TRANSPORTATION LAW

REVIEWER

From the Lectures of Atty. Melissa Romana Suarez

Ateneo De Davao University - College of Law

With Bar Questions and Suggested Answers

Compiled by:
JUSTIN RYAN D. MORILLA
A.Y. 2015-2016

Page 1
LAST UPDATED: 12/16/15
 TRANSPORTATION LAWS
the other batch in June, 1981.

t and thus no ticket was yet issued, the fact remains that the passage had already been paid for by the principal of the appellee, and the appellant had accepted such payment. The existence
Art. 1766. Civil Code

In all
n object is the matters
transport of not regulated by
the passengers this
from theCode, thedeparture
place of rights and obligations
to the of
place of destination as stated in the telex.
age imposing common carriers
reciprocal shallonbeboth
obligations governed
parties. by the Code of Commerce and
by special laws.
re and its willingness for its contract workers to leave for their place of destination.
Hierarchy of Transportation Laws in the Philippines

1. Primary
rt the contract workers Law despite
on their flight - Civil Code
confirmation and bookings made by appellee's travelling agent.
2. The following aresuppletoryin character:
a. Code of Commerce
b. Special Laws
1) Carriage of Goods by Sea Act
d specified the period of compliance therewith, and(COGSA)
with emphasis that it could only be used if the passengers fly on BA. Under the circumstances, the appellant should have refused acceptan
2) Salvage Law
3) Warsaw Convention
4) Tariff and Customs Code

Definition of Transportation

 A movement of things or persons from one place to another;

a carrying across

What is included in the word transportation?

It includes:

1. Waiting time,
2. Loading and unloading,
3. Stopping in transit, and
4. All other accessorial services in connection with the loaded
movement

When does a contract of transportation arise? COMMON CARRIERS IN GENERAL

G.R. No. 92288 February 9, 1993

BRITISH AIRWAYS, INC., petitioner, Definition of a Common Carrier [Art. 1732]
vs.
THE HON. COURT OF APPEALS, Twelfth Division, and FIRST Common carriers are persons, corporations, firms or associations
INTERNATIONAL TRADING AND GENERAL engaged in the business of carrying or transporting passengers or
SERVICES, respondents. goods or both, by land, water, or air, for compensation , offering their
NOCON, J.: services to the public.
Private respondent had a valid cause of action for damages against Elements of a Common Carrier
petitioner. A cause of action is an act or omission of one party in
violation of the legal right or rights of the other. 9 Petitioner's repeated
1. Must be a person, corporation, firm or association
failures to transport private respondent's workers in its flight despite 2. Engaged in a business
confirmed booking of said workers clearly constitutes breach of 3. Transports persons or goods or both by land, water or air
contract and bad faith on its part. In resolving petitioner's theory that 4. Offers services to the public
private respondent has no cause of action in the instant case, the
5. Accepts compensation for services
appellate court correctly held that:
True Test of a Common Carrier
In dealing with the contract of common carriage of passengers for
purpose of accuracy, there are two (2) aspects of the same,
The carriage of goods and passengers, provided it has space for all
namely: (a) the contract "to carry (at some future time)," which
who opt to avail themselves of its transportation for a fee [National
contract is consensual and is necessarily perfected by mere
Steel v. CA, 283 SCRA 45]
consent (See Article 1356, Civil Code of the Philippines), and (b)
the contract "of carriage" or "of common carriage" itself which
should be considered as a real contract for not until the carrier is JURISPRUDENCE ON THE DEFINITION OF A COMMON CARRIER
actually used can the carrier be said to have already assumed the
obligation of a carrier. (Paras, Civil Code Annotated, Vol. V, p. One is still considered a Common Carrier [for the provisions of the Civil
429, Eleventh Ed.) Code to apply] even if:[De Guzman v. CA [168 SCRA 612]

In the instant case, the contract "to carry" is the one involved which is 1. The carrying across of pax and/or goods is only an ancillary
consensual and is perfected by the mere consent of the parties. activity or sideline

There is no dispute as to the appellee's consent to the said contract "to 2. The transportation service is merely on an occasional,
carry" its contract workers from Manila to Jeddah. The appellant's episodic, or unscheduled basis
consent thereto, on the other hand, was manifested by its acceptance
of the PTA or prepaid ticket advice that ROLACO Engineering has 3. The transportation is offered only to a narrow segment of
prepaid the airfares of the appellee's contract workers advising the the general population
 xclude it from the4.definition
He has of not secured
a common a Certificate of Public Convenience
carrier.
[CPC]
"common carrier" as used in Section 133 (j) of the Local Government Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels either by lan
G.R. No. L-47822 December 22, 1988 PEDRO DE GUZMAN, petitioner,
vs.
definition of "common carriers"
COURT in the Civil
OF APPEALS andCode makes CENDANA,
ERNESTO no distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation of the p
respondents.
FELICIANO, J.:

ess only from a narrow segment of the general population.

Asia Lighterage v. CA [Aug 19, 2003] – It has no fixed and publicly

known route, maintains no terminals, and issues no tickets
om the liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound public policy; that would be to reward priva
G.R. No. 147246 August 19, 2003
ASIA LIGHTERAGE AND SHIPPING, INC., petitioner,
vs.
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND
ASSURANCE, INC., respondents.
PUNO, J.:
d issues no tickets. It points out that it is not obliged to carry indiscriminately for any person. It is not bound to carry goods unless it consents. In short, it does not hold out its services to the g

orting goods by water for compensation. Petitioner is clearly a common carrier. In De Guzman, supra, we considered private respondent Ernesto Cendaña to be a common carrier even if his p

only limited clientele. A common carrier need not have fixed and publicly known routes. Neither does it have to maintain terminals or issue tickets.

ether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business

FPIC v. CA [300 SCRA 661] – The mode of transportation is not a

motor vehicle Calvo v. UCPB [19 Mar 2002] – It is not in the business of public
transportation
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, G.R. No. 148496 March 19, 2002
vs. VIRGINES CALVO doing business under the name and style
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, TRANSORIENT CONTAINER TERMINAL SERVICES,
BATANGAS CITY and ADORACION C. ARELLANO, in her official INC., petitioner,
capacity as City Treasurer of Batangas, respondents. vs.
UCPB GENERAL INSURANCE CO., INC. (formerly Allied
MARTINEZ, J.: Guarantee Ins. Co., Inc.) respondent.
MENDOZA, J.:
[T]here is no doubt that petitioner is a common carrier. It is engaged in
the business of transporting or carrying goods, i.e. petroleum products, Petitioner contends that contrary to the findings of the trial court and
for hire as a public employment. It undertakes to carry for all persons the Court of Appeals, she is not a common carrier but a private carrier
indifferently, that is, to all persons who choose to employ its services, because, as a customs broker and warehouseman, she does not
and transports the goods by land and for compensation. The fact that indiscriminately hold her services out to the public but only offers the
 same to select parties with whom she may contract in the conduct of her business. XXX

There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral part of her business. To uphold petitioner's contention w

G.R. No. 157917 August 29, 2012

SPOUSES TEODOROand NANETTE PERENA, Petitioners,
vs.
those with cargo to move. Judicial admissions are conclusive and no evidenceSPOUSES TERESITA
is required to provePHILIPPINE
the same. NICOLAS and L. ZARATE, NATIONAL RAILWAYS, and the COURT OF
APPEALS Respondents.
D E C I S I O N BERSAMIN, J.:
Schmitz v. TVI [ April 22, 2005] – The vehicle or mode of transport
is not owned by him
rvice has been usually regarded as a private carrier,primarily because he only caters to some specific or privileged individuals, and his operation is neither open to the indefinite public nor fo
G.R. No. 150255. April 22, 2005 SCHMITZ TRANSPORT & BROKERAGE
n the eyes of the law. He is bound to observe extraordinary
CORPORATION, diligence
Petitioners, vs. in the conduct of his business. He is presumed to be negligent when death occurs to a passenger. His liability may include
USTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now INCHCAPE SHIPPING SERVICES, Respondents.
CARPIO-MORALES, J.:

to the consignee‘s warehouse at Cainta, Rizal. As the appellate court put it, "as long as a person or corporation holds [itself] to the public for the purpose of transporting goods as [a] busines

er that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of m

WHAT ARE NOT CONSIDERED AS COMMON CARRIER

 Exclusive hauler

G.R. No. 141910 August 6, 2002

FGU INSURANCE CORPORATION, petitioner,
vs.
G.P. SARMIENTO TRUCKING CORPORATION and LAMBERT M. EROLES, respondents.
VITUG, J.:

rs 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 hire or compensation, offering th

Bascos v. CA - The contract entered into was not a ―contract of

carriage‖ but one of ―lease‖

G.R. No. 101089. April 7, 1993.

ESTRELLITA M. BASCOS, petitioners,
vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.
CAMPOS, JR., J p:

In disputing the conclusion of the trial and appellate courts that general public as his occupation rather than the quantity or extent of
petitioner was a common carrier, she alleged in this petition that the the business transacted." In this case, petitioner herself has made
contract between her and Rodolfo A. Cipriano, representing the admission that she was in the trucking business, offering her
CIPTRADE, was lease of the truck. She cited as evidence certain trucks to
affidavits which referred to the contract as "lease". These affidavits
were made by Jesus Bascos 8 and by petitioner herself. 9 She further
averred that Jesus Bascos confirmed in his testimony his statement
that the contract was a lease contract. 10 She also stated that: she
was not catering to the general public. Thus, in her answer to the
amended complaint, she said that she does business under the same
style of A.M. Bascos Trucking, offering her trucks for lease to those
who have cargo to move, not to the general public but to a few
customers only in view of the fact that it is only a small business.

We agree with the respondent Court in its finding that petitioner is a

common carrier.

Article 1732 of the Civil Code defines a common carrier as "(a) person,
corporation or firm, or association 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." The test to
determine a common carrier is "whether the given undertaking is a part
of the business engaged in by the carrier which he has held out to the
  Travel Agency

The object of petitioner‘s contractual relation with respondent is the Are arrastre operators common carriers?
G.R. No. 138334 August 25, 2003
latter‘s service of arranging and facilitating petitioner‘s booking, ESTELA L. CRISOSTOMO, Petitioner, vs.
ticketing and accommodation in the package tour. In contrast, the The Court Anofarrester
Appealsoperator
and CARAVANis anTRAVEL
entity who transports
& TOURS the goodsINC.,
INTERNATIONAL, from the
Respondents.
object of a contract of carriage is the transportation of passengers or vessel to the customs warehouse.YNARES-SANTIAGO, J.:
goods. It is in this sense that the contract between the parties in this It is hired by the government. It has only one customer – government.
case was an ordinary one for services and not one of carriage. Therefore, there is one missing element to make it a common carrier. It
Petitioner‘s
or a common carrier. submission
Respondent did notisundertake
premisedtoontransport
a wrongpetitioner
assumption. does
from one place to another sincenot
its offer its services
covenant to the public.
with its customers is simply to make travel arrangements in their beh

Are freight forwarders common carriers? HOWEVER

ipso facto is a common carrier. At most, respondent acted merely as an agent of the airline, with whom petitioner ultimately contracted for her carriage to Europe. Respondent‘s obligation t
The term "freight forwarder" refers to a firm holding itself out to the G.R. No. 84680 February 5, 1996
general public (other than as a pipeline, rail, motor, or water carrier) to SUMMA INSURANCE CORPORATION, petitioner,
provide transportation of property for compensation and, in the vs.
ordinary course of its business, COURT OF APPEALS and METRO PORT SERVICE,
INC., respondents. PANGANIBAN, J.:
1. To assemble and consolidate, or to provide for assembling
and consolidating,
f diligence as that required shipments,
of a common carrier and to perform
and a warehouseman as or provide under
enunciated for Article 1733 of the Civil Code and Section 3(8) of the Warehouse Receipts Law, respectively. Bein
break-bulk and distribution operations of the shipments;

2. To assume responsibility for the transportation of goods from

the place of receipt to the place of destination; and

3. To use for any part of the transportation a carrier subject to

the federal law pertaining to common carriers.

G.R. No. 184300 MALAYAN

July 11, 2012 INSURANCE G.R. No. 165647 March 26, 2009
vs. CO., INC., Petitioner, PHILIPPINES FIRST INSURANCE CO., INC., Petitioner,
vs.
PHILIPPINES FIRST INSURANCE CO., INC. and REPUTABLE FORWARDER
WALLEM SERVICES,
PHILS. SHIPPING, INC.,
INC., Respondents.
UNKNOWN OWNER AND/OR UNKNOWN CHARTERER OF THE VESSEL M/S "OFFSHORE MASTER" AND "
REYES, J.: COMPANY," Respondents.
TINGA, J.:

Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.
serves only one customer, Wyeth.

es and damage to shipments under its custody.

e wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general public. A common carrier becomes a private carrier when it

e:

ommon 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 g

always and necessarily solidarily liable as the facts of a case may vary the rule. But the precise question is which entity had custody of the shipment during its unloading from the vessel?

n is which entity had custody of the shipment during its unloading from the vessel? XXX

G.R. No. 166250 July 26, 2010

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.),
INC., Petitioner, vs.
COURT OF APPEALS and PIONEER INSURANCE AND SURETY
CORPORATION, Respondents.
NACHURA, J.:

destination instead of merely arranging for their transportation, it becomes liable as a common carrier for loss or damage to goods. A freight forwarder assumes the responsibility of a carrier

uring to the consignee.

 The records are replete with evidence which show that the damage to The registered owner has the right to be indemnified by the actual
the bags happened before and after their discharge and it was caused or real owner of the amount that he is required to pay[BA Finance
by the stevedores of the arrastre operator who were then under the v. CA, 215 SCRA 715]
supervision of Wallem.
STATE REGULATION OF COMMON CARRIERS
NATURE AND BASIS OF LIABILITY
Art. 1765.
Art. 1733
The Public Service Commission may, on its own motion or on petition
Common Carriers, from the nature of their business and for reasons of of any interested party, after due hearing, cancel the certificate of
public policy are bound to observe EXTRAORDINARY DILIGENCE in public convenience granted to any common carrier that repeatedly fails
the vigilance over the goods and for the safety of passengers to comply with his or its duty to observe extraordinary diligence as
transported by them, according to ALL the circumstances of each prescribed in this Section.
case
Note: Public Service Commission is now a defunct office.
Meaning of Extraordinary Diligence
Governing Bodies:
Extraordinary diligence is that extreme measure of care and caution
which persons of unusual prudence and circumspection use for 1. Land - Land Transportation Franchising and Regulatory
securing and preserving their own property or rights. RP [DOH] v. Board [LTFRB]
Lorenzo Shipping [Feb 7, 2005] 2. Water - Maritime Industry Authority [MARINA]
3. Air - Civil Aeronautics Board [CAB]
Distinctions
G.R. No. 47065 June 26, 1940
COMMON CARRIER PRIVATE CARRIER PANGASINAN TRANSPORTATION CO., INC., petitioner,
vs.
Involved in the business of More of a single undertaking THE PUBLIC SERVICE COMMISSION, respondent.
transporting pax and goods as a LAUREL, J.:
general occupation
A certificate of public convenience constitutes neither a franchise nor contract, confers no property right, and is mere li
Bound to carry all pax who Can choose persons with
choose to employ it whom it may contract
EN BANC
Degree of diligence required is Diligence required is the [G.R. No. L-8194. July 11, 1956.]
extraordinary diligence of a GFOF EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees, vs. GUILLERMO CRESENCIA, ET AL., Defendants
CRESENCIA, Appellant.
Negligence is presumed if pax Person who alleges
or goods does not reach final negligencemust prove that it REYES, J.B.L., J.
destination exists because negligence is
not presumed
n order that a franchise, or any privilege pertaining thereto, may be sold or leased without infringing the certificate issued to the grantee; and that if property covered by the franchise is tran
To free itself from liability, it has The party alleging negligence
the burden of proving that it has the burden of proving
, before theexercised
approval is XO
granted, there should be anegligence
diligence public hearing,onwith
thenotice
part toofallthe
interested parties, in order that the Commission may determine if there are good and reasonable grounds
common carrier

Performs public service and Does not generally perform

is subject to state regulation public service and is not subject
to such regulations as common
carriers

LIABILITY OF REGISTERED OWNER

The registered owner shall be liable for consequences flowing from the
operations of the carrier, even though the vehicle has already been
transferred to another[Benedicto v. CA, 187 SCRA 547]

This doctrine rests upon the principle that in dealing with

vehicles registered under the Public Service Law, the public
has the right to assume that the registered owner is the
actual or lawful owner thereof. It would be very difficult and G.R. No. 119528 March 26, 1997 PHILIPPINE AIRLINES, INC., petitioner,
often impossible as a practical matter, for members of the vs.
general public to enforce the rights of action that they may CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL
have for injuries inflicted by the vehicles being negligently AIRWAYS, INC., respondents.
operated if they should be required to prove who the actual TORRES, JR., J.:
owner is. The registered owner is not allowed to deny
authority to issue a Certificate of proving
liability by Public Convenience
the identityand
of Necessity,
the allegedor transferee.
Temporary Operating
XXX Permit to a domestic air transport operator, who, though not possessing a legislative franchise,
To permit the ostensible or registered owner to prove who
the actual owner is, would be to set at naught the purpose or
public policy which infuses that doctrine.
 3. He must undertake to carry the goods by the method by
There is nothing in the law nor in the Constitution, which indicates that which his business is conducted and over his
a legislative franchise is an indispensable requirement for an entity to established roads, and
operate as a domestic air transport operator. Although Section 11 of 4. The transportation must be for hire
Article XII recognizes Congress' control over any franchise, certificate
or authority to operate a public utility, it does not mean Congress has Nature and Basis of Liability
exclusive authority to issue the same. Franchises issued by Congress
are not required before each and every public utility may operate. 19 In Art. 1733
many instances, Congress has seen it fit to delegate this function to
government agencies, specialized particularly in their respective areas Common Carriers, xxx, are bound to observe EXTRAORDINARY
of public service. DILIGENCE in the vigilance over the goods according to ALL the
circumstances of each case.
Can a common carrier become a private carrier?
Such XO diligence in the vigilance of the goods is further expressed
G.R. No. 131621 September 28, 1999 LOADSTAR SHIPPING CO., INC., petitioner,
vs. in: 1. Art. 1734
COURT OF APPEALS and THE MANILA INSURANCE CO., 2. Art. 1735, and
INC., respondents. DAVIDE, JR., C.J.: 3. Art. 1745 [5], [6] and [7]

