passenger. (Dangwa Transpo. V. CA)
private respondent's principal occupation was not the carriage of goods
for others. There is no dispute that private respondent charged his
Thus, one is not a passenger when one is a:
customers a fee for hauling their goods; that fee frequently fell below
a. Stow away
commercial freight rates is not relevant here.
b. The driver did not consent or had no knowledge of the presence of
the person.
Whether respondent is liable to pay for the value of the
undelivered merchandise.

No. The law provides that a common carrier will not be allowed to divest
or diminish any responsibility even for acts of strangers like thieves or
robbers, except where such thieves or robbers acted with grave or
irresistible threat, violence or force. In this case, armed men help up the
truck which carried the cargo. The trial court in the criminal case for
robbery filed against the robber ruled that the accused acted with grave,

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TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
if not irresistible threat, violence or force. The robbers not only took
away the truck and its cargo but also kidnapped the driver and his
helper.
In these circumstances, the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier and
properly regarded as a fortuitous event. It is necessary to recall that
even common carriers are not made absolute insurers against all risks
of travel and of transport of goods, and are not held liable for acts or
events which cannot be foreseen or are inevitable, provided that they
shall have complied with the rigorous standard of extraordinary
diligence.
Sps. Perena v. Zarate
Facts:
The Pereñas were owners of a van being used for private school
transport. Nicolas and Teresita Zarate contracted Teodoro and Nanette
Pereña to transport their (Zarate’s) son, Aaron, to and from the school.
One day, the driver, Alfaro decided to take a short cut in order to avoid
traffic. The usual short cut was a railroad crossing. Alfaro saw that
the barandilla (the pole used to block vehicles crossing the railway) was
up. He then tried to overtake a bus. However, there was in fact an
oncoming train but Alfaro no longer saw the train as his view was already
blocked by the bus he was trying to overtake. The bus was able to cross
unscathed but the van’s rear end was hit.
During the collision, Aaron, was thrown off the van. His body hit the
railroad tracks and his head was severed. It turns out that Alfaro was
not able to hear the train honking from 50 meters away before the
collision because the van’s stereo was playing loudly.
The Zarates sued PNR and the Pereñas. Their cause of action against
PNR was based on quasi-delict. Their cause of action against the
Pereñas was based on breach of contract of common carriage. In their
defense, the Pereñas invoked that as private carriers they were not
negligent in selecting Alfaro as their driver as they made sure that he
had a driver’s license and that he was not involved in any accident prior
to his being hired. In short, they observed the diligence of a good father
in selecting their employee.
Issue: Whether or not the defense of due diligence of a good father by
the Pereñas is untenable.
Ruling:
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The Pereñas are common
carriers. They are not merely private carriers. (Prior to this case, the
status of private transport for school services or school buses is not well
settled as to whether or not they are private or common carriers – but
they were generally regarded as private carriers). Private transport for
schools are common carriers.
The Pereñas, as the operators of a school bus service were: (a) engaged
in transporting passengers generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over established roads
by the method by which the business was conducted; and (c)
transporting students for a fee.
Despite catering to a limited clientèle, the Pereñas operated as a
common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular school
living within or near where they operated the service and for a fee. Being
a common carrier, what is required of the Pereñas is not mere diligence
of a good father. What is specifically required from them by law is
extraordinary diligence – a fact which they failed to prove in court.
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Verily, their obligation as common carriers did not cease upon their
exercise of diligently choosing Alfaro as their employee.
Westwind v. UCPB
Facts:
Kinsho-Mataichi Corporation shipped from the port of Kobe, Japan, 197
metal containers/skids of tin-free steel for delivery to the consignee, San
Miguel Corporation (SMC). It was covered by a bill of lading and loaded
and received clean on board M/V Golden Harvest Voyage vessel owned
and operated by Westwind Shipping Corporation (Westwind). SMC
insured the cargoes against all risks with UCPB General Insurance Co.
The shipment arrived in Manila and was discharged in the custody of
the arrastre operator, Asian Terminals, Inc. (ATI).
During the unloading operation, however, six containers/skids sustained
dents and punctures from the forklift used by the stevedores of Ocean
Terminal Services, Inc. (OTSI) in centering and shuttling the
containers/skid. As a consequence, the local ship agent of the vessel
Baliwag Shipping Agency, Inc., issued two Bad Order Cargo Receipt.
Orient Freight International, Inc. (OFII), the customs broker of SMC,
withdrew from ATI the 197 containers/skids, including the six in
damaged condition. It was discovered upon discharge that additional
nine containers/skids due to the forklift operations; thus, making the
total number of 15 containers/skids in bad order.
AFTER ALMOST A YEAR SMC filed a claim against UCPB, Westwind, ATI,
and OFII to recover the amount corresponding to the damaged 15
containers/skids. UCPB as insurer paid liability to SMC. Thereafter, UCPB
was subrogated into the rights of SMC. UCPB claimed for the amount
with the courts. Westwind argues that it no longer had actual or
constructive custody of the containers/skids at the time they were
damaged by ATI's forklift operator during the unloading operations
contends that its responsibility already ceased from the moment the
cargoes were delivered to ATI, which is reckoned from the moment the
goods were taken into the latter's custody Westwind adds that ATI,
which is a completely independent entity that had the right to receive
the goods as exclusive operator of stevedoring.
As for OFII, it maintains that it is not a common carrier, but only a
customs broker whose participation is limited to facilitating withdrawal
of the shipment in the custody of ATI by overseeing and documenting
the turnover. It asserts that the loading to the trucks were made by way
of forklifts owned and operated by ATI and the unloading from the
trucks at the SMC warehouse was done by way of forklifts owned and
operated by SMC employee.
Issues:
1. Whether Westwind still had actual or constructive custody of the
containers/skids at the time they were damaged by ATI's forklift
operator during the unloading operations
2. Whether OFII was a common carrier and merely a customs broker?
Ruling:
Westwind still had actual/ custody of such goods.
The case of Wallem applies, as it settled the query on which between a
common carrier and an arrastre operator should be responsible for
damage or loss incurred by the shipment during its unloading. 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. The functions of an arrastre operator involve
the handling of cargo deposited on the wharf or between the
establishment of the consignee or shipper and the ship's tackle. Being
the custodian of the goods discharged from a vessel, an arrastre
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
operator's duty is to take good care of the goods and to turn them over
to the party entitled to their possession.
Handling cargo is mainly the arrastre operator's principal work so its
drivers/operators or employees should observe the standards and
measures necessary to prevent losses and damage to shipments under
its custody. The legal relationship between the consignee and the
arrastre operator is akin to that of a depositor and warehouseman. The
relationship between the consignee and the common carrier is similar to
that of the consignee and the arrastre operator. Since it is the duty of
the ARRASTRE to take good care of the goods that are in its custody
and to deliver them in good condition to the consignee, such
responsibility also devolves upon the CARRIER.
Both the ARRASTRE and the CARRIER are therefore charged with and
obligated to deliver. The liability of the arrastre operator was reiterated
in Eastern Shipping Lines with the clarification that the arrastre operator
and the carrier are not always and necessarily solidarily liable. The
aforementioned Section 3 (2) of the COGSA states that among the
carriers' responsibilities are to properly and carefully load, care for and
discharge the goods carried.
What Westwind failed to realize is that the extraordinary responsibility
of the common carrier lasts until the time the goods are actually or
constructively delivered by the carrier to the consignee or to the person
who has a right to receive them. Since the discharging of the
containers/skids, which were covered by only one bill of lading, had not
yet been completed at the time the damage occurred, there is no reason
to imply that there was already delivery, actual or constructive, of the
cargoes to ATI
OFII is a common carrier
A customs broker has been regarded as a common carrier because
transportation of goods is an integral part of its business (Schmitz
Transport. Article 1732 does not distinguish between one whose
principal business activity is the carrying of goods and one who does
such carrying only as an ancillary activity. OFII is a common carrier is
buttressed by the testimony of its own witness, Mr. Loveric Panganiban
Cueto, that part of the services it offers to clients is cargo forwarding,
which includes the delivery of the shipment to the consignee.
Thus, for undertaking the transport of cargoes from ATI to SMC's
warehouse in Calamba, Laguna, OFII is considered a common carrier.
In the case at bar, it was established that, except for the six
containers/skids already damaged, OFII received the cargoes from ATI
in good order and condition; and that upon its delivery to SMC,
additional nine containers/skids were found to be in bad order.
Federal Phoenix v. Fortune Sea
Facts:
Fortune Sea agreed to lease its vessel MV Ricky Rey to Northern
Mindanao Transport. The time charter party agreement contained that
it shall be leased for 90 days (extended for another 90) to carry bags of
cement to different ports.
Northern Mindanao then transported abaca fibers shipped by Manila
Hemp Trading Corp in favour of the consignee Newtech. It was covered
by a bill of lading and insure by Federal Phoenix. Upon its arrival, the
stevedores noticed smokes from the cargo haul; 60 bales of abaca were
damaged.
Newtech filed an insurance claim against Federal Phoenix. Later, the
latter subrogated to the former’s rights and demanded payment from
Fortune se but it remained unheeded. Fortune Sea alleged that it was
acting as a private carrier at the time. The agreement provided that MV
Ricky Rey shall be under the orders and complete control of Northern
Transport.
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Issue: Whether Fortune Sea was converted into a private carrier by
virtue of the charter party agreement
Ruling:
Yes. The charter party agreement converted Fortune Sea into a private
carrier.
It has been settled in various jurisprudence that the nature of a contract
is not dependent on the assigned name of the parties. The decisive
factor being the intention of the parties evident on the contract or other
conducts. In the case, although it was denominated as a time charter
party agreement, it includes not only the vessel but also its crew thereby
making Northern Transport the owner pro hac vice of the vessel during
the whole period of the voyage. It assumes all operational control as
evidenced by the master of the vessel being under Northern Transport’s
command.
Cosequently, Fortune Sea relinquished its possession, command, and/or
navigation of the vessel. This was heavily supported by the testimonies
of the captain itself and that all directions were handed out by Northern
Transport.
CHARACTERISTICS OF COMMON CARRIER
COMMON CARRIER
Art. 1732 NCC: 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.
Characteristics:
1. Engaged in the business and holds himself out as ready to engage
in such and not as a casual operation (Note: It does not
differentiate principal business or ancillary business)
2. Undertake to carry goods of kind to which business is confined
3. Undertake to carry by method by which business is conducted; and
4. Transportation for hire.
TN: A common carrier may have limited clientele, it may not have a
fixed and publicly known route, it need not maintain a terminal or issue
tickets, nor does it have to conduct its business in a regular basis or in
a scheduled manner.
EFFECTS OF CHARTER PARTY
CHARTER PARTY
A contract by which an entire ship or some principal thereof, is lent by
the owner to another person for a specified time or use (ship for rent)
It may either be:
1. Contract of Affreightment
Involves use of shipping space on vessels leased by the owner in
part/ as a whole, to carry goods for others.
It may either be:
A. Time charter – leased for a fixed period or time
B. Voyage Charter – Leased for a single voyage
2. Charter by demise/ bareboat charter
Whole vessel is let to the charterer with a transfer to him of its
entire command and possession and consequent control of its
navigation including master and crew.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
When does a charter party transform a common carrier into a
private carrier?
Only when it is a charter by demise or bareboat charter and not a
contract of affreightment. Such is the case because the charter mans
the vessel with his own people and becomes, in effect, the owner for
the voyage or service stipulated.
TRAVEL AGENT, PIPELINE OPERATOR, CUSTOMS BROKER
TRAVEL AGENT
General rule: A travel agency is not a common carrier as the contract
between the travel agency is a contract of service and not a contract of
carriage. Thus, diligence required is mere good father of a family.
Exception: If it provides tour packages which include transportation to
and from the destination.
Sps. Cruz vs. Sun Holidays
The operator a beach resort that accepts clients by virtue of 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 service is so intertwined with its main business as to be properly
considered ancillary thereto.
PIPELINE OPERATOR
A pipeline operator is a common carrier even if the oil or petroleum
products are being transported not through motor vehicles but through
pipelines. The law does not provide that the transportation of the
passengers or goods should be by motor vehicle, only that the means
of transportation is by land, water or air.
CUSTOMS BROKER
Calvo v. UCPB
A customs broker is a common carrier although he 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. Common carrier despite a limited clientele.
A.F. Sanchez Brokerage v. CA
Customs broker is engaged in the business of transportation as a
common carrier if it obliges itself to undertake to deliver goods to the
warehouse for consideration.
Schmitz Transport and Brokerage vs. Transport Venture
A customs broker may be regarded as a common carrier. Petitioner is a
common carrier for it undertook to transport the cargoes from the
shipside of to the consignee’s warehouse. As long as a person or
corporation holds itself to the public for the purpose of transporting
goods as a business, it is already considered a common carrier. That
petitioner is a common carrier, the testimony of its own Vice-President
and General Manager that part of the services it offers to its clients as a
brokerage firm includes the transportation of cargoes reflects so.
REGISTERED OWNER RULE
REGISTERED OWNER RULE/REGISTRATION LAWS
Governed by the Land Transportation and Traffic Code and administered
by the Land Transportation Office.
The registered owner of a vehicle is liable from any damage caused by
the negligent operation of the vehicle although the same was already
sold or conveyed to another person at the time of the accident. The
registered owner is liable to the injured party subject to his right of
recourse against the transferee or the buyer.
True even in the case of lease
The registered owner rule applies even if the registered owner leased
the vehicle to another who is the actual operator. The registered owner
is directly liable.
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When registered owner not liable
Registered owner not liable if vehicle was taken from him without his
knowledge and consent.
Purpose of the law
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 vehicle on the public highways, responsibility therefore can be fixed
on a definite individual – the registered owner.
KABIT SYSTEM
KABIT SYSTEM
This 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.
TN: The “registered owner” rule is applicable to people involved on a
“kabit system”.
Void and inexistent
Although the parties to such an agreement are not outrightly penalized,
the kabit system is invariably recognized as being contrary to public
policy and therefore void and inexistent.
Why kabit system is pernicious
It would seem 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.
Pari delicto rule
Parties to the “kabit system” cannot invoke the same as against each
other either to enforce their illegal agreement or to invoke the same to
escape liability as they are in pari delicto. Having entered into an illegal
contract, neither can seek relief from the courts and each must bear the
consequences of his acts.
TN: This is also applicable to aircrafts and vessels – basic rule that no
person can operate a common carrier without securing a certificate of
public convenience and necessity.
TRAMP SERVICE
TRAMP SERVICE
RA 9515 defines it as the operation of a contract carrier which has no
regular and fixed routes and schedules but accepts cargo wherever and
whenever the shipper desires, is hired on contractual basis, or chartered
by any one or few shippers under mutually agreed terms and usually
carrier bulk or break bulk cargoes.
Carriage of bulk cargoes
Tramps “offer their capacity for the carriage of bulk cargoes as desired
by the shipper, who ordinarily engages the whole of the ship. Each
voyage is thus a matter of special arrangement between the shipowner
and the shipper.”
The tramp seeks and usually gets a full cargo loaded by a single shipper
and such cargoes are more often in bulk or in standard packages and
typically consist of raw materials, fuels and unprocessed foods so vital
to the world economy.
While RA 9515 refers to an entity engage in “Line Service” as a common
carrier, an entity that provides “Tramp Service” is only referred to as a
“contract carrier.” Nevertheless, those engaged in “Tramp Service” may
also be considered common carriers depending on the circumstances.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
GOVERNING LAWS
Governing laws
1. Art. 1766 NCC: NCC, Code of Commerce and Special Laws
2. Art. 1753: Country of destination shall apply in cases involving
loss, destruction or deterioration
3. Carriage of Goods by Sea Act (COGSA)
4. Treaties, i.e. Warsaw Convention
OBLIGATIONS OF COMMON CARRIER
DUTY TO DELIVER GOODS
TIME OF DELIVERY
Where a carrier has made an express contract, the goods must be
delivered within a specified time, otherwise he is liable for any delay.
Rule in case of absence of special contract
If there is no special contract on the fixed period, then it must be
delivered within reasonable time. (depending on the attending
circumstances, nature of the goods; expected date of arrival in the bill
of lading may be considered).
TN: In the absence of a special contract, a carrier is not an insurer
against delay in transportation of goods.
WHERE AND TO WHOM DELIVERED
A. Where – Goods should be delivered to the consignee in the place
agreed upon by the parties.
The shipper may change the consignment of the goods provided
that at the time of ordering the change of the consignee the bill of
lading signed by the carrier be returned to him, in exchange for
another wherein the novation of the contract appears. The
expenses occasioned by the change shall be for the account of the
shipper.
B. To whom – Delivery must generally be made to the owner or
consignee or to someone lawfully authorized by him to receive the
goods for his account or to the holder of the negotiable instrument.
Article 369. If the consignee cannot be found at the residence indicated
in the bill of lading, or if he refuses to pay the transportation charges
and expenses, or if he refuses to receive the goods, the municipal judge,
where there is none of the first instance, shall provide for their deposit
at the disposal of the shipper, this deposit producing all the effects of
delivery without prejudice to third parties with a better right.
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE
Relevant provisions
Art. 1733. 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 the circumstances of each case.
Article 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.
TN: Goods should be delivered in the same condition that they were
received and to transport the passengers without encountering any
harm or loss.
6|U N I V E R S I T Y O F S A N C A R L O S
DURATION OF DUTY:
Carriage of Goods
Due diligence should be exercised the moment the goods are delivered
to the carrier. Goods are deemed delivered to the carrier when the goods
are ready for and have been placed in the exclusive possession, custody
and control of the carrier for the purpose of their immediate
transportation and the carrier has accepted them.
Relevant provisions
Article 1736. 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…
Article 1737. The common carrier’s duty to observe extraordinary
diligence over the goods remains in full force and effect even when they
are temporarily unloaded or stored in transit, unless the shipper or
owner has made use of the right of stoppage in transitu. (Common
carrier becomes a warehouseman – ordinary diligence)
Article 1738. 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 if 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.
Carriage of Passengers
By trains
The extraordinary diligence of common carrier commences the moment
the person who purchases the ticket (or a ‘token’ or ‘card’) 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.
Take note:
Mere purchase of a ticket does not of itself create the relation of carrier
and passenger but it is an element in the inception of the relation.
Considered passenger:
A. A proper person who enters upon the carrier’s premises (station,
ticketing office, or waiting room) with the intention of becoming
a passenger will ordinarily be viewed as assuming the status of a
passenger.
B. A person riding on a freight train, on a driver’s pass or similar
arrangement, to look after livestock being transported and as
incident to such transportation is, generally regarded as a
passenger for hire.
C. A person still retrieving his baggage is still within the responsibility
of the carrier
D. A person after alighting the train, walks along the station platform
is still considered a passenger.
Not considered passenger:
A. One who goes to the railroad station to inquire as to the possibility
of securing passage on a freight train, which he knows, by the
rules of the company, is not allowed to carry passengers, and to
secure passage thereon if possible, is not entitled to the rights of
a passenger but is a mere trespasser.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
B. One who rides upon any part of the vehicle or conveyance which
is unsuitable or dangerous, or which he knows is not intended for
passengers, is not presumed to be a passenger.
C. One who secures free passage by fraud or stealth is precluded
from recovery for injuries sustained through the negligence of the
carrier, for he has not assumed the status of a passenger.
Motor vehicles like jeepneys and buses
Passenger jeepneys and buses are duty bound to stop their conveyances
for a reasonable length of time in order to afford passengers an
opportunity to board and enter, and they are liable for injuries suffered
by boarding passengers resulting from the sudden starting up or jerking
of their conveyances while they do so. Once a public utility bus or
jeepney stops, it is making a continuous offer to bus riders.
The duty to exercise extraordinary diligence will not terminate until the
passenger, has after reaching his destination, safely alighted form the
carrier’s conveyance or had reasonable opportunity to leave the carrier’s
premises.
Carriage by sea
Extraordinary diligence commences as soon as a person with a bona fide
intention of taking passage places himself in the care of the carrier or
its employees and is accepted as a passenger.
Westwind v. UCPB
Supra, 3.
PRESUMPTION OF NEGLIGENCE AND HOW TO REBUT IT
PRESUMPTION OF NEGLIGENCE
Presumption of Negligence
In case of loss of effects or cargo or passengers or death or injuries to
passengers, the common carrier is presumed to be at fault or have acted
negligently unless he had observed extraordinary diligence in the
vigilance thereof.
Two conditions for the birth of the presumption of negligence:
1. There exists a contract between the passenger or the shipper and
the common carrier
2. The loss, deterioration, injury or death took place during the
existence of the contract
INSPECTION OF CARRIER
OVERLAND TRANSPORTATIONS
There is no unbending duty to inspect each and every package or
baggage that is being brought inside the bus or jeepney. The carrier is
duty bound to conduct such inspection depending on the circumstances.
Nocum vs. Laguna Tayabas Bus Company
Facts: Petitioner was injured as a consequence of the explosion of
firecrackers contained in a box, loaded in said bus and declared to its
conductor as containing clothes and miscellaneous items.
Issue: Whether common carrier is liable.
Ruling: No. A carrier is ordinarily not liable for injuries to passengers
from fires or explosions caused by articles brought into its conveyances
by other passengers, in the absence of any evidence that the carrier,
through its employees, was aware of the nature of the article or had any
reason to anticipate danger therefrom.
7|U N I V E R S I T Y O F S A N C A R L O S
It is to be presumed that a passenger will not take with him anything
dangerous to the lives and limbs of his co-passengers not to speak of
his own.
Not to be lightly considered is the right to privacy to which each
passenger is entitled. He cannot be subjected to any unusual search,
when he protests the innocuousness of his baggage and nothing