Extraordinary Diligence in the Vigilance over the Goods:

wner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers is upheld. Such policy has no force where the public at is not involved, a
Extraordinary diligence requires rendering service with the greatest
skill and foresight to avoid damage and destruction to the goods
t, but only a general provision to the effect that the M/V"Cherokee" was a "general cargo carrier." 14 Further,
entrusted the bareand
for carriage fact delivery.
that the vessel
[Leawas
Mercarrying a particular
Industries type of cargo for o
v. Malayan
Insurance, 20 Sep 2005]

Carriage of Goods; Exercise Extraordinary Diligence

(2005)

Star Shipping Lines accepted 100 cartons of sardines fromMaster to

be delivered to 555 Company in Manila. Only 88cartons were
delivered, however, these were in badcondition. 555 Company claimed
from Star Shipping Linesthe value of the missing goods, as well as the
damagedgoods. Star Shipping Lines refused because the formerfailed
to present a bill of lading. Resolve with reasons theclaim of 555
Company. (4%)

SUGGESTED ANSWER:

The claim of 555 Company is meritorious, even if it fails topresent a bill

of lading. Although a bill of lading is the bestevidence of the contract of
carriage for cargo, neverthelesssuch contract can exist even without a
bill of lading. Likeany other contract, a contract of carriage is a meeting
ofminds that gives rise to an obligation on the part of thecarrier to
transport the goods. Jurisprudence has held that
the moment the carrier receives the cargo for transport,then its duty to
exercise extraordinary diligence arises. (Cia.Maritima v. Insurance Co.
of North America,G.R. No. L-18965, October 30, 1964; Negre v.
COMMON CARRIER OF GOODS Cabahug Shipping &Co., G.R. No. L-19609, April 29, 1966)

ALTERNATIVE ANSWER:
Parties
Star Shipping Lines can refuse to honor 555 Company'sclaim for the
1. CARRIER
missing and damaged goods. The Bill ofLading is the document of title
2. SHIPPER OR CONSIGNOR – one who delivers the goods
that legally establishes theownership of 555 Company over said
to the carrier for transportation
goods. 555 needs topresent the Bill of Lading to legally claim said
3. CONSIGNEE – one to whom the goods are delivered; he is
goods.(National Union Fire Insurance of Pittsburg v. Stolt-Nielaen,
not a party to the contract of carriage, as a general rule.
G.R. No.87958, April 26, 1990)
Law Applicable
Liability of a Common Carrier of Goods
Art. 1753
Art. 1734.
The law of the country to which the goods are to be transported
Common carriers are responsible for the loss, destruction, or
shall govern the liability of the common carrier for their loss,
deterioration of the goods, unless the same is due to any of the
destruction or deterioration
following causes only:
Test to determine if one is a Common Carrier of Goods
1. Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
FPIC v. CA [300 SCRA 661]
2. Act of the public enemy in war, whether international or civil;
1. He must be engaged in the business of carrying goods for
others as a public employment,
3. Act of omission of the shipper or owner of the goods;
2. He must undertake to carry goods of the kind to which his
business is confined and is conducted,
 4. The character of the goods or defects in the packing or in the The common carrier must prove that it exercised XO diligence in the
container; vigilance over the goods according to all the circumstances of each
case [Art. 1735, 1733]
5. Order or act of competent public authority.
Instances where Presumption of Negligence does NOT Arise [Art.
1734]
Art. 1735.
 Natural disaster
In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of Art.
1734, if the goods are lost, destroyed or deteriorated, common carriers  Act of public enemy
are presumed to have been at fault or to have acted negligently,  Act of shipper
unless they prove that they observed extraordinary diligence as  Character of the goods
required in Art. 1733.  Order of competent authority

GENERAL RULE: Common carriers are responsible for the loss, Effects when any of the 5 Exceptions Present:
destruction, or deterioration of goods [Art. 1734]
1. There is no presumption that the common carrier acted
Effects when the Goods are Lost, Destroyed or Deteriorated [Art. negligently
1735] 2. The common carrier need not prove that it exercised
extraordinary diligence in the vigilance over the goods,
 The shipper/consignee has a cause of action for breach of 3. BUT, the common carrier is not automatically exempt from
contract against the carrier liability;
4. To escape liability, the common carrier has to prove that it
 The common carrier is PRESUMED to have been at fault complied with the requirements under Art. 1739, 1740,
or to have acted negligently 1741, 1742, and 1743

o There is no automatic liability or responsibility. How a Common Carrier of Goods Can Escape Liability

What does the shipper or consignee have to show in order to 1st Exception: NATURAL DISASTER - flood, storm, earthquake,
have a prima facie case against the carrier? lightning, or other natural disaster or calamity [Art. 1734.1]

1. Proof of actual delivery of goods in good order to carrier, and Requisites - The common carrier must show that:
2. Failure of carrier to deliver the goods in the same condition
as when they were received [Ynchausti v. Dexter, 41 P 1. The natural disaster must have been the proximate and
289] only cause of the loss [Art. 1739],
2. It exercised DUE diligence (not extraordinary diligence) to
What does it mean if the shipment is not containerized? prevent or minimize the loss BEFORE, DURING or
AFTER the occurrence [Art. 1739],
G.R. No. 80256 October 2, 1992 3. It did not incur in delay in transporting the goods [Art.
BANKERS & MANUFACTURERS ASSURANCE CORP., petitioner, 1740]
vs.
Is fire a natural calamity?
COURT OS APPEALS, F. E. ZUELLIG & CO., INC. and E. RAZON,
INC., respondents.
MELO, J.:
er and thereafter picked up by the carrier. Consequently, the recital of the bill of lading for goods thus transported ordinarily would declare "Said to Contain", "Shipper's Load and Count", "F

Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under

G.R. No. 146018 June 25, 2003

EDGAR COKALIONG SHIPPING LINES, INC., Petitioner,
What should be done to hold the CC if goods are damaged under vs.
this arrangement? UCPB GENERAL INSURANCE COMPANY, INC., Respondent.
PANGANIBAN, J.:
checked crack in the
Verily, if fuel
any oil
of service tank,
the vans the fire
found couldcondition,
in bad not have been caused
or if any by force majeure.
inspection of Broadly speaking, force majeure generally applies to a natural accident, such as that caused b
the goods was to be done in order to determine the condition thereof,
the same should have been done at the pier side, the pier warehouse,
or at any time and place while the vans were under the care and
custody of the carrier or of the arrastre operator.

How can the carrier rebut the automatic presumption of

negligence against it?
 Are heavy rains considered natural disasters? G.R. No. L-31379 August 29, 1988 COMPAÑIA MARITIMA, petitioner,
vs.
G.R. No. 94151 April 30, 1991 COURT OF APPEALS and VICENTE CONCEPCION, respondents.
EASTERN SHIPPING LINES, INC., petitioner, FERNAN, C.J.:
vs.
he necessary precautionTHE
under the circumstances
COURT OF APPEALS andwhich
THEusage
FIRSThas established among careful persons, more particularly its Chief Officer, Mr. Felix Pisang, who is tasked with the over-all supe
NATIONWIDE
ASSURANCE CORPORATION, respondents.
GANCAYCO,
not to take the necessary precaution to avoid damage byJ.: checking the correct weight of the payloader, extraordinary care and diligence compel the use of the "jumbo" lifting apparatus as th
unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage. That rain water (not sea water) found its w

G.R. No. 150255. April 22, 2005 SCHMITZ TRANSPORT & BROKERAGE
CORPORATION, Petitioners, vs.
USTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now INCHCAPE SHIPPING SERVICES, Respondents.
CARPIO-MORALES, J.:

vent or minimize the loss, before, during and after the occurrence of the storm in order that it may be exempted from liability for the loss of the goods.
easonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt towage of the barge despite the deteriorating sea conditions, it should have summoned the sam

2nd Exception: The ACT OF PUBLIC ENEMY in war, whether

international or civil [Art. 1734.2]

Requisites - The common carrier must show that:

1. The act of the public enemy must have been the proximate
and only cause of the loss [Art. 1739], 4th Exception: The CHARACTER of the GOODS or DEFECTS in
2. It exercised DUE diligence to prevent or minimize the the PACKING or in the CONTAINER [Art. 1734.4]
loss BEFORE, DURING or AFTER the occurrence [Art.
1739] Requisite:

3rd Exception: ACT or OMISSION of the SHIPPER or OWNER of  The common carrier must prove that it exercised DUE
the goods [Art. 1734.3] diligence to FORESTALL or LESSEN the loss [Art. 1742]

Requisites: G.R. No. L-16629 January 31, 1962

SOUTHERN LINES, INC., petitioner, vs.
 The CC has to prove that the act of the shipper is the COURT OF APPEALS and CITY OF ILOILO, respondents.
proximate and only cause of the loss DE LEON, J.:
 The CC CANNOT escape liability [but damages shall be
igence of the agents ofequitably
respondentreduced]:
City of Iloilo in receiving the shipment. The contention is untenable, for, if the fact of improper packing is known to the carrier or his servants, or apparent

o If the proximate cause of the loss is the

negligence of the CC
o The shipper merely contributed to the loss,
destruction, or deterioration [Art. 1741]
 plenty of rice were spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among themselves." Th

The case at bar falls under one of the exceptions mentioned in Article
1734 of the Civil Code, particularly number (4) thereof, i.e., the
character of the goods or defects in the packing or in the containers.
The trial court found that the breakage of the crate was not due to the
fault or negligence of ICTSI, but to the inherent defect and weakness
of the materials used in the fabrication of the said crate.
G.R. No. 148496March 19, 2002
GINES CALVO doing business under the name and style TRANSORIENT CONTAINER TERMINAL SERVICES,5th Exception: If through the ORDER Of PUBLIC AUTHORITY the
INC., petitioner, vs. goods are seized or destroyed [Art. 1743]
UCPB GENERAL INSURANCE CO., INC. (formerly Allied Guarantee Ins. Co., Inc.) respondent.
MENDOZA, J.: Requisites:

1. The person making the order must have the power or

authority to issue such order, and
2. The order is lawful or has been issued under legal
process or authority[Ganzon v. CA, 161 SCRA 646]

Carriage; Fortuitous Event (1995)

M. Dizon Trucking entered into a hauling contract withFairgoods Co

whereby the former bound itself to haul thelatter‗s 2000 sacks of Soya
s not relieved of liability for damage resulting therefrom.14 In this case, petitioner accepted the cargo without
bean exception
meal despitePort
from Manila the apparent defects in some
Area to Calamba, of theTo
Laguna. container vans. Hence, f
carry out
faithfully itsobligation Dizon subcontracted with Enrico Reyes
thedelivery of 400 sacks of the Soya bean meal. Aside fromthe driver,
three male employees of Reyes rode on thetruck with the cargo. While
the truck was on its way toLaguna two strangers suddenly stopped the
truck andhijacked the cargo. Investigation by the police disclosedthat
one of the hijackers was armed with a bladed weaponwhile the other
was unarmed. For failure to deliver the 400sacks, Fairgoods sued
Dizon for damages. Dizon in turnset up a 3rd party complaint against
G.R. No. 161833. July 8, 2005 Reyes which the latterregistered on the ground that the loss was due
ATION, Petitioners, to forcemajeure. Did the hijacking constitute force majeure toexculpate
vs. Reyes from any liability to Dizon? Discuss fully.
NATIONAL HONOR," NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and INTERNATIONAL CONTAINER SERVICES, INC., Respondents.
SUGGESTED ANSWER:

No. The hijacking in this case cannot be considered forcemajeure.

Only one of the two hijackers was armed with abladed weapon. As
against the 4 male employees of Reyes,2 hijackers, with only one of
them being armed with abladed weapon, cannot be considered force
abrication of said crate.
majeure. Thehijackers did not act with grave or irresistible threat,
violence or force.
e crate‘s contents, had a knot hole or "bukong-bukong," which considerably affected, reduced and weakened its strength. Because of the enormous weight of the machineries inside this crat
Duration of Liability

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, without prejudice to the provisions of article 1738.

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.

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 of destination, until the
consignee has been advised of the arrival of the goods and has
had reasonable opportunity thereafter to remove them or
otherwise dispose of them.

G.R. No. L-18965 October 30, 1964

COMPAÑIA MARITIMA, petitioner, vs.
INSURANCE COMPANY OF NORTH BAUTISTA ANGELO, J.:

Was there a contract of carriage between the carrier and the shipper even if the loss occurred when the hemp was loaded on a barge owned by the carrier which was loaded fre
y say that the carrier losses control of the goods because of a custom regulation and it is unfair that it be made responsible for what may happen during the interregnum. And this is precisely

es,delivered
the rights
atand obligations
ship's of the
tackle. These parties attached
stipulations thereby
are clear. They subjecting
have been them to the
adopted principles
precisely and usages
to mitigate of the maritime
the responsibility of law. In other
the carrier words, here
considering thewe have alaw
present complete
on the contract of carriage
matter, and we find th
n

o the effect that a bill of lading is not indispensable for the creation of a contract of carriage.

G.R. No. L-36481-2 October 23, 1982

AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees, vs.
PHILIPPINE STEAM NAVIGATION CO., defendant-appellant.
ESCOLIN, J.:

hat the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred b

ut, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment

l not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused

y of the above stipulation; there is nothing therein that is contrary to law, morals or public policy.

G.R. No. L-9840 April 22, 1957

LU DO & LU YM CORPORATION, petitioner-defendant, vs.
I. V. BINAMIRA, respondent-plaintiff. BAUTISTA ANGELO, J.:

G.R. No. 125524 August 25, 1999

BENITO
possession of the carrier until they are delivered to the consignee, or "to the person who has MACAM
the right doingthem"
to receive business under
(Article the Idem.),
1736, name and
butstyle
theseBEN- MAC ENTERPRISES,
provisions petitioner,
only apply when the loss, d
vs.
COURT OF APPEALS, CHINA OCEAN SHIPPING CO., and/or WALLEM PHILIPPINES SHIPPING, INC.,respond
BELLOSILLO, J.:

ANK was indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to
which eitherValidity of Stipulations
exempt the carrier from liability for loss or damage occasioned by its negligence, or provide for an unqualified limitation of such liability to an agreed valuation.

As to DILIGENCE Required
of the bill of lading here in question, however, clearly shows that the present case falls within the third stipulation, to wit: That a clause in a bill of lading limiting the liability of the carrier to a
RULE: The common carrier and the shipper or owner of the goods
may enter into a stipulation whereby the diligence required would be
LESS than XO diligence [Art. 1744]

Requisites for Stipulation to be Valid - It must be:

1. In writing, 2. The stipulation is just and reasonable under the

2. Signed by the shipper or owner, circumstances,
3. Supported by valuable consideration other than the 3. The contract has been fairly and freely agreed upon, and
service rendered by the common carrier, and 4. The shipper or owner does NOT:
4. Reasonable, just and not contrary to public policy a. declare a greater value, NOR
b. pay a higher rate of freight
Stipulations Considered Unjust, Unreasonable and `
G.R. No. 146018 June 25, 2003
EDGAR COKALIONG SHIPPING LINES, INC., Petitioner,
vs.
UCPB GENERAL INSURANCE COMPANY, INC., Respondent.
PANGANIBAN, J.:
operty, "[t]he liability of the common carrier x xx shall not exceed the value of the goods as appearing in the bill of lading."

gnees may recover the full value of the goods by the simple expedient of declaring the true value of the shipment in the Bill of Lading. Other than the payment of a higher freight, there was n

Contrary to Public Policy [Art. 1745]

What if there is no stipulation limiting liability?
1. That the goods are transported at the risk of the
shipper or owner,  Domestic Voyage – Full value of the goods
2. That the CC will not be liable for any loss,  Foreign Trade - $US 500 per package (COGSA)
destruction, or deterioration of the goods,
3. That the CC need not observe any diligence in No. L-69044 May 29, 1987 EASTERN SHIPPING LINES, INC., petitioner,
G.R.
the custody of the goods, vs.
4. That the CC shall exercise a degree of diligence INTERMEDIATE APPELLATE COURT and DEVELOPMENT INSURANCE & SURETY CORPORATION,responde
less than that of a GFOF, or of a man of ordinary MELENCIO-HERRERA, J.:
prudence in the vigilance over the goods,
5. That the CC shall not be responsible for the
acts or omission of its EE’s,
6. That the CC‘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 CC is not responsible for the loss,
, the COGSA which is suppletory todestruction
the provisionsorof thedeterioration
Civil Code, stepsofin and
goods on
supplements the Code by establishing a statutory provision limiting the carrier's liability in the absence of a d
account or the defective condition of the the
car, vehicle, ship, airplane or other equipment
higher value of the goods. Hence,used
Petitioner
in theCarrier's
contract liability should not exceed US $500 per package, or its peso equivalent, at the time of payment of the value of the goods lost, but in no c
of carriage

As to Amount of Liability

RULE:The common carrier and the shipper/owner of the goods may

enter into a stipulation LIMITING the LIABILITY of the common
carrier in case of loss, destruction, or deterioration of the goods
[Art. 1744]

Requisites for Limiting Liability [Art. 1749 & 1750]:

1. There is a stipulation limiting the liability of the carrier to

the value of the goods appearing in the bill of lading,
May a common carrier, by stipulations inserted in the bill of lading, limit its liability for the loss of or damage to the cargo to an agreed valuation of the latter?

Three kinds of stipulations have often been made in a bill of lading. The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own neglig

The authorities relied upon by the plaintiff-appellant (the Harter Act [Act of Congress of February 13, 1893]: Louisville Ry. Co. vs. Wynn, 88 Tenn., 320; and Galt vs. Adams Expres
 The actual total loss for the 5,000 pieces of calorized lance pipes was
P256,039 (Exhibit "C"), which was exactly the amount of the insurance
coverage by Development Insurance (Exhibit "A"), and the amount
affirmed to be paid by respondent Court. The goods were shipped in
28 packages (Exhibit "C-2") Multiplying 28 packages by $500 would
result in a product of $14,000 which, at the current exchange rate of
P20.44 to US $1, would be P286,160, or "more than the amount of
damage actually sustained." Consequently, the aforestated amount of
P256,039 should be upheld.

With respect to the seven (7) cases of spare parts (Exhibit "I-3"), their
actual value was P92,361.75 (Exhibit "I"), which is likewise the insured
value of the cargo (Exhibit "H") and amount was affirmed to be paid by
respondent Court. however, multiplying seven (7) cases by $500 per
package at the present prevailing rate of P20.44 to US $1 (US $3,500
x P20.44) would yield P71,540 only, which is the amount that should
be paid by Petitioner Carrier for those spare parts, and not
P92,361.75.