appears to indicate the contrary.
In other words, inquiry may be verbally made as to the nature of a
passenger’s baggage when such is not outwardly perceptible, but
beyond this, constitutional boundaries are already in danger of being
transgressed
SC held that carrier has succeeded in rebutting the presumption of
negligence by showing that it has exercised extraordinary diligence for
the safety of its passenger, according to the circumstances of each case
Take note: Although overland transportation are not bound nor
empowered to make an examination on the contents of packages or
bags particularly those hand carried by passengers, such is different with
regards to an airline company.
CARRIAGE BY AIR
There is no room for the application of the ruling in Nocum vs. Laguna
Tayabas Bus Company when an aircraft is involved. Unlike buses or
jeepneys, passengers and goods in aircrafts are subject to rigorous
inspection under the above-quoted law.
It is the duty of the carrier to make inquiry as to the general nature of
the articles shipped and of their value before it consents to carry them;
and its failure to do so cannot defeat the shipper’s right to recovery of
full value of the package if lost, in the absence of showing of fraud or
deceit on the part of the shipper.
Where a common carrier has reasonable ground to suspect that the
offered goods are of a dangerous character, the carrier has the right to
know the character of such goods and to insist inspection, if reasonable
and practical under the circumstances, as a condition of receiving and
transporting such goods. To be subjected to unusual search, other than
the routinary inspection procedure customarily undertaken, there must
exist proof that would justify cause for apprehension that the baggage
is dangerous as to warrant exhaustive inspection, or even refusal to
accept carriage of the same.
Northwest Airlines vs. Laya
The fact that the plaintiff was greatly inconvenienced by the fact that
his attaché case was subjected to further inspection does not warrant
imposition of liability because he was not singled out and discriminated
by the employees of the carrier. Protection of passengers must take
precedence over convenience. Nevertheless, the implementation of
security measures must be attended by basic courtesies.
BAGGAGE
BAGGAGE
The term baggage has been defined to include whatever articles a
passenger usually takes with him for his own personal use, comfort and
convenience according to the habits or wants of the particular class to
which he belongs, either with reference to his immediate necessities or
to the ultimate purpose of his journey.
Checked in or delivered to carrier
A. Extraordinary diligence
B. The rules that are applicable to goods that are being shipped are
applicable to baggage delivered to the custody of the carrier. Arts.
1733. 1734 and 1736 of Civil Code are applicable.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
Hand carried luggage
A. Considered as necessary deposits and carriers shall be
depositaries.
B. See credit transactions Arts. 1998-2003
Distinction: Whether or not the baggage is in the personal custody of
the passenger.
A. If yes – hand carried baggage
B. If no – checked-in baggage
Relevant provisions
Art. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extra ordinary diligence
in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extra ordinary diligence in vigilance over the goods is further
expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of passengers is further set forth
in Articles 1755 and 1756.
Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods unless the same is due to any of the following
causes only:
1. Flood, storm, earthquake, lightning, or other natural disasters or
calamity
2. Act of public enemy in war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the
containers;
5. Order or act of competent public authority
Art. 1736. The extraordinary responsibility of the common carriers 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, without prejudice to
provisions of Article 1738.
Art. 1998. The deposit of effects made by the travellers in hotels or inns
shall also be regarded as necessary. The keepers of hotels or inns shall
be responsible for them as depositaries, provided that notice was given
to them, or to their employees, of the effects brought by the guests and
that, on the part of the latter, they take the precautions which said hotel-
keepers or their substitutes advised relative to the care and vigilance of
their effects.
Art. 2000. The responsibility referred to in the two preceding articles
shall include the loss of, or injury to the personal property of the guests
caused by the servants or employees of the keepers of hotels or inns as
well as strangers; but not that which may proceed from any force
majeure. The fact that travellers are constrained to rely on the vigilance
of the keeper of the hotels or inns shall be considered in determining
the degree of care required of him.
Art. 2001. The act of a thief or robber, who has entered the hotel is not
deemed force majeure, unless it is done with the use of arms or through
an irresistible force.
Art. 2002. The hotel-keeper is not liable for compensation if the loss is
due to the acts of the guest, his family, servants or visitors, or if the loss
arises from the character of the things brought into the hotel.
Art. 2003. The hotel-keeper cannot free himself from responsibility by
posting notices to the effect that he is not liable for the articles brought
by the guest. Any stipulation between the hotel-keeper and the guest
whereby the responsibility of the former as set forth in articles 1998 to
2001 is suppressed or diminished shall be void.
8|U N I V E R S I T Y O F S A N C A R L O S
OBLIGATION OF THE PASSENGER AND SHIPPER
DUTY TO EXERCISE DUE DILIGENCE
Diligence of a good father of a family
Relevant provisions
Art. 1741. 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.
Art. 1761. The passenger must observe the diligence of a good father
of a family to avoid injury to himself.
Art. 1762. 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.
The shipper or passenger is bound to:
1. Pay the consideration in the form of freight or fare
2. Exercise due diligence in avoiding damage and injury
SHIPPER’S LOAD AND COUNT
Definition
"Shipper’s load and count" which means that the "container [was]
packed with cargo by one shipper where the quantity, description and
condition of the cargo is the sole responsibility of the shipper. (Philam
Insurance Co., Inc. v. Heung-A Shipping Corp.)
Note required to be checked and inventoried by the carrier
"Shipper's Load and Count" shipping arrangement are not required to
be checked and inventoried by the carrier at the port of loading or before
said carrier enters the port of unloading in the Philippines since it is the
shipper who has the sole responsibility for the quantity, description and
condition of the cargoes shipped in container vans, each container van
considered as a unit of transport. (United States Lines Inc. v. COC)
DUTY TO SECURE TRAVEL DOCUMENTS
Duty to secure travel documents
It is the obligation of the passenger, not the carrier, to secure the
appropriate travel documents. Hence, it is not the obligation of the
carrier to secure the necessary visa for a passenger.
It is incumbent upon the passenger to take ordinary care of his
concerns. This requires the passenger to read the travel documents in
order to assure herself of the important details regarding the trip. For
instance, there would be negligence if the passenger did not even check
the date of departure.
However, the airline may be held liable if the loss of documents
was due to the negligence of its employee.
Philippine Airlines, Inc. v. Court of Appeals
The airline agreed to transport two minors from Manila to San Francisco
and later to transport them from San Francisco to Los Angeles via
Northwest Airlines. However, the minors were not able to board the
Northwest Airlines flight because the indemnity bond which was required
to be with the minors was lost through the negligence of the petitioner
airline’s personnel. Hence, the petitioner airline was made liable for its
breach of its obligation.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
DEFENSES OF THE COMMON CARRIER
DEFENSES
DEFENSES OF COMMON CARRIER
Article 1734.
1. Flood, storm, earthquake, lightning, or other natural disaster or
calamity
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packing or in the
containers
5. Order or act of competent public authority
FORTITUOUS EVENT
To be a valid defense, it must be established to be the proximate cause
of the loss
TN: Since common carrier is presumed is to be negligent, it has been
observed that the doctrine of proximate cause is inapplicable to a
contract of carriage. The injured passenger or owner of goods need not
prove causation to establish his case.
The absence of causal connection is only a matter of defense.
Requisites of Fortuitous Event:
1. The cause of the unforeseen and the unexpected occurrence, or of
the failure of the debtor to comply with his obligation, must be
independent of the human will
2. 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
3. The occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner
4. The obligor (debtor) must be free from any participation in or the
aggravation of the injury resulting to the creditor
FLOOD, STORM, EARTHQUAKE, LIGHTNING, OR OTHER
NATURAL DISASTER OR CALAMITY
In order for the common carrier to be exempted from responsibility, the
natural disaster must have been the proximate and only cause of the
loss.
To be exempted from liability, what must the carrier show?
The common carrier must show that it exercised due diligence to prevent
or minimize loss before, during and after the occurrence of flood, storm
or other natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or deterioration of the
goods.
A. Fire – not considered as a natural calamity or disaster
B. Fire caused by lightning – a natural calamity
C. Hijacking – does not fall under the categories of exempting causes;
the common carrier is presumed to be at fault or to have acted
negligently unless there is a proof of extraordinary diligence on its
part
D. Mechanical defects – damage or injury resulting from mechanical
defects is not a damage or injury that was caused by fortuitous
event; carrier is liable to its passengers for damages caused by
mechanical defects of the conveyance (breakage of a faulty drag-
link spring, fracture of the vehicle’s right steering knuckle, defective
breaks)
TN: One of the reason why carrier is made liable despite the
presence of mechanical defect is the absence of privity between
the passenger and the manufacturer
9|U N I V E R S I T Y O F S A N C A R L O S
Juntilla v. Fontanar
“Tire-blowouts” was not considered as fortuitous event although it was
alleged that the tires were in good condition. No evidence was presented
to show that the evidence were due to adverse road conditions – the
carrier must prove all angles.
The explosion could have been caused by too much air pressure injected
into the tires and the fact that the jeepney was overloaded and speeding
at the time of the accident.
PUBLIC ENEMY
Presupposes a state of war and refers to the government of a foreign
nation at war with the country to which the carrier belongs, though not
necessarily with that to which the owner of the gods owes allegiance.
When can the common carrier be exempted from liability?
Common carriers may be exempted from responsibility only if:
1. The act of the public enemy has been the proximate and only cause
of the loss.
2. Due diligence must be exercised to prevent or at least minimize the
loss before, during and after the performance of the act of the
public enemy in order that the carrier may be exempted from
liability for the loss, destruction, or deterioration of the goods
TN: Thieves, rioter, and insurrectionists are not included. They are
merely private depredators for whose acts a carrier is answerable.
Rebels
GR: Rebels in insurrection against their own government are generally
not embraced in the definition of public enemy.
XPN: If the rebels hold a portion of territory, they have declared their
impendence, cast off their allegiance and has organized armed hostility
to the government, and the authority of the latter is at the time
overthrown, such an uprising may take on the dignity of a civil war, and
so matured and magnified, the parties are belligerent and are entitled
to belligerent rights.
Pirates
Depredation by pirates (which are enemy of all civilized nation) excuses
the carrier from liability.
IMPROPER PACKING
Character of the goods and defects in the packaging or in the containers
are defenses available to the common carrier.
Similarly, the Carriage of Good by Sea Act provides that carrier shall not
liable for:
A. Wastage in bulk or weight or any damages arising form the
inherent defect, quality or vice of goods
B. Insufficiency of packing
C. Insufficiency or inadequacy of the marks
D. Latent defects no discoverable by due diligence.
However, NCC likewise provides:
Art. 1742. 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 the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
Thus, if the carrier accepted the goods knowing the fact of improper
packing or even if the carrier does not know but the defect was
nonetheless apparent upon ordinary observation, it is not relived from
liability for loss or injury to goods resulting therefrom.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017

ORDER OF PUBLIC AUTHORITY Article 698.

Art. 1743. If through the order of public authority the goods are seized
or destroyed, the common carrier is not responsible, provided said public
authority had power to issue order.
Case:
Carrier was not excused from liability since the order of an acting mayor
was not considered as a valid order of a public authority. It is required
that public authority who issued the order must be duly authorized to
issue the order.
Carriage of Goods by Sea Act – provides that carrier shall not responsible
for loss or damage resulting from “arrest or restraint of princes, rulers,
or people, or seizure under legal process” and from “quarantine
restrictions”.
EFFECT IN CASE OF DELAY IN TRANSPORTATION
Consequences or Effects of Delay
In case a voyage already begun should be interrupted, the passengers
shall be obliged to pay the fare in proportion to the distance covered,
without right to recover for losses and damages if the interruption is due
to fortuitous event of force majeure, but with a right to indemnity if the
interruption should have been caused by the captain exclusively. If the
interruption should be caused by the disability of the vessel and a
passenger should agree to await the repairs, he may not be required to
pay any increased price of passage, but his living expenses during the
stay shall be for his own account.
TN: 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
thereof.
Right of refund
In case the vessel is not able to depart on time and the delay is
unreasonable, the passenger may opt to have his or her ticket
immediately refunded without any refund service fee from the
authorized issuing/ticketing office.

A. Excusable delays in carriage suspend, but do not generally Delay to transport passengers
terminate, the contract of carriage. When the cause is removed, A carrier is duty bound to transport the passenger with reasonable
the master must proceed with the voyage and make delivery. dispatch. The carrier shall be made liable when the vessel or vehicle is
unreasonably delayed.
B. During the detention or delay, vessel continues to be liable as a
common carrier, not a warehouseman, and remains duty bound to
EFFECTS OF ‘DELAYED AND UNFINISHED VOYAGE’ IN INTER-
exercise extraordinary diligence.
ISLAND VESSELS:
Article 1740
If a vessel cannot continue or complete her voyage for any
If common carrier negligently delays in transporting the goods, a natural
cause:
disaster shall not free it from responsibility.
A. Carrier is under obligation to transport the passenger to his/her
Article 1747
destination at the expense of the carrier including free meals and
If common carrier delays , without just cause, in transporting the goods
lodging before the passenger is transported to his/her destination.
or changes the stipulated or usual route, the contract limiting its liability
cannot be availed of in case of the loss, destruction, or deterioration of
B. The passenger may opt to have his or her ticket refunded in full if
the goods.
the cause of the unfinished voyage is due to the negligence of the
carrier or to an amount that will suffice to defray transportation
RIGHT OF THE CONSIGNEE TO REFUSE TO ACCEPT THE GOODS
cost at the shortest possible route if the cause of the unfinished
In case of delay through the fault of the carrier, the consignee may
voyage is fortuitous event.
refuse to accept the goods or may leave the goods in the hands of the
carrier. It must be communicated to the carrier in writing.
Take note:
A. Vessel is delayed in arrival at the port of destination – free meals
Time to exercise this right
during mealtime
This right must be exercised between the time of delay and before the
B. Delay in departure at the point of origin due to carrier’s
arrival of the goods at its destination.
negligence – free meals during mealtime
C. Delay in departure at the point of origin due to fortuitous
Liability of carrier
event –carrier not obliged to serve free meals
The carrier must pay the full value of the goods as if they had been lost
or mislaid.
TN: Carrier is not obliged to inform passengers of sailing schedule of the
vessel.
Effect if abandonment is not made
If abandonment is not made, indemnification for the losses and
damages by reason of the delay cannot exceed the current price which
the goods would have on the day and at the place they are to be
delivered.