In G.R. No. 71478, in so far as the two (2) cases of surveying

instruments are concerned, the amount awarded to DOWA which was
already reduced to $1,000 by the Appellate Court following the
statutory $500 liability per package, is in order.

In respect of the shipment of 128 cartons of garment fabrics in two (2)

containers and insured with NISSHIN, the Appellate Court also limited
Petitioner Carrier's liability to $500 per package and affirmed the award
of $46,583 to NISSHIN. it multiplied 128 cartons (considered as
COGSA packages) by $500 to arrive at the figure of $64,000, and
explained that "since this amount is more than the insured value of the
goods, that is $46,583, the Trial Court was correct in awarding said
amount only for the 128 cartons, which amount is less than the
maximum limitation of the carrier's liability."
Carriage; Liability; Lost Baggage or Acts of Passengers (1997)

Antonio, a paying passenger, boarded a busbound for Batangas City.

He chose a seat at the front row,near the bus driver, and told the bus
driver that he hadvaluable items in his hand carried bag which he then
placed beside the driver‗s seat. Not having slept for 24hours, he
requested the driver to keep an eye on the bagshould he doze off
The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors
during of trip.
the the baggage compartment
While Antonio of its bus
wasasleep, were passenger
another securely fastened. As a result of th
took the
. . . . Where the common carrier accepted its passenger's baggage for transportation andbag evenaway
had itand alightedat
placed Calamba,
in the vehicle by itsLaguna. Could the
own employee, common
its failure carrierthe freight ch
to collect
be heldliable by Antonio for the loss?

SUGGESTED ANSWER:

Yes. Ordinarily, the common carrier is not liable for acts ofother
passengers. But the common carrier cannot relieveitself from liability if
the common carrier‗s employeescould have prevented the act or
omission by exercising duediligence. In this case, the passenger asked
the driver tokeep an eye on the bag which was placed beside
thedriver‗s seat. If the driver exercised due diligence, he couldhave
prevented the loss of the bag.

Common Carrier; Duty to Examine Baggages;

Railway and Airline (1992)

When Stipulation Limiting Liability CANNOT be availed of by CC
in case of Loss, Destruction or Deterioration of the Goods[Art.
1747]:
1. If the CC, without just cause, DELAYS the transportation
of the goods, or
2. If the CC, without just cause, CHANGES the stipulated or
usual route
Agreement Limiting Liability v.v. Presumption of Negligence
Art. 1752
Even when there is an agreement limiting the liability of a common
carrier in the vigilance over the goods, the common carrier is
disputably presumed to have been negligent in case of their loss,
destruction or deterioration.
Marino was a passenger on a train. Another passenger,Juancho, had
taken a gallon of gasoline placed in a plasticbag into the same coach
where Marino was riding. Thegasoline ignited and exploded causing
injury to Marino whofiled a civil suit for damages against the railway
companyclaiming that Juancho should have been subjected
toinspection by its conductor. The railway companydisclaimed liability
resulting from the explosion contendingthat it was unaware of the
contents of the plastic bag andinvoking the right of Juancho to privacy.
a) Should therailway company be held liable for damages? b) If it were
an airline company involved, would your answer be thesame? Explain
briefly.
SUGGESTED ANSWER:
a) No. The railway company is not liable for damages. Inoverland
transportation, the common carrier is not boundnor empowered to
make an examination on the contents ofpackages or bags, particularly
those handcarried bypassengers.

b) If it were an airline company, the common carrier shouldbe made

liable. In case of air carriers, it is not lawful tocarry flammable materials
in passenger aircrafts, and airlinecompanies may open and investigate
suspicious packagesand cargoes (RA 6235)
Passenger Baggage

What Laws Shall Apply:

1. CHECK-IN BAGGAGE[not in the personal custody of pax or

his EE] - Civil Code provisions on common carrier of goods
[Art. 1733-1753]
2. HAND CARRIED BAGGAGE[in the personal custody of pax
or his EE] - Civil Code provisions concerning responsibility of
hotel keepers [Art. 1998 and 2000-2003]

Common Cariers shall be Responsible for the Hand-carried Items

when [Art. 1998]:

1. Notice was given to them or their EE‘s by the pax of the

hand-carried items, and
2. The pax took precautions which the carrier advised
relative to the care and vigilance of their effects
 COMMON CARRIER OF When an airline issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of carriage arises. The

PASSENGERS passenger then has every righ

t to expect that he be transported on that flight and on that date. If he
does not, then the carrier opens itself to a suit for a breach of contract
Nature and Basis of Responsibility of carriage. XXX

Article 1732. Common carriers are persons, corporations, firms or In the case at bar, it is undisputed that the respondent carried a
associations engaged in the business of carrying or transporting confirmed ticket for the two-legged trip from Frankfurt to Manila: 1)
passengers or goods or both, by land, water, or air, for compensation, Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of
offering their services to the public. carriage with the petitioner, the respondent certainly expected that she
would fly to Manila on Flight No. SQ 72 on January 28, 1991. Since the
Article 1733. Common carriers, from the nature of their business and petitioner did not transport the respondent as covenanted by it on said
for reasons of public policy, are bound to observe extraordinary terms, the petitioner clearly breached its contract of carriage with the
diligence in the vigilance over the goods and for the safety of the respondent. The respondent had every right to sue the petitioner for
passengers transported by them, according to all the circumstances of this breach.
each case.
G.R. No. 155550 January 31, 2008
Diligence Required from Common Carrier of Pax NORTHWEST AIRLINES, INC., petitioner,
vs.
Art. 1755 STEVEN P. CHIONG, respondent.
NACHURA, J.:
A common
n April 1, 1989, carrier isinbound
already defaulted to carry
his obligation to pax
abidesafely
by theas far as
terms andhuman care
conditions of the contract of carriage; and thus, Northwest could not have been in breach of its reciprocal obligati
and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.
ogether, amply establish the fact that Chiong was present at MIA on April 1, 1989, passed through the PCG counter without delay, proceeded to the Northwest check-in counter, but when h
Diligence Required/ Presumption

Art. 1756

In case of death of or injuries to passengers, common carriers are

presumed to have been at fault or to have acted negligently, unless
they prove that they observed XO diligence as prescribed in Art.
1733 and 1755.

In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the

First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitio

G.R. No. 142305 December 10, 2003

SINGAPORE AIRLINES LIMITED, petitioner,
vs.
ANDION FERNANDEZ, respondent.
CALLEJO, SR., J.:
 Breach of Contract
G.R. No. L-22415 March 30, 1966
FERNANDO LOPEZ, ET AL., plaintiffs-appellants, vs.
When is a common carrier presumed to have been at fault or to
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.
have acted negligently and therefore? When does the pax have a
prima facie cause of action for breach of contract against the BENGZON, J.P., J.:
carrier?
ncellations of bookings would be made before the flight time, Jose decided to withhold from Senator Lopez and party, or their agent, the information that their reservations had been cancel
When there
previously confirmed is DEATH
Senator Lopezor
andINJURY to pax
party's first class[Art. 1756] to PAN-AM's ticket sellers at its Manila Hotel office, the latter sold and issued in their favor the corresponding first clas
reservations

Other Causes of Breach:

dence of defendant it is in effect admitted that defendant — through its agents — first cancelled plaintiffs, reservations by mistake and thereafter deliberately and intentionally withheld f
 reservations stood valid and confirmed. In so misleading plaintiffs into
purchasing first class tickets in the conviction that they had confirmed
reservations for the same, when in fact they had none, defendant
wilfully and knowingly placed itself into the position of having to breach
its a foresaid contracts with plaintiffs should there be no last-minute
cancellation by other passengers before flight time, as it turned out in
this case. Such actuation of defendant may indeed have been
prompted by nothing more than the promotion of its self-interest in
holding on to Senator Lopez and party as passengers in its flight and
foreclosing on their chances to seek the services of other airlines that
may have been able to afford them first class accommodations. All the
time, in legal
Presumption of contemplation
Negligence such conduct already amounts to action in
bad faith. For bad faith means a breach of a known duty through some
motive ofinterest or ill-will (Spiegel vs. Beacon Participations, 8 NE 2d
895, 907).
PAL VS CA
September 22, 2008
Private respondents and petitioner entered into a contract of air
carriage when the former purchased two plane tickets from the latter.
Under this contract, petitioner obliged itself (1) to transport Deanna and
Nikolai, as unaccompanied minors, on 2 May 1980 from Manila to San
Francisco through one of its planes, Flight 106; and (2) upon the arrival
of Deanna and Nikolai in San Francisco Airport on 3 May 1980, to
situation? If transport
not, then he is guilty
them of negligence.
on that same dayThe law San
from here Francisco
in effect adopts theAngeles
to Los standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. T
via a connecting flight on United Airways 996. As it was, petitioner
failed to transport Deanna and Nikolai from San Francisco to Los
Angeles on the day of their arrival at San Francisco. The staff of United
Airways 996 refused to take aboard Deanna and Nikolai for their
connecting flight to Los Angeles because petitioner‘s personnel in San
Francisco could not produce the indemnity bond accomplished and
submitted by private respondents. Thus, Deanna and Nikolai were
stranded in San Francisco and were forced to stay there overnight. It
was only on the following day that Deanna and Nikolai were able to
leave San Francisco and arrive at Los Angeles via another airline,
Western Airlines. Clearly then, petitioner breached its contract of
carriage with private respondents.
G.R. No. 150843 March 14, 2003
CATHAY PACIFIC AIRWAYS, LTD., petitioner,
vs.
SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL
VAZQUEZ, respondents.
DAVIDE, JR., C.J.:
mmodation they had booked for and which was designated in their boarding passes. They clearly waived their priority
Common Carrier; Breach of Contract; Damages (2003)
Vivian Martin was booked by PAL, which acted as aticketing agent of
Far East Airlines, for a round trip flighton the latter‗s aircraft, from
Manila-Hongkong-Manila.The ticket was cut by an employee of PAL.
The ticketshowed that Vivian was scheduled to leave Manila at 5:30
p.m. on 05 January 2002 aboard Far East‗s Flight F007.Vivian arrived
at the Ninoy Aquino International Airportan hour before the time
scheduled in her ticket, but wastold that Far East‗s Flight F007 had left
at 12:10 p.m. It turned out that the ticket was inadvertently cut
andwrongly worded. PAL employees manning the airport‗sground
services nevertheless scheduled her to fly twohours later aboard their
plane. She agreed and arrived inHongkong safely. The aircraft used by
Far East Airlinesdeveloped engine trouble, and did not make it to
Hongkong but returned to Manila. Vivian sued bothairlines, PAL and
Far East, for damages because of herhaving unable to take the Far
East flight. Could either orboth airlines be held liable to Vivian? Why?
(6%)
SUGGESTED ANSWER:
(per dondee) No, there was breach of contract and thatshe was
accommodated well with the assistance of PALemployees to take the
flight without undue delay.
Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
G.R. No. L-12219 March 15, 1918
AMADO PICART, plaintiff-appellant, vs.
FRANK SMITH, JR., defendant-appellee.
STREET, J.:
How can the presumption of negligence be rebutted?
If the common carriers proves that it observed the diligence
prescribed in Art. 1733 and 1756 [Art. 1756]
Grounds to Escape Liability
How a common carrier of pax can escape liability – if it proves that:
1. It observed XO diligence by carrying the pax safely as far
as human foresight can provide, using the diligence of a
very orcautious
preferenceperson,
when theywith
askeddue
that other passengers
regard for allbe the
given the upgra
circumstances [Art. 1756]
2. The breach was caused by a fortuitous event [Art. 1174]
Carriage; Breach of Contract; Presumption of
Negligence (1990)
Peter so hailed a taxicab owned and operated by JimmyCheng and
driven by Hermie Cortez. Peter asked Cortezto take him to his office in
Malate. On the way to Malate,the taxicab collided with a passenger
jeepney, as a result ofwhich Peter was injured, i.e., he fractured his left
leg. Petersued Jimmy for damages, based upon a contract ofcarriage,
and Peter won. Jimmy wanted to challenge thedecision before the SC
on the ground that the trial courterred in not making an express finding
as to whether ornot Jimmy was responsible for the collision and,
hence,civilly liable to Peter. He went to see you for advice. Whatwill
you tell him? Explain.
SUGGESTED ANSWER:
I will counsel Jimmy to desist from challenging thedecision. The action
of Peter being based on culpacontractual, the carrier‗s negligence is
presumed upon thebreach of contract. The burden of proof instead
would lieon Jimmy to establish that despite an exercise of utmost
diligence the collision could not have been avoided.
Carriage; Breach of Contract; Presumption of Negligence (1997)
 In a court case involving claims for damages arising fromdeath and
injury of bus passengers, counsel for the busoperator files a demurrer
to evidence arguing that thecomplaint should be dismissed because
the plaintiffs didnot submit any evidence that the operator or its
employeeswere negligent. If you were the judge, would you dismiss
the complaint?
SUGGESTED ANSWER:
No. In the carriage of passengers, the failure of thecommon carrier to
bring the passengers safely to theirdestination immediately raises the
presumption that suchfailure is attributable to the carrier‗s fault or
negligence. Inthe case at bar, the fact of death and injury of the bus
passengers raises the presumption of fault or negligenceon the part of
the carrier. The carrier must rebut suchpresumption. Otherwise, the
conclusion can be properlymade that the carrier failed to exercise
extraordinarydiligence as required by law.
Requisites for a fortuitous event to exempt a common carrier from
liability:
1. The cause of the incident, or the failure of the carrier to
comply with his obligations, must be independent of human
will;
2. The incident must have been impossible to foresee, or if it
can be foreseen, it must have been impossible to avoid;
3. The incident must be such as to render it impossible for
the carrier to fulfill his obligation in a normal manner;
and
4. The carrier must be free from any participation in the aggravation
of the injury resulting to the pax
G.R. No. L-19495 February 2, 1924
HONORIO LASAM, ET AL., plaintiffs-appellants,
vs.
FRANK SMITH, JR., defendant-appellant.
OSTRAND, J.:
In discussing and analyzing the
term casofortuito the EnciclopediaJuridica Española says: "In a legal
sense and, consequently, also in relation to contracts, a casofortuito
presents the following essential characteristics: (1) The cause of the
unforeseen and unexpected occurrence, or of the failure of the debtor
to comply with his obligation, must be independent of the human will.
(2) It must be impossible to foresee the event which constitutes
the casofortuito, 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. And (4) the obligor
(debtor) must be free from any participation in the aggravation of the
injury resulting to the creditor." (5 EnciclopediaJuridica Española, 309.)
As will be seen, these authorities agree that some extraordinary
circumstance independent of the will of the obligor, or of his
employees, is an essential element of a casofortuito. Turning to the
present case, it is at once apparent that this element is lacking. It is not
suggested that the accident in question was due to an act of God or to
adverse road conditions which could not have been foreseen. As far as
the records shows, the accident was caused either by defects in the
automobile or else through the negligence of its driver. That is not
a casofortuito.
G.R. No. L-10605 June 30, 1958
PRECILLANO NECESITO, ETC., plaintiff-appellant,
vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.
REYES, J. B. L., J.:
The proximate cause of the accident was the reduced strength of the
steering knuckle of the vehicle caused by defects in casting it. While
appellants hint that the broken knuckle exhibited in court was not the
real fitting attached to the truck at the time of the accident, the records
they registered no objection on that ground at the trial below. The issue
is thus reduced to the question whether or not the carrier is liable for
the manufacturing defect of the steering knuckle XXX
XXX In the American law, where the carrier is held to the same degree
of diligence as under the new Civil Code, the rule on the liability of
carriers for defects of equipment is thus expressed: "The
preponderance of authority is in favor of the doctrine that a passenger
is entitled to recover damages from a carrier for an injury resulting from
a defect in an appliance purchased from a manufacturer, whenever it
appears that the defect would have been discovered by the carrier if it
had exercised the degree of care which under the circumstances was
incumbent upon it, with regard to inspection and application of the
necessary tests. For the purposes of this doctrine, the manufacturer is
considered as being in law the agent or servant of the carrier, as far as
regards the work of constructing the appliance. According to this
theory, the good repute of the manufacturer will not relieve the carrier
from liability"
The rationale of the carrier's liability is the fact that the passenger has
neither choice nor control over the carrier in the selection and use of
the equipment and appliances in use by the carrier. Having no privity
whatever with the manufacturer or vendor of the defective equipment,
the passenger has no remedy against him, while the carrier usually
has. It is but logical, therefore, that the carrier, while not in insurer of
the safety of his passengers, should nevertheless be held to answer
for the flaws of his equipment if such flaws were at all discoverable.
In the case now before us, the record is to the effect that the only test
applied to the steering knuckle in question was a purely visual
inspection every thirty days, to see if any cracks developed. It nowhere
appears that either the manufacturer or the carrier at any time tested
the steering knuckle to ascertain whether its strength was up to
standard, or that it had no hidden flaws would impair that strength. And
yet the carrier must have been aware of the critical importance of the
knuckle's resistance; that its failure or breakage would result in loss of
balance and steering control of the bus, with disastrous effects upon
the passengers. No argument is required to establish that a visual
inspection could not directly determine whether the resistance of this
critically important part was not impaired. Nor has it been shown that
the weakening of the knuckle was impossible to detect by any known
test; on the contrary, there is testimony that it could be detected. We
are satisfied that the periodical visual inspection of the steering knuckle
as practiced by the carrier's agents did not measure up to the required
legal standard of "utmost diligence of very cautious persons" — "as far
as human care and foresight can provide", and therefore that the
knuckle's failure can not be considered a fortuitous event that exempts
the carrier from responsibility (Lasam vs. Smith, 45 Phil. 657; Son vs.
Cebu Autobus Co., 94 Phil., 892.)
It may be impracticable, as appellee argues, to require of carriers to
test the strength of each and every part of its vehicles before each trip;
but we are of the opinion that a due regard for the carrier's obligations
toward the traveling public demands adequate periodical tests to
determine the condition and strength of those vehicle portions the
failure of which may endanger the safe of the passengers.
G.R. No. 119756 March 18, 1999
FORTUNE EXPRESS, INC., petitioner,
vs.
COURT OF APPEALS, PAULIE U.CAORONG, and minor
childrenYASSER KING CAORONG, ROSE HEINNI and PRINCE
ALEXANDER, all surnamed CAORONG, and represented by their
mother PAULIE U. CAORONG, respondents.
MENDOZA, J.:
The petitioner contends that the seizure of its bus by the armed
assailants was a fortuitous event for which it could not be held liable.
XXX
Petitioner invokes the ruling in Pilapil v. Court of Appeals, 9 and De
Guzman v. Court of Appeals, 10 in support of its contention that the
seizure of its bus by the assailants constitutes force majeure. In Pilapil
v. Court of Appeals, 11 it was held that a common carrier is not liable
for failing to install window grills on its buses to protect the passengers
from injuries cause by rocks hurled at the bus by lawless elements. On
the other hand, in De Guzman v. Court of Appeals, 12 it was ruled that
a common carriers is not responsible for goods lost as a result of a
robbery which is attended by grave or irresistable threat, violence, or
force.
 It is clear that the cases of Pilapil and De Guzman do not apply to the
prensent case. Art. 1755 of the Civil Code provides that "a common
carrier is bound to carry the passengers as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances." Thus, we held in
Pilapil and De Guzman that the respondents therein were not negligent
in failing to take special precautions against threats to the safety of
passengers which could not be foreseen, such as tortious or criminal
acts of third persons. In the present case, this factor of unforeseeability
(the second requisite for an event to be considered force majeure) is
lacking. As already stated, despite the report of PC agent Generalao
that the Maranaos were planning to burn some of petitioner's buses
and the assurance of petitioner's operation manager (Diosdado Bravo)
that the necessary precautions would be taken, nothing was really
done by petitioner to protect the safety of passengers.