The value of the goods which the carrier must pay in case of loss or
misplacement shall be that what is declared in the bill of lading.
Consignee must not defer the payment of the expenses and
transportation charges of the goods otherwise carrier may demand the
judicial sale of the goods.

RIGHTS OF PASSENGERS IN CASE OF DELAY

As to the rights and duties of the parties strictly arising out of delay, the
Civil Code is silent. However, the Code of Commerce provides for such
a situation:

10 | U N I V E R S I T Y O F S A N C A R L O S
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
PRESCRIPTION AND NOTICE OF CLAIM
OVERLAND TRANSPORTATION OF GOODS
AND COASTWISE SHIPPING
When to file a claim with carrier
Art. 366 constitutes a condition precedent to the accrual of a right of
action against a carrier for damage caused to the merchandise.
Relevant provision
Article 366 of the Code of Commerce – An action for damages is barred
if the goods arrived in damaged condition and no claim is filed by the
shipper within the following period:
1. Immediately if damage is apparent
2. Within twenty four (24) hours from delivery if damage is not
apparent.
The period does not begin to run until the consignee has received
possession of the merchandise that he may exercise over it the
ordinary control pertinent to ownership.
TN: This provision applies even to transportation by sea within the Phils
or coastwise shipping.
This does not apply to misdelivery of goods
Because in cases of misdelivery, there can be no question of claim for
damages suffered by the goods while in transport, since the claim for
damages arises exclusively out of the failure to make delivery.
Monica Roldan v. Lim Ponzo and Co.
Article 366 of the Commercial Code is limited to cases of claims for
damage to goods actually turned over by the carrier and received by the
consignee. But the period prescribed in Art. 366 may be subject to
modification by agreement of the parties.
The validity of a contractual limitation of time for filing the suit itself
against a carrier shorter than the statutory period thereof has generally
been upheld as such stipulation merely affects the shipper’s remedy and
does not affect the liability of the carrier.
Extinctive Prescription
A. Six (6) years if there is no written contract (bill of lading)
B. Ten (10) years if there is written contract
TN: This rule likewise applies to carriage of passengers for domestic
transportation.
INTERNATIONAL CARRIAGE OF GOODS BY SEA
A claim must be filed with the carrier within the ff period:
A. If the damage is apparent – the claim should be filed immediately
upon discharge of the goods
B. If damage is not apparent – within 3 days from delivery
Take note: Filing of claim is not condition precedent. Thus, regardless
of whether the notice of loss or damage has been given, the shipper can
still bring an action to recover said loss or damage within one year after
the delivery of the goods or the date when the goods should have been
delivered.
Prescription
Action for damages must be filed within a period of one (1) year from
discharge of the goods.
11 | U N I V E R S I T Y O F S A N C A R L O S
TN: The period is not suspended by an extra-judicial demand because
transportation of goods by sea should be decided in as short a time as
possible.
Dole Philippines Inc. v. Maritime Company of the Philippines
The prescriptive period is not tolled or interrupted by a written extra-
judicial demand. Article 1155 is NOT applicable.
The period does not apply to conversion or misdelivery.
The one (1) year period refers to loss of goods and not to misdelivery.
Damages arising from delay or late delivery are not the damage or loss
contemplated under the COGSA. Thus, if the goods are not actually lost
or damaged. The applicable period is ten (10) years.
Domingo Ang v. American Steamship Agencies
What is to be resolved in order to determine the applicability of the
prescriptive period of one year – is whether or not there was loss of the
goods subject matter of the complaint.
Loss contemplates merely a situation where no delivery at all was made
by the shipper of the goods because the same had perished, gone out
of commerce, or disappeared in such a way that their existence is
unknown or they cannot be recovered. (Note: It is not loss due to
misdelivery or delivery to the wrong person.)
This rule applies in collision cases. The one (1) year period starts not
from the date of the collision but when the goods should have been
delivered, had the cargoes been saved.
Maritime Agencies and Services Inc. v. CA
When there is two destination of delivery, the one year period should
commence when the last item was delivered to the consignee
ART. 1759 AND 1763 (NCC)
DEFENSES IN CARRIAGE OF PASSENGERS
Primary defense of carrier is exercise of extraordinary diligence in
transporting passengers. Even if there is a fortuitous event, the carriers
must also present proof of exercise of extraordinary diligence.
Art. 1759
Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the carrier’s employees,
although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
The liability does not cease even upon proof that they exercised
diligence in the selection and supervision of their employees.
Art. 1763
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.
EMPLOYEES
Carrier is liable for the acts of its employees. It can’t escape liability by
claiming that it exercised due diligence in supervision and selection of
its employees (unlike in quasi-delicts)
Reasons for the rule:
A. Undertaking of the carrier requires that its passenger that full
measure of protection afforded by the exercise of high degree of
care prescribed by law, inter alia from violence and insults at the
hands of strangers and other passengers, but above all, from the
acts of the carrier’s own servants.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
B. The liability of the carrier for the servant’s violation of duty to
performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with
utmost care prescribed by law.
C. As between the carrier and the passenger, the former must bear
the risk of wrongful acts or negligence of the carrier’s employees
against passenger, since it, and not the passenger, has the power
to select and remove them.
Rationale: On the other hand, if the ship owner derives profits from the
results of the choice of the captain and the crew, when the choice turns
out successful, it is also just that he should suffer the consequences of
an unsuccessful appointment, by application of the rule of natural law
contained in the partidas – that he who enjoys the benefits derived from
a thing must likewise suffer the losses that ensue therefrom - Note:
Willful acts of the employees include theft
OTHER PASSENGERS AND THIRD PERSONS
With respect to acts of strangers and other passengers resulting in injury
to a passenger, the availability of such defense is also subject to the
exercise of a carrier of due diligence to prevent or stop the act or
omission.
Negligence of the carrier need not be the sole cause
Negligence of the carrier need not be the sole cause of the damage or
injury to the passenger or the goods. The carrier would still be liable
even if the contractual breach concurs with the negligent act or omission
of another person.
CONTRIBUTORY NEGLIGENCE OF SHIPPER OR PASSENGER
Shipper and passenger is equally obliged to be diligent
The obligation to exercise due diligence is not limited to the carrier. The
shipper is obliged to exercise due diligence in avoiding damage or injury.
Effect of contributory negligence
GR: Contributory negligence on the part of the shipper or passenger
would only mitigate the carrier’s liability. It is not a total excuse.
XPN: If the negligence of the shipper or passenger is the proximate and
only cause of the loss, then, the carrier shall not be liable.
The carrier may overcome the presumption of negligence
The carrier may overcome the presumption of negligence and may be
able to prove that it exercised extraordinary diligence in handling the
goods or in transporting the passenger.
The carrier may be able to prove that the only cause of the loss of the
goods is any of the following:
1. Failure of the shipper to disclose the nature of the goods
2. Improper marking or direction as to the destination
3. Improper loading when he assumes such responsibility.
The shipper must likewise see to it that the goods are properly packed;
otherwise, liability of the carrier may either be mitigated or barred
depending on the circumstances.
Relevant codal provisions
Art. 1741. 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. Art. 1761. The
passenger must observe the diligence of a good father of a family to
avoid injury to himself.
12 | U N I V E R S I T Y O F S A N C A R L O S
Art. 1762. 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.
BILL OF LADING
CHARACTER OF THE BILL OF LADING
BILL OF LADING
A written acknowledgement, signed by the master of a vessel or other
authorized agent of the carrier that he has received the described goods
from the shipper, to be transported on the expressed terms to be
described the place of destination, and to be delivered to the designated
consignees of the parties.
Bill of lading is not necessary for the perfection of a contract of
carriage
Thus, the obligation of the carrier to exercise extraordinary diligence in
transporting goods or passengers is present even if no bill of lading or
ticket was issued by the carrier.
Character of a bill of lading:
Has a 3-fold nature
1. As a receipt
2. As a contract
3. As a document of title or an actionable document
TN: The three-fold nature of a bill of lading is obviously applicable only
to carriage of goods.
RECEIPT
As comprehending all methods of transportation, a BOL may be defined
as a written acknowledgement of the receipt of goods and an agreement
to transport and to deliver them at a specified place to a person named
or on his order.
Other terms include:
A. “Shipping receipts”
B. “Forwarders receipts”
C. “Receipts for transportation”
Designation and form not material
(SC) the designation however is not material, and neither is the form of
the instrument. If it contains an acknowledgement by the carrier of the
receipt of goods for transportation it is, in legal effect a BOL.
Presumption
The issuance of a bill of lading carries the presumption that the goods
were delivered to the carrier issuing the bill, for immediate shipment,
and it is nowhere questioned that a bill of lading is prima facie evidence
of the receipt of the goods by the carrier
CONTRACT
It expresses the terms and conditions of the agreement between the
parties; names the parties; includes consignees etc. It is the law
between the parties bound by its terms and conditions.
Contracts of Adhesion
It is to be construed liberally in favor of the shipper who adhered to such
bill as it is a contract of adhesion. The only participation of the party is
the signing of his signature or his adhesion thereto.
Rule in case of absence of ambiguities
The shipper or passenger is bound by the terms and conditions if there
is no occasion to speak of ambiguities or obscurities
If the words appear to be contrary to the evident intention of the parties,
the latter shall prevail over the former
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
Relevant codal provision
ART. 24 (NCC) In all contractual property or other relations, when one
of the parties is at a disadvantage on account of his moral dependence,
ignorance indigence, mental weakness, tender age and other handicap,
the court must be vigilant for his protection.
Parole Evidence Rule
BOL is covered by the parol evidence rule. The terms of the contract are
conclusive upon the parties and evidence aliunde is not admissible to
vary or contradict a complete enforceable agreement, subject to well
defined exceptions.
The mistake contemplated as an exception to the parol evidence rule is
one which is a mistake of fact mutual to the parties.
TN: That if such is not raised inceptively in the complaint or in the
answer, a party cannot later on be permitted to introduce parol evidence
thereon.
Bill of Lading as evidence of contract
The BOL is the legal evidence of the contract and the entries thereof
constitutes prima facie evidence of the contract. All the essential
elements of a valid contract (cause, consent, object) are present when
such bill are issued.
ACTIONABLE DOCUMENT/DOCUMENT OF TITLE
In a contractual obligation, the bill of lading can be categorized as an
actionable document under the Rules of Court. Hence, the bill of lading
must be properly pleaded either as causes of action or defenses
Relevant provision
ART 1507 (NCC). A document of title in which it is stated that the goods
referred to therein will be delivered to the bearer or to the order of any
person named in such document is a negotiable document of title.
If the document of title contains the required words of negotiability to
make the instrument negotiable under Article 1507 of the NCC, the
document remains to be negotiable even if the words “not negotiable”
or non-negotiable are places thereon.
A. Bearer document – negotiated by delivery
B. Order document – negotiated by indorsement of the specified
person so named
Effects of negotiation
Negotiation of the document has the effect of manual delivery so as to
constitute the transferee the owner of the goods.
CLEAN BILL V. FOUL BILL
A. Clean Bill of lading – does not contain any notation indicating of
any defect in the goods.
B. Foul Bill of Lading – one that contains such notation of defect in
the goods.
Iron bulk shipping v. Remmington
The questioned bill of lading is a clean bill of lading as it does not indicate
any defect in the goods covered by it, as shown by the notation, “CLEAN
ON BOARD” and “Shipped at the Port of Loading in apparent good
condition on board the vessel for carriage to Port of Discharge”.
If the bill of lading is not truly reflective of the true condition of the cargo
at the time of loading to the effect that the said cargo was indeed in a
damaged state, the carrier could have refused to accept it, or at the
least, made a marginal note in the bill of lading indicating the true
condition of the merchandise. But it did not.
13 | U N I V E R S I T Y O F S A N C A R L O S
On the contrary, it accepted the subject cargo and even agreed to the
issuance of a clean bill of lading without taking any exceptions with
respect to the recitals contained therein. Since the carrier failed to
annotate in the bill of lading the alleged damaged condition of the cargo
when it was loaded, said carrier and the petitioner, as its representative,
are bound by the description appearing therein and they are now
estopped from denying the contents of the said bill.
SURRENDER OF BILL
SURRENDER OF THE BILL
Relevant provision
Article 353 (CC). After the contract has been complied with, the bill of
lading which the carrier has issued shall be returned to him, and by
virtue of the exchange of this title with the thing transported, the
respective obligations and actions shall be considered cancelled.
In case the consignee, upon receiving the goods, cannot return the bill
of lading subscribed by the carrier, because of its loss or of any other
cause, he must give the latter a receipt for the goods delivered, this
receipt producing the same effects as the return of the bill of lading.”
Note: In other words, the surrender of the BL is NOT a condition
precedent for a common carrier to be discharged of its contractual
obligations. Thus, if the surrender of the bill of lading is not possible,
acknowledgment of the delivery by signing the delivery receipt suffices
to discharge the common carrier of its contractual obligation.
PACKAGE UNDER COGSA
Meaning of Package
If the goods are shipped in cartons, each carton is considered a package
even if they are stored in container vans.
When what ordinarily be considered packages are shipped in a container
supplied by the carrier and the number of such units is disclosed in the
shipping documents, each of those units and not the container
constitutes the package.
Eastern Shipping Lines vs. BPI
Facts:
BPI/MS Insurance (BPI/MS) and Mitsui Sumitomo Insurance Company
(Mitsui) filed a Complaint against Eastern Shipping Lines (ESLI) and
Asian Terminals. Sumitomo Corporation shipped 22 coils of various steel
sheet on board ESLI’s vessel for transportation and delivery from Japan
to Manila in favor of consignee Calamba Steel Center (Calamba). The
coils were in good order and condition. The shipment then arrived at the
port of Manila in an unknown condition and was turned over to ATI for
safekeeping. Upon withdrawal of the shipment by the Calamba, part of
the shipment was damaged and was in bad order condition.
Sumitomo Corporation again shipped on board ESLI’s vessel various
steel sheet kilograms in good order and condition. The second shipment
arrived at the port of Manila partly damaged and in bad order. Calamba
attributed the damages on both shipments to ESLI as the carrier and
ATI as the arrastre operator who handled and discharged the coils. ATI
alleged that the coils in the 2 shipments were already damaged upon
receipt from ESLI’s vessels and that it exercised due diligence. On the
other hand, ESLI alleged that the damage to both shipments was
incurred while in the possession of ATI.
Issue: Whether ESLI and ATI were liable for the damage that was
caused.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
Ruling:
ESLI cannot invoke its non-liability solely on the manner the cargo was
discharged and unloaded. The actual condition of the cargoes upon
arrival prior to discharge is equally important and cannot be disregarded.
In maritime transportation, a bill of lading (BoL) is issued by a common
carrier as a contract, receipt and symbol of the goods covered by it. If
it has no notation of any defect or damage in the goods, it is considered
as a “clean BoL. A clean BoL constitutes prima facie evidence of the
receipt by the carrier of the goods as therein described.
Based on the bills of lading issued, it is undisputed that ESLI received
the two shipments of coils from shipper Sumitomo Corporation in good
condition at the ports in Japan. However, upon arrival at the port of
Manila, some coils from the two shipments were partly dented and
crumpled. Mere proof of delivery of the goods in good order to a
common carrier and of their arrival in bad order at their destination
constitutes a prima facie case of fault or negligence against the carrier.
Hence, the fault is attributable to ESLI. It may also be nonetheless
stated that ATI was correctly absolved of liability for the damage.
As to Validity of Stipulations:
The New Civil Code (NCC) states that 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. The NCC further
provides that a stipulation limiting a common carrier’s liability to the
value of the goods appearing in the BoL is binding, unless the shipper
or owner declares a greater value. In addition, 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.
Accordingly, the issue whether or not ESLI has limited liability as a
carrier is determined by either absence or presence of proof that the
nature and value of the goods have been declared by Sumitomo
Corporation and inserted in the bills of lading.
The BoL represent the formal expression of the parties’ rights, duties
and obligations. It is the best evidence of the intention of the parties,
which is to be deciphered from the language used in the contract.
As to the non-declaration of the value of the goods on the second BoL,
the declaration requirement does not require that all the details must be
written down on the very BoL itself. All the needed details are in the
invoice, which “contains the itemized list of goods shipped to a buyer,
stating quantities, prices, shipping charges,” and other details which
may contain numerous sheets.
It must also be noted that a shipper cannot understate the value of his
property for the purpose of reducing the rate, and then recover a larger
value in case of loss. Nor does a limitation based upon an agreed value
for the purpose of adjusting the rate conflict with any sound principle of
public policy.” Thus, it is unjust for ESLI to invoke the limitation when it
is informed that the shipper paid the freight charges corresponding to
the value of the goods.
Asian Terminals v. Simon Enterprises
Facts:
Simon Enterprise Inc. (Simon) has entered into contract with
Contiquincybunge Export Company (Contiquincybunge) as its consignee
of the shipped Soybean Meal. For the first shipment, Contiquincybunge
made a shipment of 6,825.144 metric tons of U.S. Soybean Meal which
when the M/V Sea Dream arrived at the Port of Manila the bulk of
soybean meal was received by the Asian Terminals, Inc. (ATI), for
shipment to Simon. However, when it reached its receiver Simon, it was
already short by 18.556 metric tons.
14 | U N I V E R S I T Y O F S A N C A R L O S
For the second shipment, Contiquincybunge made shipment, through
M/V Tern, of 3,300.000 metric tons of U.S. Soybean Meal in Bulk for
delivery to Simon at the Port of Manila. The shipment was received by
ATI again for delivery to Simon. However, the shipped cargos were
found lacking 199.863 metric tons. Simon filed an action for damages
against the unknown owner of the vessels M/V Sea Dream and M/V
Tern, its local agent Inter-Asia Marine Transport, Inc., and petitioner
ATI alleging that it suffered the losses through the fault or negligence
of the said defendants.
The case of the unknown owner of the vessel M/V Sea Dream has been
settled in release and quitclaim and therefore has been stricken out of
the case, leaving M/V Tern, its local agent Inter-Asia Marine Transport,
Inc., and petitioner ATI’s case remaining. The RTC has ruled that the
defendants be solidarily liable for the damages incurred by Simon.
Issue: Whether or not petitioner ATI is solidarily liable with its co-
defendants for the shortage incurred in the shipment of the goods to
respondent.
Ruling:
The SC agreed to ATI’s claim that the CA erred in affirming the decision
of the trial court holding petitioner ATI solidarily liable with its co-
defendants for the shortage incurred in the shipment of the goods to
respondent. Petitioner ATI is correct in arguing that the respondent
failed to prove that the subject shipment suffered actual shortage, as
there was no competent evidence to prove that it actually weighed 3,300
metric tons at the port of origin.
The plaintiff must still, before the burden is shifted to the defendant,
prove that the subject shipment suffered actual shortage. This can only
be done if the weight of the shipment at the port of origin and its
subsequent weight at the port of arrival have been proven by a
preponderance of evidence, and it can be seen that the former weight
is considerably greater than the latter weight. It was not able to
establish that the subject shipment was weighed at the port of origin at
Darrow, Louisiana, U.S.A. and that the actual weight of the said
shipment was 3,300 metric tons.
The subject shipment was carried with the qualification "Shipper’s
weight, quantity and quality unknown," meaning that it was transported
with the carrier having been oblivious of the weight, quantity, and
quality of the cargo. Indeed, as the bill of lading indicated that the
contract of carriage was under a "said to weigh" clause, the shipper is
solely responsible for the loading while the carrier is oblivious of the
contents of the shipment Hence, the weight of the shipment as indicated
in the bill of lading is not conclusive as to the actual weight of the goods.
Consequently, the respondent must still prove the actual weight of the
subject shipment at the time it was loaded at the port of origin so that
a conclusion may be made as to whether there was indeed a shortage
for which petitioner must be liable. This, the respondent failed to do.
Second, as correctly asserted by petitioner ATI, the shortage, if any,
may have been due to the inherent nature of the subject shipment or
its packaging since the subject cargo was shipped in bulk and had a
moisture content of 12.5%.Third, SC agreed with the petitioner ATI that
respondent has not proven any negligence on the part of the former.
Marina Port Services v. American Homes
Facts:
On September 21, 1989, Countercorp Trading PTE., Ltd. shipped from
Singapore to the Philippines 10 container vans of soft wheat flour with
seals intact on board the vessel M/V Uni Fortune. The shipment was
insured against all risks by AHAC and consigned to MSC Distributor
(MSC).
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
Upon arrival at the Manila South Harbor on September 25, 1989, agents
of the Bureau of Customs officially broke the seals, opened the container
vans, and examined the shipment for tax evaluation in the presence of
MSC's broker and checker. Thereafter, the customs inspector closed the
container vans and refastened them with safety wire seals. MPSI then
placed the said container vans in a back-to-back arrangement at the
delivery area of the harbor's container yard where they were watched
over by the security guards of MPSI and of the Philippine Ports Authority.
On October 10, 1989, MSC's representative, AD's Customs Services
(ACS), took out five container vans for delivery to MSC. At the
compound's exit, MPSI issued to ACS the corresponding gate passes for
the vans indicating its turnover of the subject shipment to MSC.
However, upon receipt of the container vans at its warehouse, MSC
discovered substantial shortages in the number of bags of flour
delivered. Hence, it filed a formal claim for loss with MPSI.
Issue: Whether MPSI is liable for the loss of the bags of flour
Ruling:
No. MPSI is not liable for the loss of the bags of flour.
MPSI was able to prove delivery of the shipment to MSC in good
and complete condition and with locks and seals intact.
In case of claim for loss filed by a consignee or the insurer as
subrogee, it is the arrastre operator that carries the burden of proving
compliance with the obligation to deliver the goods to the appropriate
party.
Issuance of the Gate Pass constitutes delivery to and receipt by
consignee of the goods as described above in good order and condition,
unless an accompanying B.O. certificate duly issued and noted on the
face of the Gate Pass appears.
Also, that MPSI delivered the subject shipment to MSC's representative
in good and complete condition and with lock and seals intact is
established by the testimonies of MPSFs employees who were directly
involved in the processing of the subject shipment.
It is hard to believe that MSC or its representative ACS has no
precautionary measures to protect itself from any eventuality of loss or
pilferage. To recall, ACS's representative signed the gate passes without
any qualifications. This is despite the fact that such signature serves as
an acknowledgment of ACS's receipt of the goods in good order and
condition. If MSC was keen enough in protecting its interest, it (through
ACS) should have at least qualified the receipt of the goods as subject
to inspection, and thereafter arrange for such an inspection in an area
where the same is allowed to be done. However, no such action or other
similar measure was shown to have been undertaken by MSC. What is
clear is that ACS accepted the container vans on its behalf without any
qualification.
Even in the light of Article 1981, no presumption of fault on the
part of MPSI arises since it was not sufficiently shown that the
container vans were re-opened or that their locks and seals
were broken for the second time.
Fault on the part of the depositary is presumed, unless there is proof to
the contrary. However, no such presumption arises in this case
considering that it was not sufficiently shown that the container vans
were re-opened or that their locks and seals were broken for the second
time.
As may be recalled, the container vans were opened by a customs
official for examination of the subject shipment and were thereafter
resealed with safety wires. While this fact is not disputed by both parties,
AHAC alleges that the container vans were re-opened and this gave way
to the alleged pilferage. The Court notes, however, that AHAC based
such allegation solely on the survey report of the Manila Adjuster &
Surveyors Company (MASCO).
15 | U N I V E R S I T Y O F S A N C A R L O S
However, the person who prepared the said report was not presented
in court to testify on the same. Thus, the said survey report has no
probative value for being hearsay.
At any rate, the goods were shipped under "Shipper's Load and
Count" arrangement. Thus, protection against pilferage of the
subject shipment was the consignees lookout.
At any rate, MPSI cannot just the same be held liable for the missing
bags of flour since the consigned goods were shipped under "Shipper's
Load and Count" arrangement. "This means that the shipper was solely
responsible for the loading of the container, while the carrier was
oblivious to the contents of the shipment. Protection against pilferage
of the shipment was the consignee's lookout.
The arrastre operator was, like any ordinary depositary, duty-bound to
take good care of the goods received from the vessel and to turn the
same over to the party entitled to their possession, subject to such
qualifications as may have validly been imposed in the contract between
the parties.
The arrastre operator was not required to verify the contents of the
container received and to compare them with those declared by the
shipper because, as earlier stated, the cargo was at the shipper's load
and count. The arrastre operator was expected to deliver to the
consignee only the container received from the carrier."
VALIDITY OF STIPULATION
PROHIBITED AND LIMITING STIPULATION
1. Exempting the carrier from any and all liability for loss or damage
occasioned by its own negligence - INVALID as it is contrary to
public policy.
2. Parties may stipulate that the diligence to be exercised by the
carrier for the carriage of goods be less than extraordinary
diligence if it is:
(a) In writing and signed by both parties
(b) Supported by a valuable consideration other than the service
rendered by the common carrier
(c) The stipulation is just, reasonable and not contrary to law.
3. Providing an unqualified limitation of such liability to an agreed
valuation – INVALID
4. Limiting the liability of the carrier to an agreed valuation unless the
shipper declares a higher value and pays a higher rate of freight –
VALID and ENFORCEABLE.
Note: The purpose of limiting stipulations in the bill of lading is to
protect the common carrier. Such stipulation obliges the
shipper/consignee to notify the common carrier of the amount that the
latter may be liable for in case of loss of the goods
Remember:
A. The parties cannot stipulate so as to totally exempt the carrier from
exercising any degree of diligence whatsoever
B. The parties cannot stipulate that the common carrier shall exercise
diligence less than the diligence of a good father of a family
Relevant Provisions
Article 1744. A stipulation between common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or
deterioration of the goods to a degree less than extra ordinary diligence
shall be valid, provided it be:
1. In writing, signed by the shipper or owner
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017