Petitioner has charged respondent carrier of negligence on the ground that the injury complained of could have been prevented by the common carrier if something like mesh-wo

We do not agree.

Although the suggested precaution could have prevented the injury complained of, the rule of ordinary care and prudence is not so exacting as to require one charged with its exe

G.R. No. L-47822 December 22, 1988 PEDRO DE GUZMAN, petitioner,

vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.
FELICIANO, J.:

h the truck carrying the 600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a

trial court shows that the accused acted with grave, if not irresistible, threat, violence or force. 3 Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only too
G.R. No. 113003 October 17, 1997
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 c
ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, vs.
COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY and
JASMIN TUMBOY, respondents.
ROMERO, J.:

vent which constitutes the casofortuito, or if it can be foreseen, it must be impossible to avoid;
an agency from the cause of injury or loss.

t could not explode within five days' use. Be that as it may, it is settled that an accident caused either by defects in the automobile or through the negligence of its driver is not a casofortuito

of the carrier in the law. Coupled with this is the established condition of the road — rough, winding and wet due to the rain. It was incumbent upon the defense to establish that it took prec

G.R. No. L-10126 October 22, 1957

SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA, ELENITA, OSCAR and ALF
BATACLAN, represented by their Natural guardian, SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffs-appe
MARIANO MEDINA, defendant-appellant.
MONTEMAYOR, J.:

Duration of Responsibility (Applicable cases)

 Note: There are no specific provisions for the duration of responsibility
for common carriers of passengers.

Bataclan v. Medina [102 SCRA 181] – common carrier is still liable

even after the occurrence took place

G.R. No. 52159 December 22, 1989 JOSE PILAPIL, petitioner,

vs.
 It may be that ordinarily, when a passenger bus overturns, and pins stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the
down a passenger, merely causing him physical injuries, if through
some event, unexpected and extraordinary, the overturned bus is set
on fire, say, by lightning, or if some highwaymen after looting the
vehicle sets it on fire, and the passenger is burned to death, one might
still contend that the proximate cause of his death was the fire and not
the overturning of the vehicle. But in the present case under the
circumstances obtaining in the same, we do not hesitate to hold that
the proximate cause was the overturning of the bus, this for the reason PAL v. Zapatos [226 SCRA 423] – until the pax reaches his
that when the vehicle turned not only on its side but completely on its destination, stoppage in between does not terminate the contract
back, the leaking of the gasoline from the tank was not unnatural or of carriage
unexpected; that the coming of the men with a lighted torch was in
response to the call for help, made not only by the passengers, but G.R. No. L-82619 September 15, 1993 PHILIPPINE AIRLINES, INC., petitioner,
most probably, by the driver and the conductor themselves, and that vs.
because it was dark (about 2:30 in the morning), the rescuers had to COURT OF APPEALS and PEDRO ZAPATOS, respondents.
carry a light with them, and coming as they did from a rural area where BELLOSILLO, J.:
lanterns and flashlights were not available; and what was more natural
than that and
comfort, convenience saidsafety
rescuers should passengers
of its stranded innocently until
approach thereached
they have vehicle to final destination. On this score, PAL grossly failed considering the then ongoing battle between gove
their
extend the aid and effect the rescue requested from them. In other
words, the coming of the men with a torch was to be expected and was
n case of such
a by-passing. The steps
natural sequence oftaken by defendant
the overturning ofairline company
the bus, towardsof
the trapping this end has not been put in evidence, especially for those 7 others who were not accommodated in the retu
some
of its passengers and the call for outside help. What is more, the
burning of the bus can also in part be attributed to the negligence of
the carrier, through is driver and its conductor. According to the
witness, the driver and the conductor were on the road walking back
and forth. They, or at least, the driver should and must have known
that in the position in which the overturned bus was, gasoline could
and must have leaked from the gasoline tank and soaked the area in
and around the bus, this aside from the fact that gasoline when spilled,
specially over a large area, can be smelt and directed even from a
distance, and yet neither the driver nor the conductor would appear to
have cautioned or taken steps to warn the rescuers not to bring the
lighted torch too near the bus.

La Mallorca v. CA [7 SCRA 739] – contractual relation continues until

pax has had a reasonable time and opportunity to leave the
premises or reach a safe distance from the vehicle

G.R. No. L-20761 July 27, 1966

LA MALLORCA, petitioner, vs.
HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET
AL., respondents. BARRERA, J.:

ghting from a train, walks along the station platform is considered still a passenger.2 So also, where a passenger has alighted at his destination and is proceeding by the usual way to leave th

r the bus, was run over and killed. In the circumstances, it cannot be claimed that the carrier's agent had exercised the "utmost diligence" of a "very cautions person" required by Article 1755

Validity of Stipulations

As to Diligence Required

Art. 1757

The responsibility of a common carrier for the safety of passengers as

required in Art. 1733 and 1755 CANNOT be DISPENSED with or
LESSENED:

 by stipulation,
 by the posting of notices,
 by statements on tickets, or otherwise.

As to Amount of Liability
Art. 1758
 Common Carrier; Defenses; Limitation of Liability (2001) Common carriers are liable for the death of or injuries to passengers
When a pax is carried gratuitously, a stipulation limiting the CC’s through the negligence or willful acts of their employees, EVEN
Supposefor
liability A was riding on an
negligence airplane
is valid, butof a common
not carrier
for willful when
acts or the
gross THOUGH such employees may have acted:
accident happened and A suffered serious injuries. In an action by A
negligence.
against the common carrier, the latter claimed that 1) there was a 1. beyond the scope of their authority, or
2) The stipulation limiting the carrier‗s liability tothe value of the goods
stipulation in the ticket issued to A absolutely exempting the carrier 2. in violation of the orders of the CC
appearing in the bill of ladingunless the shipper or owner declares a
from liability from the passenger‗s death or injuries ad notices were
higher value, isexpressly recognized in Article 1749 of the Civil Code.
posted by the common carrier dispensing with the extraordinary This liability of the common carriers does NOT cease upon proof that
diligence of the carrier,
Responsibility for andActs
2) A wasof given a discount on his plane fare they exercised all the diligence of a GFOF in the selection and
thereby reducing the liability of the common carrier with respect to A in supervision of their employees
particular. Art. 1759
Employees

a) Are those valid defenses? (1%)

b) What are the defenses available to any common carrier to limit or
exempt it from liability? (4%)
SUGGESTED ANSWER:
a) No. These are not valid defenses because they are contrary to law
as they are in violation of the extraordinary diligence required of
common carriers. (Article 1757, 1758 New Civil Code)
b) The defenses available to any common carrier to limitor exempt it
from liability are:
1) observance of extraordinary diligence,
2) or the proximate cause of the incident is afortuitous event or force
majeure,
3) act or omission of the shipper or owner ofthe goods,
4) the character of the goods or defects in thepacking or in the
containers, and
5) order or act of competent public authority,without the common carrier
being guilty of evensimple negligence (Article 1734, NCC).
The reduction of fare does not justify any limitation of the CC’s
liability.
Amount of liability of carrier for death/injury to pax:
General Rule: The liability of the CC for death or injuries to pax cannot
be limited by stipulation or otherwise
Exception: The CC‘s liability may be limited when:
 Pax is carried gratuitously,
 There is a stipulation limiting the CC‘s liability, and
 The incident was not caused by willful acts or gross
negligence of the CC
Carriage; Prohibited & Valid Stipulations (2002)
Discuss whether or not the following stipulations in acontract of
carriage of a common carrier are valid:
1) a stipulation limiting the sum that may be recovered bythe shipper or
owner to 90% of the value of the goods in case ofloss due to theft.
Common Carrier; Defenses (2002)
Why is the defense of due diligence in the selection andsupervision of
an employee not available to a commoncarrier? (2%)
SUGGESTED ANSWER:
The defense of due diligence in the selection andsupervision of an
employee is not available to a commoncarrier because the degree of
diligence required of acommon carrier is not the diligence of a good
father of afamily but extraordinary diligence, i.e., diligence of
thegreatest skill and utmost foresight.
Principle of Contributory Negligence:
It is the principle that negligence, however slight, on the part of the
person injured, which is one of the causes proximately contributing to
his injury, equitably reduces the liability of the common carrier
What is contributory negligence?
Conduct on the part of the injured party, contributing as a legal cause
to the harm he has suffered, which falls below the standard to which he
is required to conform for his own protection [Estacio v. Bernardo, 27
Feb 2006]
When can a person be held to have contributed to his injuries?
When it is shown that he performed an act that brought about his
injuries in disregard of warning or signs of an impending danger to
health and body [Estacio v. Bernardo, 27 Feb 2006]
Duty of Pax:
The pax must observe the diligence of a GFOF to avoid injury to
himself[Art. 1761]
Effect of Contributory Negligence on the part of pax:
The carrier shall still be held liable for the death or injury to pax, BUT
the amount of damages shall be equitably reduced [Art. 1762]

2) a stipulation that in the event of loss, destruction ordeterioration of

goods on account of the defective condition ofthe vehicle used in the
contract of carriage, the carrier‗s liability islimited to the value of the
goods appearing in the bill of ladingunless the shipper or owner
declares a higher value (5%) The railroad company's defense involves the assumption that even granting that the neg

1) The stipulation is considered unreasonable,unjust and contrary to

public policy under Article 1745 ofthe Civil Code.
 negligence announced in the Rakes case (supra), if the accident was CLEMENTE BRIÑAS, petitioner, vs.
caused by plaintiff's own negligence, no liability is imposed upon THE PEOPLE OF THE PHILIPPINES and HONORABLE COURT OF
defendant's negligence and plaintiff's negligence merely contributed to APPEALS, respondents. GUTIERREZ, JR., J.:
his injury, the damages should be apportioned. It is, therefore,
important to ascertain if defendant was in fact guilty of negligence.
and the conductor announces the name of the place. It is also a matter of common experience that as the train or bus slackens its speed, some passengers usually stand and proceed to the n
It may be admitted that had plaintiff waited until the train had come to a
full stop before alighting, the particular injury suffered by him could not
eals correctly observed, "the appellant's announcement was premature and erroneous.
have occurred. Defendant contends, and cites many authorities in
support of the contention, that it is negligence per se for a passenger
to alight from a moving
l speed. Petitioner-appellant failed to train. We reason
show any are notwhydisposed
the traintosuddenly
subscribe to thisits regular speed. The announcement was made while the train was still in Barrio Lagalag.
resumed
doctrine in its absolute form. We are of the opinion that this proposition
is too badly stated and is at variance with the experience of every-day
ted the victims
life.toInstand
this and proceed
particular to the nearest
instance, exit.train
that the Without
wassaid announcement,
barely moving when the victims would have been safely seated in their respective seats when the train jerked as it picked up
plaintiff alighted is shown conclusively by the fact that it came to stop
withinthat
as this negligence six was
meters from the place
the proximate cause where
of theirhe stepped from it. Thousands
deaths.
y announcing ofthe
person alight
next flag stopfrom trains
was the under cause
proximate theseofconditions
the deathsevery day Bool
of Martina of the
and EmelitaGesmundo. Any negligence of the victims was at most contributory and does not exculpate
year, and sustain no injury where the company has kept its platform
free from dangerous obstructions. There is no reason to believe that
plaintiff would have suffered any injury whatever in alighting as he did
had it not been for defendant's negligent failure to perform its duty to
provide a safe alighting place.

XXX

As the case now before us presents itself, the only fact from which a
conclusion can be drawn to the effect that plaintiff was guilty of
contributory negligence is that he stepped off the car without being
able to discern clearly the condition of the platform and while the train
was yet slowly moving. In considering the situation thus presented, it
should not be overlooked that the plaintiff was, as we find, ignorant of
the fact that the obstruction which was caused by the sacks of melons
piled on the platform existed; and as the defendant was bound by
reason of its duty as a public carrier to afford to its passengers facilities
for safe egress from its trains, the plaintiff had a right to assume, in the
absence of some circumstance to warn him to the contrary, that the
platform was clear. The place, as we have already stated, was dark, or
dimly lighted, and this also is proof of a failure upon the part of the
defendant in the performance of a duty owing by it to the plaintiff; for if
it were by any possibility concede that it had right to pile these sacks in
the path of alighting passengers, the placing of them adequately so
that their presence would be revealed.

As pertinent to the question of contributory negligence on the part of

the plaintiff in this case the following circumstances are to be noted:
The company's platform was constructed upon a level higher than that
of the roadbed and the surrounding ground. The distance from the
steps of the car to the spot where the alighting passenger would place G.R. No. 95582 October 7, 1991
his feet on the platform was thus reduced, thereby decreasing the risk DANGWA TRANSPORTATION CO., INC. and THEODORE
incident to stepping off. The nature of the platform, constructed as it LARDIZABAL y MALECDAN, petitioners,
was of cement material, also assured to the passenger a stable and vs.
even surface on which to alight. Furthermore, the plaintiff was COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA
possessed of the vigor and agility of young manhood, and it was by no CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA
means so risky for him to get off while the train was yet moving as the CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT,
same act would have been in an aged or feeble person. In determining SAMUEL
the question of contributory negligence in performing such act — that CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late
is to say, whether the passenger acted prudently or recklessly — the PedritoCudiamat represented by
age, sex, and physical condition of the passenger are circumstances InocenciaCudiamat, respondents.
necessarily affecting the safety of the passenger, and should be It is the duty of common REGALADO, J.:p
carriers of passengers, including common
considered. Women, it has been observed, as a general rule are less carriers by railroad train, streetcar, or motorbus, to stop their
capable than men of alighting with safety under such conditions, as the conveyances a reasonable length of time in order to afford passengers
nature of their wearing apparel obstructs the free movement of the an opportunity to board and enter, and they are liable for injuries
limbs. Again, it may be noted that the place was perfectly familiar to suffered by boarding passengers resulting from the sudden starting up
the plaintiff as it was his daily custom to get on and of the train at this or jerking of their conveyances while they are doing so.
station. There could, therefore, be no uncertainty in his mind with
regard either to the length of the step which he was required to take or Further, even assuming that the bus was moving, the act of the victim
the character of the platform where he was alighting. Our conclusion is in boarding the same cannot be considered negligent under the
that the conduct of the plaintiff in undertaking to alight while the train circumstances. As clearly explained in the testimony of the aforestated
was yet slightly under way was not characterized by imprudence and witness for petitioners, Virginia Abalos, th bus had "just started" and
that therefore he was not guilty of contributory negligence. "was still in slow motion" at the point where the victim had boarded and
was on its platform.

It is not negligence per se, or as a matter of law, for one attempt to

board a train or streetcar which is moving slowly. 14 An ordinarily
G.R. No. L-30309 November 25, 1983 prudent person would have made the attempt board the moving
 conveyance under the same or similar circumstances. The fact that passengers board and alight from GOODS
slowly moving vehicle is a matter ofPASSENGERS
common experience both the driver an

Extraordinary diligence XO diligence for the safety of

The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger and is entitled all thepax
rights and protection pertaining to such a contrac

Bound to carry pax safely as far

as human foresight can provide,
using the utmost diligence of
very cautious persons, with due
regard for all the circumstances

Presumption of negligence
Responsibility for Acts of Strangers arises:

When a CC can be held liable for death or injury to pax for willful acts In case of loss, destruction or In case of death or injuries to
or negligence of strangers: deterioration of the goods passengers

 If the common carrier's employees through the exercise of Non-arrival of goods at Non fulfillment of contract
the diligence of a GFOF could have prevented or destination; delay
stopped the act or omission
Presumption of negligence does Presumption of negligence will
G.R. No. L-19161 April 29, 1966 not arise automatically in the always arise in case of carriage
MANILA RAILROAD COMPANY, petitioner, vs. five (5) instances mentioned of pax
MACARIA BALLESTEROS, TIMOTEO CAMAYO, JOSE REYES and
JULIAN MAIMBAN, JR., respondents.
Stipulation that provides that the Responsibility of a common
MAKALINTAL, J.:
common carrier need not carrier to transport passenger
observe
as correctly overruled by the trial court, considering the provisions of Article 1763 of the Civil Code and any(b) diligence
section 48 in Vehicle
of the Motor the Law,
with which
extraordinary
respectivelyand utmost
provide as follows:
custody of the goods shall be diligence cannot be dispensed
considered unreasonable, with by stipulation, by the
ers or of strangers, if the common carrier's employees through the exercise of the diligence of a goodunjust
father of a family
and could have
contrary prevented
to public or stoppedofthe actnotices,
posting or omission.by
policy statements on tickets or
otherwise
tting beside him or in any other part of the car, to interfere with him in the operation of the motor vehicle, by allowing said person to take hold of the steering wheel, or in any other manner
Degree of diligence can be The responsibility of a common
driver could have taken over, constitute reckless imprudence and wanton injurious conduct on the part of the MRR
lessened employees."
provided it be in carrier to exercise extraordinary
writing, signed by the shipper or and utmost diligence in the
owner, supported by a valuable transportation of passengers
consideration other than the cannot be lessened by
service rendered by the stipulation, the posting of
common carrier and notices, by statements on
reasonable, just and not tickets, or otherwise
contrary to public policy