2. Supported by a valuable consideration other than the service
rendered by common carrier and
3. Reasonable, just and not contrary to public policy
Article 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust, contrary to public policy:
1. That the goods are transported at the risk of the owner or shipper
2. That the common carrier will not be liable for any loss, destruction,
or deterioration of the goods
3. That the common carrier need not observe any diligence in the
custody of the goods
4. That the common carrier shall exercise a degree of diligence in the
custody of the goods
5. That the common carrier shall not be responsible for the acts or
omissions of his or its employees
6. 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 or diminished
7. 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 or airplane, or other equipment
used in the contract of carriage
Article 1749. 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.
Article 1750. A contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction, of deterioration of the goods
is valid, if reasonable and just under the circumstances, and has been
fairly and freely agreed upon.
Article 1903 (last paragraph) – 2 things are apparent:
1. That when an injury is caused by the negligence of a servant or
employee there instantly arises a presumption of law that there
was negligence on the part of the master or the employer either in
the selection of the servant or employee, or in supervision over him
after the selection, or both.
2. That presumption is juris tantum and not juris et de jure (of law
and of right), and consequently may be rebutted.
Note however: That Article 1903 of the Civil Code is not applicable to
acts of negligence which constitute the breach of contract. It is
applicable only to culpa contractual.
The fundamental distinction between obligation of extra-contractual and
those which arise from contract, rests upon the fact that in cases of non-
contractual obligation it is the wrongful or negligent act or omission itself
which creates the vinculum juris, whereas in contractual relations the
vinculum (bond) exists independently of the breach of the voluntary
duty assumed by the parties when entering into the contractual relation.
CONCURRENT CAUSES OF ACTION
A. There is one action but several causes of action
B. The same act that breaches the contract may also be tort
Note: The cause of action of a passenger or shipper against the common
carrier can be culpa contractual or culpa aquiliana while the basis of
liability on the part of the driver is either culpa delictual or culpa
aquiliana. The driver of the carrier is not liable based on contract
because there is NO PRIVITY of contract between him and the
passenger or shipper.