Liability in case of breach can As a general rule, liability in

be lessened is allowed case of breach cannot be
lessened, especially for willful
An agreement limiting the acts or gross negligence.
common carrier‘s liability for
delay on account of strikes or Exception: A stipulation limiting
riots is valid the common carrier‘s liability for
simple negligence is valid but
Common Carrier; Defenses; Fortuitous Events (1994) A stipulation that the common only when a passenger is
Marites, a paying bus passenger, was hit above her left eyeby a stone
MARITIME COMMERCE
carrier‘s liability is limited to the carried gratuitously.
value of the goods appearing in
hurled at the bus by an unidentified bystanderas the bus was speeding the bill of lading, unless the
through the National Highway.The bus owner‗s personnel lost no time shipper or owner declares a
in bringingMarites to the provincial hospital where she was greater value is binding.
confinedand treated. Marites wants to sue the bus company for
damages and seeks your advice whether she can legallyhold the bus A contract fixing the sum that
company liable. What will you advise her? may be recovered by the owner
or shipper for the loss,
SUGGESTED ANSWER: destruction, or deterioration of
the goods is valid if it is
Marites can not legally hold the bus company liable. Thereis no reasonable and just under the
showing that any such incident previously happenedso as to impose circumstances, and has been
an obligation on part of the personnel ofthe bus company to warn the fairly and freely agreed upon.
passengers and to take thenecessary precaution. Such hurling of a
stone constitutesfortuitous event in this case. The bus company is not
aninsurer. (Pilapil v CA 180 s 346)
Distinctions between Common Carriers of Goods and Common
Carriers of Passengers

COMMON CARRIERS OF COMMON CARRIERS OF

Maritime Law - the system of laws which particularly relates to the affairs and business of the sea, to ships, their crews and navigation, and
to marine conveyance of persons and property.
FaustoRubiso in the ownership of the pilot boat Valentina, inasmuch as, though the latte
Primary Law - Civil Code Provisions on Common Carriers

Suppletory Laws:

1. Code of Commerce [Book III]

2. CA 65 - COGSA [Carriage of Goods by Sea Act]
3. PD 474
4. RA 1937 – Tariff and Customs Code
5. Act 2616 – Salvage Law Persons Who Take Part in Marine Commerce[Art. 586-651]
6. PD 1521 - Ship Mortgage Decree of 1978
1. Ship Owner – the owner of the vessel
Governing Body in Marine Transportation - MARINA [Maritime 2. Ship Agent – the person:
Industry Authority] a. entrusted with provisioning of the vessel, or
b. who represents the vessel in the port where she
General Functions of the MARINA: happens to be
3. Captain or Master – the one who governs the vessel
1. Issue Certificates of Public Convenience for the operation of 4. Sailing Mate – the second chief of the vessel
domestic and overseas water carriers 5. Second Mate – the one who takes command of the vessel
2. Register and issue certificates, licenses, or documents in case of disability or disqualification of captain or sailing
necessary or incident thereto mate
6. Crew or Sailors – the persons who man the vessel and
Vessels those who perform other duties

How ownership of MERCHANT VESSELS may be acquired [Art.
573]:
1. By any means recognized by law [Art. 712 Civil Code]:
a. By law [sale or dacion en pago]
b. By donation
c. By testate or intestate succession
d. In consequence of certain contracts
e. By tradition
2. By prescription:
a. 3 years – if possession thereof was in good faith
with just title duly recorded, or
b. 10 years – in the absence of above requisites
Captain or Master of a Vessel
Distinctions:
1. Captain - one who governs vessels:
a. that navigate the high seas, or
b. of large dimensions and importance [although
engaged in coastwise trade]
2. Master - one who commands smaller ships engaged
exclusively in the coastwise trade
Note: For purposes of Maritime Commerce, ―captain‖ and
―master‖ have the same meaning, both being the chiefs and
commanders of vessels

What kind of property is a vessel? Qualifications under Art 609 of the Code of Commerce

1. PERSONAL or MOVABLE 1.Filipino

2. BUT – the 2.Legal capacity to bind himself
a. ownership thereof must be evidenced by a 3.Proof that they have skill, capacity, and qualification
certificate of ownership, and required to command and direct a vessel as established by:
b. transfer thereof must be registered in the a. marine laws, ordinances or regulations
proper registry [to bind 3rd persons] (Art. 585) b. those of navigation
4. Not disqualified according to the same for the discharge of
Requisites for Legal Acquisition of a Merchant Vessel [Art. 573]: the dutiesG.R.
of that
No.position
114167 July 12, 1995
COASTWISE LIGHTERAGE CORPORATION, petitioner,
1. The mode of transfer must appear in a written instrument vs.
2. It must be recorded in the registry or vessels to bind 3rd COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE
persons: COMPANY, respondents.

a. Under EO 125 – transaction must be registered FRANCISCO, R., J.:

with MARINA
b. But, this is also being conducted by the PPA
G.R. No. L-11407 October 30, 1917
FAUSTO RUBISO and BONIFACIO GELITO, plaintiff-appellee,
vs.
FLORENTINO E. RIVERA, defendant-appellant.
TORRES, J.:
The requisite of registration in the registry, of the purchase of a vessel,
is necessary and indispensable in order that the purchaser's rights may
be maintained against a claim filed by a third person. Such registration
is required both by the Code of Commerce and by Act No. 1900. XXX
In view of said legal provisions, it is undeniable that the defendant
Florentino E. Rivera's rights cannot prevail over those acquired by
Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted
that he was not licensed. The Code of Commerce, which subsidiarily
governs common carriers (which are primarily governed by the
provisions of the Civil Code) provides:
Art. 609. — Captains, masters, or patrons of vessels must be Filipinos,
have legal capacity to contract in accordance with this code, and prove
the skill capacity and qualifications necessary to command and direct
the vessel, as established by marine and navigation laws, ordinances
or regulations, and must not be disqualified according to the same for
the discharge of the duties of the position. . . .
Clearly, petitioner Coastwise Lighterage's embarking on a voyage with
an unlicensed patron violates this rule. It cannot safely claim to have
exercised extraordinary diligence, by placing a person whose
navigational skills are questionable, at the helm of the vessel which
 admitted that on account
eventually metofthe
hisfateful
experience he was
accident. veryalso
It may familiar withfollow
logically, the configuration ofwithout
that a person the riverlicense
as welltoasnavigate,
the course headings,
lacks not justand
thethat
skill he does
to do so,not
buteven
also refer to riverfamiliarity
the utmost charts when
withnavig
the

of the Orinoco
As aRiver,
commonCaptain Colon
carrier, relied onisthe
petitioner knowledge
liable and
for breach ofexperience ofof
the contract pilot Vasquez
carriage, to guide
having failedthe
to vessel safely.
overcome the presumption of negligence with the loss and destruction of goods it

al, bank, deep and shallow ends of the river. In his deposition, pilot EzzarSolarzano Vasquez testified that he is an official pilot in the Harbour at Port Ordaz, Venezuela, and that he had been a

ine Roxas deemed it best not to order him (the pilot) to stop the vessel,mayhap, because the latter had assured him that they were navigating normally before the grounding of the vessel.M

of the Orinoco River, Captain Colon relied on the knowledge and experience of pilot Vasquez to guide the vessel safely.
General Functions of a Captain

1. General agent of the ship owner

2. Technical director of the vessel
3. Representative of the government in the country under
whose flag he navigates

No. 115286 August 11, 1994

-ORIENT MARITIME ENTERPRISES, INC., SEA HORSE SHIP, INC. and TRENDA WORLD SHIPPING (MANILA),
INC., petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and RIZALINO D.
TAYONG, respondents.
FELICIANO, J.:

se) has to do with the operation and preservation of the vessel during its voyage and the protection of the passengers (if any) and crew and cargo. In his role as general agent of the shipown

Obligations of the Captain if Repair and Maintenance of Vessel is

required during the voyage [583]

1. He shall apply to:

a. If in RP territory – the judge or the courts or
b. If outside RP territory :
i. Filipino Consul
ii. Judge or Court of the Local Authority, if
no consul is available

2. He must present to:

a. Certificate or registry of the vessel
b. Instruments proving the obligation contracted

PROHIBITED ACTS (613, 614, 615, 617, 621)

Books to be Carried by the Captain on Board the Vessel Art.

612[3]

1. LOGBOOK - where he shall enter everyday everything

significant about the voyage
G.R. No. 119602 October 6, 2000
2. ACCOUNTING BOOK - where he shall enter all the
WILDVALLEY SHIPPING CO., LTD. petitioner,
amounts collected and paid for the account of the vessel
vs. 3. FREIGHT BOOK– where he shall record the entry and
COURT OF APPEALS and PHILIPPINE PRESIDENT LINES exit of goods
INC., respondents.
BUENA, J.:

hallow ends of the river. In his deposition, pilot EzzarSolarzano Vasquez testified that he is an official pilot in the Harbour at Port Ordaz, Venezuela,and that he had been a pilot for twelve (12

best not to order him (the pilot) to stop the

G.R. No. L-65442 April 5, 1985

 HAVERTON SHIPPING LTD. and OFSI SERVICES, Article 1736. The extraordinary responsibility of the common carrier
INC., petitioners, vs. lasts from the time the goods are unconditionally placed in the
THE NATIONAL LABOR RELATIONS COMMISSION, THE HON. possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the
NCIO M. SIDDAYAO, in his capacity as Officer-in-Charge of the NATIONAL SEAMEN BOARD and ALFREDO
BENITEZ, respondents. MELENCIO-HERRERA, J.: consignee, or to the person who has a right to receive them, without
prejudice to the provisions of article 1738.

Common Carrier; Duration of Liability (1996)

e has adopted. 7 Even according to the law of the vessel's registry, that book is also "required by law"Aasbus of GL by
disclosed Transit on its
the entry way8to
itself. Davao
There is nostopped toenable
controversy a passenger
as to the genuineness of the sa
to alight. At that moment, Santiago,who had been waiting for a ride,
boarded the bus.However, the bus driver failed to notice Santiago who
wasstill standing on the bus platform, and stepped on theaccelerator.
Because of the sudden motion, Santiagoslipped and fell down
suffering serious injuries. MaySantiago hold GL Transit liable for
breach of contract ofcarriage? Explain.

SUGGESTED ANSWER:

Santiago may hold GL Transit liable for breach of contractof carriage. It

G.R. No. 180719 August 22, 2008 was the duty of the driver, when he stoppedthe bus, to do no act that
L TRANSMARINE, INC., CENTENNIAL MARITIME SERVICES CORPORATION AND/OR B+H EQUIMAR SINGAPORE, would have the effect ofincreasing the peril to a passenger such as
PTE. LTD., petitioners, vs. Santiago whilehe was attempting to board the same. When a bus is
RUBEN G. DELA CRUZ, respondent. not inmotion there is no necessity for a person who wants to ride the
YNARES-SANTIAGO, J.: same to signal his intentionto board. A public utility bus, once it stops,
is in effectmaking a continuous offer to bus riders. It is the duty of
common carriers of passengers to stop their conveyancesfor a
opy presented in evidence. reasonable length of time in order to affordpassengers an opportunity
to board and enter, and they areliable for injuries suffered by boarding
passengers resultingfrom the sudden starting up or jerking of their
ubmitted three official documents bearing the signature of Capt. SczepanKowalewski which is different from the one appearing in Annex E. Thus, it was incumbent upon petitioners to prove
conveyanceswhile they are doing so. Santiago, by stepping and
standingon the platform of the bus, is already considered apassenger
m a blind adoption of such contents.Thus, the unauthenticated documents relied upon by petitioners and is entitled
are mere to all the
self-serving rights and
statements protectionpertaining
of their to a contract
own officers and were correctly of
disregarded by
carriage.(Dangwa Trans Co v CA 95582 Oct 7,91 202s574)

Definition of Maritime Protest [BAR]

 It is a written statement under oath

 Made by the captain or master of the vessel
 After the occurrence of an accident or disaster
 In which the vessel or cargo is lost or injured
 With respect to circumstances attending such occurrence

Purpose of a Maritime Protest - It is usually intended to show:

1. That the loss or damage resulted from:

a. a peril of the sea, or
b. some other cause for which neither the master
or owner was responsible
2. It concludes with the protestation against any liability of the
owner for such loss or damage

Doctrine of Limited Liability[Art. 586-590]

When Ship owner or Ship Agent shall be Civilly Liable [Art. 586]

1. Art. 586:
a. For the acts of the CAPTAIN, and
What is the probative value of the entries in the logbook? It is an b. For the obligations contracted by the CAPTAIN
official record of entries made by a person in the performance of a duty to repair, equip, and provision the vessel [provided
required by law and are prima facie evidence of the facts stated therein the creditor proves that the amount claimed was
invested for the benefit of the vessel]
Duration of Responsibility of Captain for Cargo on Board his
Vessel [Art. 619] 2. Art. 587 - For the indemnities in favor of 3rd persons
which arise from the conduct of the CAPTAIN in the care of
1. FROM – the time it is turned over to him at the dock or afloat the goods which the vessel carried
alongside the vessel at the port of loading
2. UNTIL – he delivers it on the shore or on the discharging
wharf at the port of unloading
3. UNLESS –otherwise expressly agreed upon

NOTE: Compare to Art. 1736 Civil Code

 Article 586 of the Code of Commerce states that a ship agent is "the person entrusted with provisioning or representing the vessel in the port in which it may be found."
Hence, whether acting as agent of the owner of the vessel or as agent of the charterer, petitioner will be considered as the ship agent and may be held liable as such, as long as t

The trial court found that petitioner "was appointed as local agent of the vessel, which duty includes arrangement for the entrance and clearance of the vessel." Further, the CA f

These acts all point to the conclusion that it was the entity that represented the vessel in the Port of Manila and was the ship agent within the meaning and context of Article

As ship agent, it may be held civilly liable in certain instances. The Code of Commerce provides:

"Article 586. The shipowner and the ship agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the v

"Article 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which

Petitioner does not dispute the liabilities of the ship agent for the loss/shortage of 476.140 metric tons of standard-grade Muriate of Potash valued at P1,657,700.95. Hence, we

boardthe vessel MV Tonichi (a common carrier engaged incoastwise trade owned by Ichi) for shipment from PuertoGalera to Manila. The cargo did not reach Manila becausethe vessel capsiz

Ichi? 2) Are there exceptions to the ―limited liability rule‖?

of ashipowner for damages in case of loss is limited to thevalue of the vessel involved. His other properties cannotbe reached by the parties entitled to damages.

uilty of negligence, the ―limited liability rule‖ does notapply. In such case, the ship owner is liable to the fullextent of the damages sustained by the aggrieved parties(Mecenas v CA 180 s 83)

ctrine of Limited Liability

G.R. No. L-47447-47449 October 29, 1941

velyreal and hypothecary nature of maritime
TEODORO law operates
R. YANGCO, tolimit the liability
ETC., petitioner, vs. of the shipowner to the value of thevessel, earned freightage and proceeds of the insurance.However, such doct
MANUEL LASERNA, ET AL., respondents.
MORAN, J.:

eursaway,
properlyMV
held liable in
Pioneer leftdamages for for
port to sail theLeyte.
consequent death
That was of its passengers?
amiscalculation of the We are of the opinion and so hold that this question is controlled by the provisions of article 587 of the Code o

ain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the

ned to that which he is entitled as of right to abandon — "the vessel with all
typhoon signals by both the ship owner and the captain as the typhoon
came earlier andovertook the vessel. The vessel sank and a number
ofpassengers disappeared with it.Relatives of the missing passengers
claimed damagesagainst the shipowner. The shipowner set up the
defensethat under the doctrine of limited liability, his liability wasco-
extensive with his interest in the vessel. As the vesselwas totally lost,
his liability had also been extinguished.. How will you advice the
claimants? Discuss thedoctrine of limited liability in maritime law. (3%).
Assuming that the vessel was insured, may theclaimants go after the
insurance proceeds? (3%)
SUGGESTED ANSWER:
Under the doctrine of limited liability in maritime law,the liability of the
shipowner arising from the operation of a shipis confined to the vessel,
equipment, and freight, or insurance, ifany, so that if the shipowner
abandoned the ship, equipment, andfreight, his liability is extinguished.
However, the doctrine oflimited liability does not apply when the
shipowner or captain isguilty of negligence.
Yes. In case of a lost vessel, the claimants may go afterthe proceeds
of the insurance covering the vessel.
MV Mariposa is guilty of negligence inignoring the typhoon bulletins
issued by PAGASA and inoverloading the vessel. But only the captain of
the vesselMV Mariposa is guilty of negligence. The ship owner is not.
Therefore, the ship owner can invoke the doctrine oflimited liability.
Limited Liability Rule; Doctrine of Inscrutable Fault (1991)
In a collision between M/T Manila, a tanker, and M/VDon Claro, an inter-
island vessel, Don Claro sank andmany of its passengers drowned and
died. All its cargoeswere lost. The collision occurred at nighttime but the
seawas calm, the weather fair and visibility was good. Prior tothe collision
and while still 4 nautical miles apart, Don Claro already sighted Manila on
its radarscreen. Manila had no radar equipment. As for speed,Don Claro
was twice as fast as Manila.
At the time of the collision, Manila failed to follow Rule19 of the
International Rules of the Road which requires 2vessels meeting head on
to change their course by eachvessel steering to starboard (right) so that
each vessel maypass on the port side (left) of the other. Manila
signaledthat it would turn to the port side and steered accordingly,thus
resulting in the collision. Don Claro‗s captain wasoff-duty and was having
a drink at the ship‗s bar at thetime of the collision.