CONCURRENCE WITH THIRD PERSONS

ACTIONS AND DAMAGES
If the negligence of third persons concurs with the breach, the liability
of the third person who was driving the vehicle and/or his employer may
CULPA CONTRACTUAL V. AQUILIANA be based on quasi delict. The driver alone may be held criminally liable
and civil liability may be imposed upon him based on delict. In the latter
CAUSE OF ACTION OF A PASSENGER AND SHIPPER: case, the employer is subsidiarily liable.
Passengers and shippers who suffered damages because of the breach
of the contractual obligation of the carrier may sue the latter for Remember: It does not make any difference that the liability of one
damages. The source of obligation is culpa contractual. This source of springs from the contract while that of the other arises from quasi-delict.
obligation is distinct from quasi-delict. If the owner and driver of the other vehicle are not impleaded, the
carrier may implead them by filing a third party complaint.
A. Against common carrier – based on culpa contractual or culpa
aquiliana SOLIDARY LIABILITY
B. On the part of the driver – based on either culpa delictual or culpa In case the negligence of the carrier’s driver and a third person concurs,
aquiliana the liability of the parties – carrier and his driver, third person – is joint
and several (solidary).
Note: The source of obligation based on culpa contractual is separate
and distinct from quasi-delict.
DEATH INDEMNITY, LOSS OF EARNING CAPACITY
Culpa contractual v. Culpa aquiliana DAMAGES MAY BE RECOVERED
Art. 2205 (Civil Code)
Culpa contractual Culpa aquiliana 1. For loss or impairment of earning capacity in cases of temporary or
Source of obligation Contract Quasi-delict permanent personal injury;
Liability of employee No liability (no Solidary liability with 2. For injury to the plaintiff’s business standing or commercial credit.
privity of contract) employee
Due diligence in the Due diligence in the For personal injury and even death
Availability of selection and selection and The claimant is entitled to all medical expenses as well as other
defenses supervision of supervision of reasonable expenses that he incurred to treat his or her relative’s
employees is NOT a employees is a injuries.
defense defense
In what As contracting party As an employer In case of death
capacity liable The plaintiff is entitled to the amount that he spent during the wake and
funeral of the deceased. But, expenses after the burial are not
compensable.

A. Death caused by a crime or quasi-delict shall be at least P3,000;

[The amount of fixed damages is now P50,000.00]

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TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017
B. the defendant shall be liable for the loss of the earning capacity of
the deceased;
C. If deceased is obliged to give support, recipient may demand
support from the person causing the death for a period not
exceeding five years
D. Spouse, legitimate and illegitimate descendant and descendants
may demand moral damages for mental anguish by reason of the
death of the deceased
Loss of earning capacity
Net Earning Capacity = Life Expectancy x [Gross Annual
Income less Necessary Living Expenses]
Life expectancy – (2/3 x 80 – age at death)
Net earnings
Based on the gross income of the victim minus the necessary incidental
living expenses which the victim would have incurred if he were alive.
Amount of living expenses must be established. In the absence of proof,
it is fixed at fifty (50%) of the gross income.
TN: Rules on loss of earning apply when the breach of the carrier
resulted in the plaintiff’s permanent incapacity.
CONCEPTS AND APPLICATION OF MENTAL
DAMAGES
Damages is the pecuniary compensation, recompense, or satisfaction
for an injury sustained, or as otherwise expressed, the pecuniary
consequences which the law imposes for the breach of some duty or
violation of some rights.
Kinds of damages
1. Actual or compensatory damages
2. Moral damages
3. Nominal damages
4. Temperate or moderate damages
5. Liquidated damages
6. Exemplary or corrective damages
TN: Article 2216 provides that no proof of pecuniary loss is necessary in
order that moral, nominal, temperate, liquidated or exemplary damages
may be adjudicated. The assessment of such damages, except
liquidated ones, is left to the discretion of the court, according to the
circumstances of each case. However, proof of pecuniary loss is
necessary if actual or compensatory damages are being claimed.
ACTUAL OR COMPENSATORY DAMAGES
Only for the pecuniary loss suffered by him as he has duly proved not
only the value of the loss suffered, but also that of the profits which the
obligee failed to obtain.
Two kinds:
1. The loss of what a person already possesses (daňo emergente);
2. The failure to receive as a benefit that would have pertained to him
(lucro cesante).
It should be proven: cannot be decided based on the consideration
of the judge; not to be based on the perception, observation and
consideration of the judge.
With respect to restorative medical procedure: to be entitled to
actual damage, you need to have an EXPERT TESTIMONY. Without
such, you cannot recover.
Actual damages include:
1. Loss of earning capacity
2. Attorney’s fees – may be awarded in an action for breach of
contract of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.
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TN: If awarded exemplary, one is entitled to attorney’s fees
Two kinds of attorney’s fees:
A. Ordinary (compensation to the lawyer);
B. Extraordinary (indemnity as a form of damages suffered due
to the breach of contract)
You can be awarded if you show that you were forced to
litigate and when you are entitled to exemplary damage. But
this award is subject to the discretion of the court
3. Interests
A. 12% per annum – if it constitutes a loan or forbearance of
money
B. 6% per annum – if it does not constitute loan or forbearance
of money
C. 12% – for final judgment
TN: No interest, however, shall be adjudged on unliquidated claims for
damages except when or until the demand can be established with
reasonably certainty, the interest shall begin to run form the time the
claim is made judicially or extrajudicially.
MORAL DAMAGES
Includes physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injury.
When can they be recovered?
1. Though incapable of pecuniary computation, moral damages may
be recovered if they were the proximate result of the defendant’s
wrongful act or omission.
2. May be recovered when there is death or there is malice or bad
faith. (in transportation of passengers)
3. Moral damages may be awarded if the contractual negligence is
considered gross negligence.
TN: Generally, no moral damages may be awarded where the breach of
contract is not malicious. Also, Moral damages are not awarded to
punish the defendant but to compensate the victim
Subject to three conditions:
1. Death
2. Malice or bad faith (must be done in the performance of the
contract of carriage)
3. For Physical Injuries
Requisites:
A. There must be an injury, whether physical, mental or psychological,
clearly sustained by the claimant
B. There must be a culpable act or omission factually established
C. The wrongful act or omission of the defendant is the proximate
cause of the injury sustained by the claimant
Factors to consider that could affect the amount to be
recovered:
1. The extent of humiliation may also determine the amount of moral
damages that can be awarded
2. The extent of pain and suffering likewise determines the award
3. Official, political, social and financial standing of the offended party
and the business and financial position of the offender affect the
amount of damages
4. The age of the claimant.
NOMINAL DAMAGES
It is adjudicated in order that the right of plaintiff may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.
TRANSPORTATION LAW l Atty. Glenn Capanas l For the exclusive use of EH 404 2016-2017

The award of nominal damages is also justified in the absence of

competent proof of the specific amounts of actual damages suffered.

TN: The assessment of nominal damages is left to the discretion of the

court according to the circumstances of the case.

Cannot co-exist with actual damages.

There is no loss in nominal damages, unlike in actual and temperate
damages, loss is present which is proven and not proven but rather
ascertained by the court, respectively.

TEMPERATE OR MODERATE DAMAGES

More than nominal but less than compensatory damages.

Maybe recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be
provided with certainty.

Cannot co-exist with actual damages

Definite proof of pecuniary loss cannot be offered, although the court is
convinced that there has been such loss.

LIQUIDATED DAMAGES
Those agreed by the parties to a contract, to be paid in case of breach
thereof.

Ordinarily, the court cannot change the amount of liquidated damages

agreed upon by the parties. However, Art. 2227 of the Civil Code
provides that liquidated damages, whether intended as an indemnity or
a penalty, shall be equitably reduced if they were iniquitous or
unconscionable.

EXEMPLARY OR CORRECTIVE DAMAGES

Requisites for the award of exemplary damages:

1. They may be imposed by way of example in addition to
compensatory damages, and only after the claimant’s right to them
has been established.
2. They cannot be recovered as a matter of right, their determination
depending upon the amount of compensatory damages that may
be awarded to the claimant.
3. The act must be accompanied by bad faith or done in wanton,
fraudulent, oppressive or malevolent manner.

TN: If gross negligence warrants the award of exemplary damages,

with more reason is its imposition justified when the act performed is
deliberate, malicious and tainted with bad faith. The rationale behind
exemplary or corrective damage is to provide an example or correction
from public good.

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