Limited Liability Rule (2000)

MV Mariposa, one of five passenger ships owned byMarina Navigation

Co, sank off the coast of Mindoro whileen route to Iloilo City. More than
200 passengers perishedin the disaster. Evidence showed that the
ship captainignored typhoon bulletins issued by Pag-asa during the24-
hour period immediately prior to the vessel‗s departurefrom Manila.
The bulletins warned all types of sea crafts to
avoid the typhoon‗s expected path near Mindoro. To makematters
worse, he took more load than was allowed for theship‗s rated
capacity. Sued for damages by the victim‗ssurviving relatives, Marina
Nav Co contended 1) that itsliability, if any, had been extinguished with
the sinking ofMV Mariposa; and 2) that assuming it had not been
soextinguished, such liability should be limited to the loss ofthe cargo.
Are these contentions meritorious in the contextof applicable
provisions of the Code of Commerce? (3%)

SUGGESTED ANSWER:

Yes. The contentions of Marina Nav Co are meritorious.The captain of

of the 2carriers for the death or injury of passengers and for theloss
of or damage to the goods arising from the collision issolidary.
Neither carrier may invoke the doctrine of lastclear chance which
can only be relevant, if at all, betweenthe two vessels but not on the
claims made by passengersor shippers (Litonjua Shipping v
National Seamen Board GR 5191010Aug1989)
SUGGESTED ANSWER:
Yes, but subject to the doctrine of limited liability. Thedoctrine is to
the effect that the liability of the shipownerswould only be to the
extent of any remaining value of thevessel, proceeds of insurance, if
any, and earned freightage.Given the factual settings, the shipowner
himself was notguilty of negligence and, therefore, the doctrine can
wellapply (Amparo de los Santos v CA 186 s 69)
Limited Liability Rule; General Average Loss (2000)
X Shipping Company spent almost a fortune in refittingand repairing
its luxury passenger vessel, the MV Marina,which plied the inter-
island routes of the company fromLa Union in the north to Davao
City in the south. TheMV Marina met an untimely fate during its
post- repairvoyage. It sank off the coast of Zambales while en route
toLa Union from Manila. The investigation showed that thecaptain
alone was negligent. There were no casualties inthat disaster.
Faced with a claim for the payment of therefitting and repair, X
Shipping company assertedexemption from liability on the basis of
the hypothecary or limited liability rule under Article 587 of the Code
ofCommerce. Is X Shipping Company‗s assertion valid?Explain
(3%).
SUGGESTED ANSWER:
a) Who would you hold liable for thecollision?
b) If Don Claro was at fault, may the heirs of thepassengers who died
and the owners of the cargoesrecover damages from the owner of said
vessel?
SUGGESTED ANSWER:
I can hold the 2 vessels liable. In the problem given,whether on the
basis of the factual settings or under thedoctrine of inscrutable fault,
both vessels can be said tohave been guilty of negligence. The liability
3. Select and come into agreement with the captain and
contract in the name of owners who shall be bound in all that
refers to repairs, details of equipment, armament, provisions,
fuel, freight, and in general that pertains to the requirement
of navigation (597)
4. Indemnify the captain for all the expenses he may have
incurred from his own funds or from those of other persons
for the benefit of the vessel (602)
NOTE: Ship owner, agent and captain can be one and the same
persons (595, 596, 606)
No. The assertion of X Shipping Company is not valid.The total
destruction of the vessel does not affect theliability of the ship owner
for repairs on the vesselcompleted before its loss.
Limited Liability Rule; General Average Loss (2000)
MV SuperFast, a passenger-cargo vessel owned by SFShipping
Company plying the inter-island routes, was on itsway to Zamboanga
City from the Manila port when itaccidentally, and without fault or
negligence of anyone onthe ship, hit a huge floating object. The
accident causeddamage to the vessel and loss of an accompanying
cratedcargo of passenger PR. In order to lighten the vessel andsave it
from sinking and in order to avoid risk of damage toor loss of the rest
of the shipped items (none of which waslocated on the deck), some
had to be jettisoned. SFShipping had the vessel repaired at its port of
destination.SF Shipping thereafter filed a complaint demanding all the
other cargo owners to share in the total repair costs incurred by the
company and in the value of the lost andjettisoned cargoes. In answer
to the complaint, theshippers‗ sole contention was that, under the Code
ofCommerce, each damaged party should bear its or his own
damage and those that did not suffer any loss or damagewere not
obligated to make any contribution in favor ofthose who did. Is the
shippers‗ contention valid? Explain(2%)
SUGGESTED ANSWER:
No. The shippers‗ contention is not valid. The owners ofthe
cargo jettisoned, to save the vessel from sinking and tosave the rest of
the cargoes, are entitled to contribution.The jettisoning of said cargoes
constitute general averageloss which entitles the owners thereof to
contribution fromthe owner of the vessel and also from the owners of
thecargoes saved.
SF Shipping is not entitled to contribution/ reimbursementfor the costs
of repairs on the vessel from the shippers.
Powers and Duties of a Ship Agent:
1. Represent the ownership of the vessel and may, in his own
name and in such capacity, take judicial and extrajudicial
steps in matters relating to commerce (595.2)
2. Occupy the duties of the captain, if he has the qualification of
a captain (596.1)

How Ship Agent may Exempt Himself from Liability:
By ABANDONING:
1. the vessel, and
2. ALL:
a. her equipment, and
b. the freightage it may have earned during the
voyage
Why is the Ship owner given the right of abandonment?
As correctly stated by the appellate court, "(t)his rule is found
necessary to offset against the innumerable hazards and perils of
a sea voyage and to encourage shipbuilding and marine
commerce. (Delos Santos v CA)
What distinguishes Maritime Law from Civil Law or Mercantile
Law? The REAL and HYPOTHECARY nature of Maritime Law
A shipping transportation contract is ―REAL & HYPOTHECARY‖
in nature under Art. 587 which accords a ship owner or agent the right
of abandonment; and by necessary implication, his liability is confined
to that which he is entitled as of right to abandon - "the vessel with all
her equipments and the freight it may have earned during the voyage."
[Yangco v. Laserna, Oct 29, 1941]
ABANDONMENT
It is equivalent to an offer of the value of the vessel, her equipment and
freight earned in return for an exemption from liability.
When ABANDONMENT is made in the instances provided by
law, it cannot be refused.
Note:When the right to abandonment exists, the
shipper/consignee/pax cannot invoke Art. 1733 and 1755 of the Civil
Code.
Article 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.
1. For civil liability to third persons arising from the conduct
of the captain in the vigilance over the goods which the
vessel carried [Art. 587]
2. For the proportionate contribution of co-owners or the
vessel to a common fund for the results of the acts of the
captain [Art. 590]
3. For civil liability incurred by the ship owner in case of
collision [Art.837]
When the ship owner or ship agent may be held liable for MORE
than the value of the vessel:
1. When the vessel is PROPERLY INSURED – the insurance
will take care of the liability the value of w/c could be more
than the value of the vessel
2. When the liability for REPAIRS of the vessel was incurred
BEFORE the loss of such vessel
3. When the liability is one that arises from the provisions of
the LABOR CODE
When Abandonment CANNOT be Made
1. When the ship owner or ship agent is at FAULT – he is
deemed at fault when the incident arose because of lack of
proper equipment of the vessel and technical training of
officers and crew
2. When the voyage is NOT maritime, but only in a river bay,
of gulf
3. When the vessel is NOT acting as a common carrier but a
private carrier
G.R. No. L-51165 June 21, 1990
HEIRS OF AMPARO DE LOS SANTOS, HEIRS OF ERNANIE
DELOS SANTOS, HEIRS OF AMABELLA DELOS SANTOS, HEIRS
OF LENNY DELOS SANTOS, HEIRS OF MELANY DELOS SANTOS,
HEIRS OF TERESA PAMATIAN, HEIRS OF DIEGO SALEM, AND
RUBEN REYES, petitioners,
vs.
HONORABLE COURT OF APPEALS AND COMPANIA
MARITIMA, respondents.
MEDIALDEA. J.:
Under Article 587, a shipowner or agent has the right of abandonment;
and by necessary implication, his liability is confined to that which he is
entitled as of right to abandon-"the vessel with all her equipments and
the freight it may have earned during the voyage" (Yangco v. Laserna,
et al., 73 Phil. 330, 332). Notwithstanding the passage of the New Civil
Code, Article 587 of the Code of Commerce is still good law. The
reason lies in the peculiar nature of maritime law which is 94
exclusively real and hypothecary that operates to limit such liability to
the value of the vessel, or to the insurance thereon, if any (Yangco v.
Laserna, Ibid). As correctly stated by the appellate court, "(t)his rule is
found necessary to offset against the innumerable hazards and perils
of a sea voyage and to encourage shipbuilding and marine commerce.
(Decision, Rollo, p. 29). Contrary to the petitioners' supposition, the
limited liability doctrine applies not only to the goods but also in all
cases like death or injury to passengers wherein the shipowner or
agent may properly be held liable for the negligent or illicit acts of the
captain (Yangco v. Laserna, Ibid). It must be stressed at this point
that Article 587 speaks only of situations where the fault or
negligence is committed solely by the captain. In cases where the
shipowner is likewise to be blamed, Article 587 does not apply
(see Manila Steamship Co., Inc. v. Abdulhanan, et al., 100 Phil. 32,

In (4)
ses) and passengers (about 241 more than the authorized 193 passengers) were loaded during the four thehour
hypothecary doctrine warranted the immediate stay of execution of
judgment to prevent the impairment of the other creditors‘ shares.
Invoking the rule on the law of the case, private respondent therein
countered that the 1990 GAFLAC case had already settled the extent
of Aboitiz‘s liability.
G.R. No. 116940 June 11, 1997
THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,
INC., petitioner,
vs.
COURT OF APPEALS and FELMAN SHIPPING
LINES, respondents.
BELLOSILLO, J.:
On the second issue, Art. 587 of the Code of Commerce is not
applicable to the case at bar. 8 Simply put, the ship agent is liable for
the negligent acts of the captain in the care of goods loaded on the
vessel. This liability however can be limited through abandonment of
the vessel, its equipment and freightage as provided in Art. 587.
Nonetheless, there are exceptional circumstances wherein the ship
agent could still be held answerable despite the abandonment, as
where the loss or injury was due to the fault of the shipowner and the
captain. 9 The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner's liability,
does not apply to cases where the injury or average was occasioned
by the shipowner's own fault. 10 It must be stressed at this point that
Art. 587 speaks only of situations where the fault or negligence is
committed solely by the captain. Where the shipowner is likewise to be
blamed, Art. 587 will not apply, and such situation will be covered by
the provisions of the Civil Code on common carrier.
It was already established at the outset that the sinking of "MV Asilda"
was due to its unseaworthiness even at the time of its departure from
the port of Zamboanga. It was top-heavy as an excessive amount of
cargo was loaded on deck. Closer supervision on the part of the
shipowner could have prevented this fatal miscalculation. As such,
FELMAN was equally negligent. It cannot therefore escape liability
through the expedient of filing a notice of abandonment of the vessel by virtue of Art. 58
NOTE:For the earlier rulings on the case against Aboitiz, read:

Aboitiz Shipping vs General Accident (1993)
1993 GAFLAC
interval" case,
(Decision, p. 13,Aboitiz
Rollo, p.argued that the
26). Perchance, realsupervision
a closer and could
Following the doctrine of limited liability, however, the Court declared in
the 1993 GAFLAC case that claims against Aboitiz arising from the
sinking of M/V P. Aboitiz should be limited only to the extent of the
value of the vessel. Thus, the Court held that the execution of
judgments in cases already resolved with finality must be stayed
pending the resolution of all the other similar claims arising from the
sinking of M/V P. Aboitiz. Considering that the claims against Aboitiz
had reached more than 100, the Court found it necessary to collate all
these claims before their payment from the insurance proceeds of the
vessel and its pending freightage. As a result, the Court exhorted the
trial courts before whom similar cases remained pending to proceed
with trial and adjudicate these claims so that the pro-rated share of
each claim could be determined after all the cases shall have been
decided.
In the 1993 GAFLAC case, the Court applied the limited liability rule in
favor of Aboitiz based on the trial court‘s finding therein that Aboitiz
was not negligent.
 Monarch Insurance vs CA (2000)
In Monarch Insurance, the Court deemed it fit to settle once and for all
this factual issue by declaring that the sinking of M/V P. Aboitiz was
caused by the concurrence of the unseaworthiness of the vessel and
the negligence of both Aboitiz and the vessel‘s crew and master and
not because of force majeure. Notwithstanding this finding, the Court
did not reverse but reiterated instead the pronouncement
in GAFLAC to the effect that the claimants be treated as "creditors in
an insolvent corporation whose assets are not enough to satisfy the
totality of claims against it." The Court explained that the peculiar
circumstances warranted that procedural rules of evidence be set
aside to prevent frustrating the just claims of shippers/insurers. Thus,
the Court in Monarch Insurance ordered Aboitiz to institute the
necessary limitation and distribution action before the proper RTC and
to deposit with the said court the insurance proceeds of and the
freightage earned by the ill-fated ship.
 Aboitiz Shipping vs New India (2006)
However, on 02 May 2006, the Court rendered a decision in Aboitiz
Shipping Corporation v. New India Assurance Company, Ltd.44 (New
India), reiterating the well-settled principle that the exception to the
limited liability doctrine applies when the damage is due to the fault of
the shipowner or to the concurrent negligence of the shipowner and
the captain. Where the shipowner fails to overcome the presumption of
negligence, the doctrine of limited liability cannot be applied. In New
India, the Court clarified that the earlier pronouncement in Monarch
Insurance was not an abandonment of the doctrine of limited liability
and that the circumstances therein still made the doctrine applicable.
In New India, the Court declared that Aboitiz failed to discharge its
burden of showing that it exercised extraordinary diligence in the
transport of the goods it had on board in order to invoke the limited
liability doctrine. Thus, the Court rejected Aboitiz‘s argument that the
award of damages to respondent therein should be limited to its pro
rata share in the insurance proceeds from the sinking of M/V P.
Aboitiz.
 G.R. No. 137801 October 17, 2008
ABOITIZ SHIPPING CORPORATION, petitioners, For the transportation of its cargo from the Port of Manilato the Port of
vs. Kobe, Japan, Osawa & Co., chartered―bareboat‖ M/V Ilog of
EQUITABLE INSURANCE CORPORATION, respondents. Karagatan Corporation. M/V Ilogmet a sea accident resulting in the
TINGA, J.: loss of the cargo and thedeath of some of the seamen manning the
vessel. Whoshould bear the loss of the cargo and the death of the
seamen? Why? (4%)
.R. No. 130752, the RTC concluded that Aboitiz failed to show that it had exercised the required extraordinary diligence ANSWER:
SUGGESTED in steering the vessel before, during and after the storm. In G.R. No. 1
(per Dondee) Osawa and Co. shall bear the loss becauseunder a
demise or bareboat charter, the charterer (Osawa& Co.) mans the
vessel with his own people and becomes,in effect, the owner for the
voyage or service stipulated,subject to liability for damages caused by
hipowner or ship agent may be held liable for damages when the sinking of the vessel is attributable tonegligence.
the actual fault or negligence of the shipowner or its failure to ensure the seaworthine

Effect of Charter Party Agreement

1. Common Carrier

a. Voyage or Time Charter – retains its status as a

common carrier

b. Bareboat or Demise Charter – it becomes a

private carrier for the particular charter

2. Private Carrier – retains its status as a private carrier

What is meant by ―owner pro hac vice‖ of the vessel?

He is a demise or bareboat charterer to whom the owner of the vessel

has completely and exclusively relinquished possession, command
and navigation of the vessel

Formal Requirements of a Charter Party [Art. 652]

1. Must be drawn in duplicates,

Can a CHARTERER make an abandonment? 2. Signed by the contracting parties [or by two witnesses at the
request of party who does not know or is not able to sign]
NO. He cannot be regarded as being in the place of the owner or agent
in matters relating to the responsibility pertaining to ownership and Substantial Requirements of a Charter Party [Art. 652]
possession of the vessel [Yeung Sheung Exchange v. Urrutia, 12
PHIL 747] 1. Conditions freely stipulated
2. Kind, name and tonnage of vessel
Special Contracts of Maritime Commerce 3. Flag and port of registry
4. Name, surname and domicile of captain, ship agent, and
1. CHARTER PARTY charterer
2. BILL of LADING 5. Port of loading or unloading
6. Capacity, weight or measure the parties respectively bind
CHARTER PARTY[Art. 652-692] themselves to load and transport, or whether it is total
cargo
A contract by which an entire ship, or some principal part thereof, is let 7. Freightage to be paid
by the owner to another person for a specified time or use, 8. Primage to be paid by captain
inconsideration of the payment of a fee. 9. Days agreed for loading or unloading
10. Lay days and extra days to be allowed and the rate of
Kinds of Charter Parties: demurrage

1. CONTRACT OF AFFREIGHTMENT– owner retains control Charter Party (1991)

of the vessel; involves merely the use of shipping space on
a vessel, leased by the owner in part or as a whole, to carry
goods for others, and may either be a:
a. TIME CHARTER– a contract to use the vessel for
a particular period of time
b. VOYAGE CHARTER– a contract for the hire of a
vessel for one or a series of voyage
2. BAREBOAT OR DEMISE– involves the transfer of full
possession and control of the vessel for the period covered
by the contract; the entire command of the vessel,
possession and control over its navigation, including the
master and crew are turned over to the charterer
Maritime Commerce; Bareboat (2003)
The Saad Dev Co enters into a voyage charter with XYZover the
latter‗s vessel, the MV LadyLove. Before the Saadcould load it,
XYZ sold Lady Love to Oslob Maritime Cowhich decided to load it for
its own account.
a) May XYZShipping Co validly ask for the rescission of the
charterparty? If so, can Saad recover damages? To what extent?
b)If Oslob did not load it for its own account, is it bound bythe charter
party?
c) Explain the meaning of ―owner prohac vice of the vessel.‖ In what
kind of charter party doesthis obtain?
SUGGESTED ANSWER:
 under which vessel navigates for damages suffered
a) XYZ may ask for the rescission of the charter party if,as in this case,
it sold the vessel before the charterer hasbegun to load the vessel and
the purchaser loads it for hisown account. Saad may recover damages Non placement of vessel at He will be indemnified by owner
to the extent ofits losses (Art 689 Code of Commerce) disposal of charterer within for damages suffered
period and manner agreed upon
b) If Oslob did not load Lady Love for its own account, itwould be
bound by the charter party, but XYZ wouldhave to indemnify Oslob if it
was not informed of theCharter Party at the time of sale. (Art 689 Code
ofCommerce) Vessel returns to port of If he unloads the vessel, owner
departure on account of risk shall have the right to freight in
c) The term ―Owner Pro Hac Vice of the Vessel,‖ isgenerally from pirates, enemies or full for voyage out
understood to be the charterer of the vessel inthe case of bareboat or inclement weather
demise charter (Litonjua Shipping Co vNational Seamen‟s Board GR
51910 10Aug1989)
Vessel makes port in order to He must dispose of the goods
Charter Party (2004) make repairs

Under a charter party, XXO Trading Company shippedsugar to Coca-

Cola Company through SS Negros ShippingCorp., insured by Capitol
Insurance Company. The cargoarrived but with shortages. Coca-Cola Rescission by Owner
demanded fromCapitol Insurance Co. P500.000 in settlement for XXO
Trading. The MM Regional Trial Court, where the civil suitwas filed, Failure of charterer to place Charter is rescinded but
"absolved the insurance company, declaring thatunder the Code of cargo alongside vessel at the charterer must pay the vessel
Commerce, the shipping agent is civillyliable for damages in favor of termination of extra lay days owner:
third persons due to theconduct of the carrier's captain, and the
stipulation in thecharter party exempting the owner from liability is not a. ½ of the freight stipulated,
against public policy. Coca-Cola appealed. Will its appealprosper? and
Reason briefly. (5%)
b. demurrage for the lay days
SUGGESTED ANSWER: and extra lay days

No. The appeal of Coca-Cola will not prosper. UnderArticle 587 of the Sale of vessel before the Charter is rescinded - If the
Code of Commerce, the shipping agentis civilly liable for damages in charterer has begun to load the buyer of has loaded the vessel
favor of third persons due tothe conduct of the carrier's captain, and vessel for his own account BUT
the shipping agentcan exempt himself therefrom only by abandoning seller/owner must indemnify
thevessel with all his equipment and the freight he may haveearned charterer for damages suffered
during the voyage. On the other hand, assumingthere is bareboat
charter, the stipulation in the charterparty exempting the owner from Charter is NOT rescinded - If
liability is not againstpublic policy because the public at large is not buyer has NOT loaded the
involved(Home Insurance Co. v. American Steamship Agencies, Inc., vessel for his own account BUT
23 SCRA25(1968). the seller shall indemnify the
buyer if he did not inform the
Definition of Terms: buyer of the charter at the time
of making the sale
1. PRIMAGE – a small allowance or compensation payable:

a. to the master or owner of the vessel for the use of Distinctions

his cables and ropes to discharge the goods, and
b. to the mariners for lading and unlading in any port ORDINARY LEASE CHARTER PARTY
CONTRACT
2. DEMURRAGE – an amount stipulated in the charter party to
be paid by the charterer or shipper to the shipowner for any If the lease is for a definite If the charter is for a definite
DELAY in the sailing of his ship period, the lessee cannot give period, the charterer may
terminate the lease by just rescind the charter party by
3. LAYDAYS – number of days between loading and departure paying a portion of the amount paying half of the freightage
agreed upon
Who can Rescind a Charter Party

1. Charterer [Art. 688]
2. Ship owner [Art. 689]
Rescission by Charterer
Abandonment of charter before
loading
If the leased property is sold to
one who knows of the existence
of the lease contract, the new
owner of the property must
respect the lease
He must pay ½ of freight agreed
upon
If the vessel is sold to another,
the new owner cannot be
compelled to respect the CP for
as long as the new owner can
load the vessel with his own
cargo

Capacity of vessel not found to He will be indemnified by owner

be in conformity with that stated for damages suffered
in certificate of tonnage

Error in the statement of the flag He will be indemnified by owner

[G.R. No. 139629. June 21, 2004]
SANTIAGO LIGHTERAGE CORPORATION, petitioner, vs. COURT OF APPEALS, C-SQUARE CONSOLIDATED MINES and MANUEL
A. PELAEZ, respondents. CARPIO, J.:
 Interpretation of the Charter Party Agreement

Petitioner asserts that delivery of the MV Christine Gay to Pelaez and

Pelaezs subsequent takeover of the vessel is already a full
performance of petitioners obligations. Petitioner berthed MV Christine
Gay in the port of Manila as early as 26 August 1989 and Pelaez had The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier withou
the opportunity to inspect her from that date until 1 September 1989,
when Pelaez took over the vessel.Thus, petitioner is not liable for
In Keng Hua Paper Products Co., Inc. v. Court of Appeals, we held that once the bill of lad
defects in MV Christine Gay after the delivery and turn over. XXX

The mere physical transfer of MV Christine Gay from petitioner to

Pelaez does not constitute full performance of its obligation under their
bareboat charter agreement. Neither is it considered a delivery. Under
the agreement, physical transfer of a seaworthy vesselis necessary to
satisfy delivery.Paragraph 3 of the bareboat charter agreement
expressly requires petitioner to make the VESSEL seaworthy at the
time of delivery. Since petitioner did not deliver a seaworthy vessel,
petitioner failed to perform his obligation to Pelaez under the
agreement. 3- Fold Character of a BL

Seaworthiness is a relative term. Petitioner claims that MV Christine 1. A RECEIPT which:

Gay later undertook voyages within the Philippines.However, such 2.
subsequent voyages in the Philippines do not prove the vessels a. specifies the quantity, condition and character of
seaworthiness to withstand a voyage to South Korea. We quote from the goods received, and
authorities in Maritime Law: b. recites the date and place of shipment and the
fees paid by the shipper
To be seaworthy, a vessel must have that degree of fitness which an
ordinary, careful and prudent owner would require his vessel to have at 3. It is evidence of a CONTRACT by which the 3 parties
the commencement of her voyage, having regard to all the probable [shipper, carrier, consignee] undertake specific
circumstances of it. Thus the degree of seaworthiness varies in relation responsibilities and assume stipulated obligations; also
to the contemplated voyage. Crossing the Atlantic calls for stronger fixes the route, destination, freight charges, and stipulates
equipment than sailing across the Visayan Sea. It is essential to the rights and obligations assumed by the parties [Art. 353]
consider that once the necessary degree of seaworthiness has been
ascertained, this obligation is an absolute one, i.e. the undertaking is 4. It is a DOCUMENT OF TITLE
that the vessel actually is seaworthy. It is no excuse that the shipowner
took every possible precaution to make her so, if in fact he failed. G.R. No. 181300 September 18, 2009
MALAYAN INSURANCE CO., INC., Petitioner,
In examining what is meant by seaworthiness we must bear in mind vs.
the dual nature of the carriers obligations under a contract of JARDINE DAVIES TRANSPORT SERVICES, INC. and ASIAN
affreightment. To satisfy these duties the vessel must (a) be efficient
TERMINALS, INC., Respondents.
as an instrument of transport and (b) as a storehouse for her
D E C I S I O N CARPIO MORALES, J.:
cargo. The latter part of the obligation is sometimes referred to as
cargoworthiness.
or restitution, constitutes prima facie evidence of the goods therein described was correctly deemed by the appellate court to have been rebutted in light of abundant evidence casting doubt
A ship is efficient as an instrument of transport if its hull, tackle and
machinery are in a state of good repair, if she is sufficiently provided
ude sulphurwith
on a fuel
"saidand
to weigh"
ballast,basis
andisisnot disputed.
manned by Under such clause,
an efficient crew. the shipper is solely responsible for the loading of the cargo while the carrier is oblivious of the contents of the ship

Andcontents
ality, condition, a vessel andis value
cargoworthy
unknown."if itEvidently,
is sufficiently strong
the weight andcargo
of the equipped to be gauged from the bill of lading.
could not
carry the particular kind of cargo which she has contracted to carry,
and her cargo must be so loaded that it is safe for her to proceed on
her voyage. A mere right given to the charterer to inspect the vessel
before loading and to satisfy himself that she was fit for the contracted
ed weighed, cargo does
albeit the Bill not free qualified
of Lading the shipowner
it by thefrom
phrase his"said
obligation to 6,599.23
to weigh," provide MT
a at the port of origin when it was loaded onto the MV Hoegh, the fact of loss or shortage in the carg
cargoworthy ship. (Emphasis added)

Bill of Lading[Art. 350-375, 709-718]

Definition [Black’s Law Dictionary]

 An instrument in writing
 Signed by a carrier or his agent
 Describing the freight so as to identify it
 Stating the name of the consignor, the terms of the
contract of carriage, and
 Agreeing or directing that the freight be delivered to the
order or assigns of a specified person at a specified place

Effect of Issuance by Carrier of an UNSIGNED Bill of Lading when

ACCEPTED by Shipper or Consignee:
Acceptance with full knowledge of its contents gives rise to the
presumption that the same was a perfected and binding contract
[Keng Hua vs CA 286 SCRA 257]
Is a Bill of Lading indispensable to a contract of carriage? NO, for
as long as there is a meeting of the minds of the parties, a contract of
carriage exists. But under Art. 350, the shipper or carrier may mutually
demand that a bill of lading be made.
What must be done to the Bill of Lading upon fulfillment of the
contract of transportation?
SUGGESTED ANSWER:
1) Yes. Transshipment is the act of taking cargo out of oneship and
loading it in another. It is immaterial whether ornot the same person,
firm, or entity owns the two vessels.(Magellan v CA 201 s 102)
2) No. JRT is bound by the terms of the bill of ladingwhen it accepted
the bill of lading with full knowledge ofits contents which included
transshipment in Hongkong.Acceptance under such circumstances
makes the bill oflading a binding contract. (Magellan v Ca 201 s 102)

It must be RETURNED to the carrier who may have issued it, and by Can a carrier refuse to accept goods? In general, no because it is
virtue of the exchange of the BL for the object transported, the obliged to offer services to whoever wants to avail of its services but
respective obligations and actions shall be considered as cancelled may refuse if the goods are unfit for transportation.
What if the shipper cannot return the bill of lading to the shipper When can carrier examine the goods? When there is a reason of
due to loss or any other cause? Shipper must give the carrier a well-founded suspicion of falsity
receipt for the goods delivered
PROCEDURE:
What is the presumption if the carrier does not hold the bill of
lading after the fulfillment of the contract of transportation? 1. It must be made in the presence of witnesses
2. Shipper or consignee must be in attendance or before a
The carrier DID NOT DELIVER the goods to the consignee. Therefore notary public
it will be liable for the merchandise stated in the bill of lading. Burden of 3. It must open the goods in front of the shipper
proof is on the carrier to establish actual delivery of the merchandise 4. If after examination, the declaration is found to be true, the
called for in the bill of lading. expenses for examination and repackage shall be borne by
the carrier otherwise, it shall be paid by the shipper.
G.R. No. 125524
Effect when Transshipment is without
BENITO Legal
MACAM Excuse:
doing business under the name an
vs.
1. It is a violation of COURT
the contract of carriage
OF APPEALS, CHINA OCEAN SHIPPING CO., and/or
2. Carrier shall be liable to the shipper if cargo is lost even by a BELLOSILLO
cause otherwise excepted

Can
In petitioner‘s several years of business relationship with GPC and respondents, there was not the consignee
a single be the
instance when changed? Yes
bill of lading was(Long voyagebefore
first presented and the
therelease of th
consignee refuses to pay)

Conditions:

1. Carrier has to be informed

Transshipment -The act of taking cargo from one ship and loading it 2. Carrier must comply with the change of the
on another consignee if the place of delivery shall not be
altered
It is immaterial whether the same person or entity owns the other 3. Original bill of lading must be returned to the
vessel carrier who will issue another one containing the
novation of contract and expenses in the change
Trans-Shipment; Bill of Lading; binding contract (1993) of consignee shall be paid by the shipper

JRT Inc entered into a contract with C Co of Japan toexport anahaw
fans valued at $23,000. As payment thereof,a letter of credit was
issued to JRT by the buyer. The letterof credit required the issuance of
an on-board bill of ladingand prohibited the transshipment. The
President of JRTthen contracted a shipping agent to ship the anahaw
fansthrough O Containers Lines, specifying the requirementsof the
letter of credit. However, the bill of lading issued bythe shipping lines
bore the notation ―received for shipment‖ and contained anentry
indicating transshipment in Hongkong. The Presidentof JRT personally
received and signed the bill of lading anddespite the entries, he
delivered the corresponding check inpayment of the freight. The
shipment was delivered at theport of discharge but the buyer refused
to accept theanahaw fans because there was no on-board bill of
lading,and there was transshipment since the goods weretransferred in
Hongkong from MV Pacific, the feedervessel, to MV Oriental, a mother
vessel. JRT argued thatthe same cannot be considered transshipment
because bothvessels belong to the same shipping company. 1) Was
theretransshipment? Explain 2) JRT further argued thatassuming that
there was transshipment, it cannot bedeemed to have agreed thereto
even if it signed the bill oflading containing such entry because it was
made known tothe shipping lines from the start that transshipment
wasprohibited under the letter of credit and that, therefore, ithad no
intention to allow transshipment of the subjectcargo. Is the argument
tenable? Reason.
Period for Bringing a Claim Against the Carrier [Art. 366]
1. IMMEDIATELY UPON RECEIPT of the package – if
damage is APPARENT from exterior of package [for such
purpose, a VERBAL CLAIM made immediately is
SUFFICIENT compliance with the law]
2. WITHIN 24 HOURS following RECEIPT of package – if the
damage CANNOT BE KNOWN from exterior of package
All Claims are EXTINGUISHED – if consignee RECEIVES
themerchandise, and PAYS the freight charges WITHOUT PROTEST
What is the PURPOSE of the above Rules?
To compel the consignee of goods entrusted to a carrier to make
prompt demand for settlement of alleged damages suffered by the
goods while in transport, so that the carrier will be enabled to verify all
claims, fix responsibility and secure evidence as to the goods while the
matter is still fresh in the minds of the parties [Roldan v. Lim Ponzo
37 PHIL 285]
 When shall the above period commence to run?
When the goods are ACTUALLY turned over by the carrier and
RECEIVED by the consignee
G.R. No. L-7311. September 30, 1955
NEW ZEALAND INSURANCE CO., LTD., Plaintiff-Appellant, v.
ADRIANO CHOA JOY, ETC.,Defendant-Appellee.
BAUTISTA ANGELO, J.:
The twenty-four-hour period prescribed by Art. 366 of the Code of
Commerce within which claims must be presented does not begin to
run until the consignee has received such possession of the
merchandise that he may exercise over it the ordinary control pertinent
to ownership. In other words, there must be delivery of the cargo by
the carrier to the consignee at the place of destination. In the case at
bar, consignee Sumitomo has not received possession of the cargo,
and has not physically inspected the same at the time the shipment
was discharged from M/V Lorcon IV in Davao City. Petitioner Lorenzo
Shipping failed to establish that an authorized agent of the consignee
Sumitomo received the cargo at Sasa Wharf in Davao City.
Respondent Transmarine Carriers as agent of respondent Gearbulk,
Ltd., which carried the goods from Davao City to the United States,
and the principal, respondent Gearbulk, Ltd. itself, are not the
authorized agents as contemplated by law. What is clear from the
evidence is that the consignee received and took possession of the
entire shipment only when the latter reached the United States‘ shore.
Only then was delivery made and completed. And only then did the 24-
hour prescriptive period start to run.

G.R. No. 136888 June 29, 2005

on, nor was it ever delivered to the consignee, the office of the shipper in Manila, because the ship ran aground upon entering
PHILIPPINE CHARTERLaoang Bay, Samar
INSURANCE of the same day
CORPORATION, of the shipment. Such bein
petitioner,
vs.
CHEMOIL LIGHTERAGE CORPORATION, respondent.
CHICO-NAZARIO, J.:
in the trial court‘s decision stated that the notice of claim was relayed or filed with the respondent-carrier immediately or within a period of twenty-four hours from the time the goods were

e that the delivery was actually being made, cannot be given great weight as no driver was presented to the witness stand to prove this. XXX

a case, we held:

arrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of delivery o

Did the prescriptive periods under the Civil Code repeal Art. 366
of Code of Commerce?

NO. The limitations of actions mentioned in the Civil Code are without
prejudice to those specified in the Code of Commerce [Art. 1148 New
Civil Code]

Prescriptive Period to File a Case in Court :

 If there is a bill of lading – 10 years [Art. 1144 – based on a G.R. No. 168402 August 6, 2008
written contract] ABOITIZ SHIPPING CORPORATION, petitioner,
 If there is NO bill of lading – 6 years [Art. 1145 – based on vs.
a an oral or quasi-contract] INSURANCE COMPANY OF NORTH AMERICA, respondent.
 If it involves overseas trading – 1 year [COGSA] REYES, R.T., J.:
ty. Circumstances peculiar to this case lead Us to conclude that the notice requirement was complied with. XXX
G.R. No. 147724 June 8, 2004
3, that letter, together with the
LORENZO
notice ofSHIPPING
claim, was
CORP.,
received
petitioner,
by petitioner
vs. only on September 21, 1993. But petitioner admits that even before it received the written notice of claim, Mr. Ma
HUBB and SONS, Inc., GEARBULK, Ltd. and PHILIPPINE TRANSMARINE CARRIERS, INC., respondents.
PUNO, J.:

redecessor-in-interest, validly made a claim for damages against Lorenzo Shipping within the period prescribed by the Code of Commerce;
dent Chubb and Sons‘ claim for damages, we rule that it has not yet prescribed at the time it was made. XXX
 7. quarantine,
In the case of Philippine Charter Insurance Corporation (PCIC) v. 8. lazaretto, and
ChemoilLighterage Corporation, the notice was allegedly made by the 9. other so called port expenses, costs of barges, and
consignee through telephone. The claim for damages was denied. This unloading, until the goods are placed on the wharf, and
Court ruled that such a notice did not comply with the notice 10. Other usual expenses of navigation
requirement under the law. There was no evidence presented that the
notice was timely given. Neither was there evidence presented that the Who Shall Defray or Reimburse the Ordinary or Petty Expenses
notice was relayed to the responsible authority of the carrier. [Art. 807]

As adverted to earlier, there are peculiar circumstances in the instant General Rule: the Ship owner
case that constrain Us to rule differently from the PCIC case, albeit this
ruling is being made pro hac vice, not to be made a precedent for other Exception:unless there is an express agreement to the contrary
cases. XXX
Kinds of Averages [Art. 808]
Bernhard Willig, the representative of consignee who received the
shipment, relayed the information that the delivered goods were 1. Simple or Particular
discovered to have sustained water damage to no less than the Claims 2. General
Head of petitioner, Mayo B. Perez. Immediately, Perez was able to
investigate the claims himself and he confirmed that the goods were, Particular Average
indeed, already corroded.
Definition [Art.
Provisions specifying a time to give notice of damage to common
carriers are ordinarily to be given a reasonable and practical, rather
809]
than a strict construction. We give due consideration to the fact that
the final destination of the damaged cargo was a school institution
where authorities are bound by rules and regulations governing their All the expenses and damage caused to the vessel or to her cargo
actions. Understandably, when the goods were delivered, the which have NOT inured to the common benefit and profit of ALL the
necessary clearance had to be made before the package was opened. persons interested in the vessel and her cargo
Upon opening and discovery of the damaged condition of the goods, a
report to this effect had to pass through the proper channels before it Who bears the loss?
could be finalized and endorsed by the institution to the claims
department of the shipping company. The OWNER of the things which gave rise to the expenses or
suffered the damage
The call to petitioner was made two days from delivery, a reasonable
period considering that the goods could not have corroded instantly General Average
overnight such that it could only have sustained the damage during
transit. Moreover, petitioner was able to immediately inspect the Definition [Art. 811]
damage while the matter was still fresh. In so doing, the main objective
of the prescribed time period was fulfilled. Thus, there was substantial All the damages and expenses which are DELIBERATELY CAUSED
compliance with the notice requirement in this case. in order to save the vessel, her cargo, or both at the same time
from a REAL KNOWN risk

Who bears the loss? All the persons having an interest in the vessel
Risks, Damages and Accidents of Maritime Commerce and cargo therein at the time of the occurrence of the average shall
contribute
Averages[Art. 806-816, 665-677, 732]
Requisites of a General Average
What are considered as Averages [Art. 806]
1. There must be a common danger, a danger in which ship,
1. All extraordinary or accidental expenses which may be cargo and crew all participate
incurred during the voyage for the preservation of the 2. For the common safety or for the purpose of avoiding an
vessel, cargo, or both imminent peril, part of the vessel or cargo or both is
sacrificed deliberately
2. All damages or deterioration: 3. This attempt to avoid the imminent peril must be
successful in a sense that the vessel and some of the cargo
a. which the vessel may suffer: are saved
b. from the time she puts to sea at the port of 4. The expenses were incurred or damages were afflicted
departure after taking the proper legal steps and authority
c. until she casts anchor at the port of destination
d. suffered by the goods: G.R. No. L-6393 January 31, 1955
e. from the time they are loaded in the port A. MAGSAYSAY INC., plaintiff-appellee, vs.
ofshipment ANASTACIO AGAN, defendant-appellant.
f. until they are unloaded in the port of their REYES, A. J.:
consignment

place described
What asare
"very shallow". It would
Considered thus or
Ordinary appear
Pettythat vessel and
Expenses cargo
[Art. were at the time in no imminent danger or a danger which might "rationally be sought to be certain and immin
807]

The petty and ordinary expenses incident to navigation such as those

of:

1. pilotage of coast and ports,

2. lighterage,
3. towage,
4. anchorage,
5. inspection,
6. health,
ent danger. What does appear from the testimony of plaintiff's manager is that the vessel had to be salvaged in order to enable it "to proceed to its port of destination." But as was said in th
M/V Ilog de Manila with a cargo of 500 tons of iron ore left the Port of
hout need of expensive salvage operation, have been unloaded by the owners if they had been required Zamboanga
to do so. City bound for Manila. For one reason or another, M/V
Ilog de Manila hit a submerged obstacle causing it to sink along with its
cargo. A salvor, Salvador, Inc., was contracted to refloat the vessel for
, the cargo owners are not in law bound to contribute to the expenses. P1 Million. What kind of average was the refloating fee of P1 million,
and for whose account should it be? Why? (4%)

SUGGESTED ANSWER:

Particular Average. The owner of the vessel shall shoulder the

average. Generally speaking, simple or particular averages include all
expenses and damages caused to the vessel or cargo which have not
inured to the common benefit (Art. 809, and are, therefore, to be borne
only by the owner of the property which gave rise to the same (Art.
810) while general or gross averages include "all the damages and
expenses which are deliberately caused in order to save the vessel, its
cargo, or both at the same time, from a real and known risk" (Art. 811).
Being for the common benefit, gross averages are to be borne by the
owners of the articles saved (Art. 812). In the present case there is no
proof that the vessel had to be put afloat to save it from an imminent
danger.

Jason Clause [Rule D, York-Antwerp Rules]

Rights to contribution in general average:

 shall not be affected, though the event which gave rise to the
sacrifice or expenditure may have been due to the fault of
G.R. No. L-13695 October 18, 1921 one of the parties to the adventure; but
STANDARD OIL COMPANY OF NEW YORK, plaintiff-appellee, vs.  this shall not prejudice any remedies which may be open
MANUEL LOPEZ CASTELO, defendant-appellant. against that party for such clause
STREET, J.:
Distinctions
s: "No jettison of deck cargo shall be made good as general average." The reason for this rule is found in the fact that deck cargo is in an extra-hazardous position and, if on a sailing vessel, its
GENERAL PARTICULAR

Deliberately caused in order to May be due to causes other

save the vessel or cargo or both than a deliberate act

Inures to the benefit of those Does not inure to the common

interested in the vessel or her benefit of all persons interested
cargo in the vessel and her cargo

Shall be shared and contributed Shall be borne by the owner of

to by all persons benefited the things damaged

Art. 677. Effect of a Declaration of War or Blockade on a Charter

Party:

 The charter party shall remain in force – if the captain should

not have any instruction from the charterer

 Captain must proceed to the nearest safe and neutral port

 At said port- captain must request and await orders from the
shippers

 Expenses and salaries accruing during detention in said port

shall be paid as general average

 If, by order of the shipper, the cargo should be discharged

at the port of arrival, the freight for the voyage out shall be
paid in full

G.R. No. L-11515 July 29, 1918

INTERNATIONAL HARVESTER COMPANY IN RUSSIA, plaintiff-
appellee, vs.
HAMBURG-AMERICAN LINE, defendant-appellant.
STREET, J.:
Average; Particular Average vs. General Average (2003)
Upon the first question it is clear that the cargo in question is not liable
to a general average. It is not claimed that this agricultural machinery
was contraband of war; and being neutral goods, it was not liable to
forfeiture in the event of capture by the enemies of the ship's flag. It
follows that when the master of the Suevia decided to take refuge in
the port of Manila, he acted exclusively with a view to the protection of
his vessel. There was nocommon danger to the ship and cargo; and
therefore it was not a case for a general average. The point here in
dispute has already been determined by this court unfavorably to the
contention of the appellant. (Compagnie de Commerce et de
Navigation D'Extreme Orient vs. Hamburg Amerika
PacketfachtActienGesselschaft, 36 Phil., 590.) The following provision
contained in the York-Antwerp Rules, as we interpret it, is conclusive
against the appellant's contention:
When a ship shall have entered a port of refuge . . . in consequence of
accident, sacrifice, or other extraordinary circumstance which renders
that necessary for the common safety, the expense of entering such
port shall be admitted as general average. (York-Antwerp Rules,
section 10.)
Second Ground: Well-founded fear of seizure, privateers or
pirates; When Not Considered Lawful [Art. 820]
If the risk of the enemies, privateers, or pirates should not have been:
1. well known,
2. manifest, and
3. based on positive andprovable acts
Third Ground: By reason of any accident of the sea disabling the
vessel to navigate; When Not Considered Lawful [Art. 820]
 If the defect of the vessel should have arisen from the fact
that she was not repaired, rigged, equipped, and
prepared in a manner suitable for voyage, or from some
erroneous orders of the captain
 Whenever malice, negligence, lack of foresight, or want
of skill on the part of the captain exists in actually
causing the damage
Collisions[Art. 827-838]

Definitions:

1. In a strict sense:

a. Collision – the impact of 2 vessels, both or

which are moving
b. Allision - the striking of a moving vessel
against
The claim of the shipowner for general average cannot be sustained under the provisions of the York-Antwerp Rules of 1890, one thatto
by reference is which,
stationary
it was expressly stipulated in

2. In a broad sense – collision includes allision, and perhaps

another species of encounters between vessels, or a vessel
and other floating, though non-navigable object

Liability in Case of Collision;

Who is at Fault: One vessel

Said vessel shall be liable for:

1. damage caused to the innocent vessel, and

2. damages suffered by the owners of the cargo of:
a. the innocent vessel, and
b. its own vessel

Who is at Fault: Both vessels[Art. 827]&It cannot be determined

which vessel[Art. 831]

Arrival Under Stress[Art. 819-821] 1. Each vessel must bear its own loss, and
2. Both shipowners shall be solidarily liable to the shippers for
 The arrival of the vessel at the nearest and most damages suffered
convenient port
 Because the vessel CANNOT continue the trip to the port Who is at Fault: A 3rd vessel [Art. 831]
of destination
 On account of: Said vessel shall be liable for:

o Lack of provisions, 1. damage caused to 2 the innocent vessels, and

o Well founded fear of seizure, privateers or pirates, 2. damages suffered by the owners of the cargo of:
or
o By reason of any accident of the sea disabling the a. the 2 innocent vessels, and
vessel to navigate b. its own vessel

First Ground: Lack of provisions; When Not Considered Lawful Who is at Fault: None [Fortuitous event] [Art. 830]
[Art. 820]
None – each one must bear his own loss
 If the lack of provisions should arise from the failure to take
the necessary provisions for the voyage according to Error in Extremis
the usage and customs, or
 Where a navigator,
 If they should have been rendered useless or lost through  suddenly realizing that a collision is imminent
bad stowage or negligence in their care  by no fault of his own,
 in confusion and excitement of the moment,
  does something which contributes to the collision, or
 omits to do something by which the collision may be
avoided,
 Such act or omission is ordinarily considered to be in
extremis, and
 The ordinary rules of strict accountability do NOT apply
When does the rule of ―error in extremis‖ apply?
It must appear that there was an imminent danger and it is the actual
risk of danger and not apprehension merely that determines the
question whether the error is one in extremis
Doctrine of Inscrutable Fault:
 The court can see that a fault has been committed,
 But is unable from the conflict of testimony, or otherwise,
to locate it [the fault]
 Hence, when it is impossible to determine to what direct and
specific acts the collision is attributable, it is a case of
damage arising from a cause that is inscrutable
Doctrine of Inscrutable Fault (1997)
Explain the doctrine in Maritime accidents – Doctrine ofInscrutable
Fault
SUGGESTED ANSWER:
Under the ―doctrine of inscrutable fault,‖ where fault isestablished but
it cannot be determined which of the twovessels were at fault, both
shall be deemed to have been atfault.
Doctrine of Inscrutable Fault (1998)
A severe typhoon was raging when the vessel SS Masdaamcollided
with MV Princes. It is conceded that the typhoonwas the major cause
of the collision, although there was avery strong possibility that it could
have been avoided ifthe captain of SS Masdaam was not drunk and
the captainof the MV Princes was not asleep at the time of collisions.
Who should bear the damages to the vessels and theircargoes? (5%)
SUGGESTED ANSWER:
The shipowners of SS Masdaam and MV Princess shalleach bear their
respective loss of vessels. For the lossesand damages suffered by
their cargoes both shipownersare solidarily liable.
What kind of AVERAGE is damage caused by a collision due to a
storm or force majeure?
The injury shall be considered as a particular average of the vessel
run into [Art. 832]
Can the ship owner raise the defense that he exercised the
diligence of GFOF in the selection and supervision of the
captain?
 Culpa Contractual – NO
 Culpa Aquiliana – YES excepti in cases of collision when
both parties or vessel are at fault
 Culpa Criminal - NO
The case of Manila Steamship Company, Inc. vs. InsaAbdulhaman
and Lim HongTo 17 is a case of collision of the ML "Consuelo V" and
MSby
nally entered into "Bowline Knot"
Macondray, as as a result
general of for
agent which the ML
the "M/S "ConsueloIt V"
TOREADOR". wascapsized
part of Macondray's obligation under the contract of carriage and the fact that the transshipment was ma
and was lost where nine (9) passengers died or were missing and all
its cargoes were lost. In the action for damages arising from the
collision, applying Article 837 of the Code of Commerce, this Court
held that in such case where the collision was imputable to both of
them, each vessel shall suffer her own damages and both shall be
solidarily liable for the damages occasioned to their cargoes.18 Thus,
We held:
In fact, it is a general principle, well established maritime law and
custom, that shipowners and ship agents are civilly liable for the acts
of the captain (Code of Commerce, Article 586) and for the indemnities
due the third persons (Article 587); so that injured parties may
immediately look for reimbursement to the owner of the ship, it being
universally recognized that the ship master or captain is primarily the
representative of the owner (Standard Oil Co. vs. Lopez Castelo, 42
Phil. 256, 260). This direct liability, moderated and limited by the
owner's right of abandonment of the vessel and earned freight (Article
587) has been declared to exist not only in case of breached contracts,
but also in cases of tortious negligence (Yu Biao Sontua vs. Osorio, 43
Phil. 511; 515):
xxxxxxxxx
It is easy to see that to admit the defense of due diligence of a bonus
paterfamilias (in the selection and vigilance of the officers and crew) as
exempting the shipowner from any liability for their faults, would render
nugatory the solidary liability established by Article 827 of the Code of
Commerce for the greater protection of injured parties. Shipowners
would be able to escape liability in practically every case, considering
that the qualifications and licensing of ship masters and officers are
determined by the State, and that vigilance is practically impossible to
exercise over officers and crew of vessels at sea. To compel the
parties prejudiced to look to the crew for indemnity and redress would
be an illusory remedy for almost always its members. are, from
captains down, mere wage earners.
We, therefore, find no reversible error in the refusal of the Court of
Appeals to consider the defense of the Manila Steamship Co., that it is
exempt from liability for the collision with the M L "Consuelo V " due to
the absence of negligence on its part in the selection and supervision
of the officers and crew of the M/S "Bowline Knot.
However, insofar as respondent Lim Hong To, owner of M L "Consuelo
V" who admittedly employed an unlicensed master and engineer and
who in his application for permission to operate expressly assumed full
risk and responsibility thereby (Exh. 2) this Court held that the liability
of Lim Hong To cannot be limited to the value of his motor launch by
abandonment of the vessel as invoked in Article 587 of the Code of
Commerce, We said:
The international rule is to the effect that the right of abandonment of
vessels, as a legal limitation of a shipowner's liability, does not apply to
cases where the injury or the average is due to shipowner's own fault.
Farina (Derecho Commercial Maritima Vol. 1, pp. 122-123), on the
authority of judicial precedents from various nations, sets the rule to be
as follows:
CARRIAGE OF GOODS BY SEA ACT[COGSA]
Contracts Covered by the COGSA
 ALL contracts:
o for the carriage of GOODS by SEA
o to and from Philippine Ports in FOREIGN Trade
G.R. No. L-24515November 18, 1967
THE AMERICAN INSURANCE COMPANY, plaintiff-appellant, vs.
COMPAÑIA MARITIMA, ET AL., defendants.
MAKALINTAL, J.:
 The carrier and the ship shall be DISCHARGED from all liability from
What is the effect of the COGSA on our Maritime Laws? such loss or damage

G.R. No. L-5554 May 27, 1953

BENITO CHUA KUY, petitioner, vs.
EVERRETT STEAMSHIP CORPORATION, respondent.
BAUTISTA ANGELO, J.:

in the cargo was discovered by petitioner on the same date; and that this action was given to respondent, as local agent of the owner of the ship, also on the same date; and that this action

It shall not:

1. repeal any existing provision of the Code of Commerce

which is now in force, or
2. limit its application

Procedure to be undertaken by Shipper or Consignee in Case of

Loss or Damage of Cargo [Sec. 3(6)]

A NOTICE of LOSS or DAMAGE and the general nature of such loss

or damage IN WRITING, must be given to the CARRIER or his agent:

1. at the PORT of DISCHARGE, or

2. at the TIME of REMOVAL of the goods into the custody of

the person entitled to delivery thereof [such removal shall be
prima facie evidence of delivery by the carrier of the goods
as described in the bill of lading], or

3. if the loss or damage is NOT apparent – the notice must be G.R. No. 77638 July 12, 1990
given within 3 days of delivery MARITIME AGENCIES & SERVICES, INC., petitioner,
vs.
G.R. No. 119571 March 11, 1998 COURT OF APPEALS, and UNION INSURANCE SOCIETY OF
MITSUI O.S.K. LINES LTD., represented by MAGSAYSAY CANTON, LTD., respondents.
AGENCIES, INC., petitioner, vs. CRUZ, J.:
rdance with the Carriage of Goods
COURT by Sea Act.
OF APPEALS andXXX
LAVINE LOUNGEWEAR MFG.
20, 1979, when the last item wasCORP., delivered to the consignee. 18 Union's complaint was filed against Hongkong on September 19, 1980, but tardily against Macondray on April 20, 1
respondents.
MENDOZA, J.:

COGSA: Prescription of Claims/Actions (2004)

y have been in the value of the goods is not due to their deterioration or disappearance because they AA entered
had into a contract
been damaged with
in transit. XXXBB thruCC to transport ladies' wear
from Manila to France withtranshipment at Taiwan. Somehow the
goods were notloaded at Taiwan on time. Hence, when the goods
What
vered by §3(6) of COGSA but petitioner's potential liability for the damages it has caused in the general senselaw shall
and, prevail,
as such, with is
thearrived
matter respect toby
governed prescriptive
theAA
Civilwas periods?
Code, CodeCivil
theonlyforof Commerce an
arrivedin France, they "off-season" and paid
Code or COGSA?
one-half the value by the buyer. AA claimed damagesfrom the shipping
he COGSA but by Art. 1144 of the Civil Code which provides for a prescriptive period of ten years. The company and its agent. The defense ofthe respondents was
New CivilConsidering
prescription. Code did NOT that impliedly
theladies'repeal the period
wear suffered of prescription
"loss of value,"
under the COGSA.
as claimed by AA,shouldAs a SPECIAL LAW period
the prescriptive the COGSA
be oneprevails over the
year under the
general provisions of the Civil Code on prescription
Carriage of Goods by Sea Act, or ten years under the CivilCode? of actions
[Maritime Agencies
Explain briefly. (5%) v. CA 187 SCRA 346]

SUGGESTED ANSWER:

The applicable prescriptive period is ten years under theCivil Code.

Prescriptive Period of Actions Under COGSA [Sec. 3[6](4)]
The one-year prescriptive period under theCarriage of Goods by Sea
Act applies in cases of loss ordamages to the cargo. The term "loss"
as interpreted bythe Supreme Court in Mitsui O.S.K. Lines Ltd. v.
Court of Appeals,287 SCRA 366 (1998), contemplates a situation
where nodelivery at all was made by the carrier of the goods because
the same had perished or gone out of commercedeteriorated or
decayed while in transit. In the presentcase, the shipment of ladies'
wear was actually delivered.The "loss of value" is not the total loss
contemplated bythe Carriage of Goods by Sea Act.

COGSA; Prescription of Claims (1992)

Any action against the carrier must be brought within one [1] year
after:

1. the delivery of the goods, or

2. the date when the goods should have been delivered

What is the effect of failure to give the required NOTICE of LOSS

to the carrier within the period prescribed?

This shall not affect or prejudice the right of the shipper to bring the suit
within the one [1] year period [EE Elser vs CA, Nov 29, 1954]

What is the effect of failure to BRING THE ACTION within one [1]
year period?
 A local consignee sought to enforce judicially a claimagainst the carrier
for loss of a shipment of drums oflubricating oil from Japan under the
Carriage of Goods bySea Act (COGSA) after the carrier had rejected
its demand.The carrier pleaded in its Answer the affirmative defense
ofprescription under the provisions of said Act inasmuch as
the suit was brought by the consignee after one (1) yearfrom the
delivery of the goods. In turn, the consigneecontended that the period
of prescription was suspendedby the written extrajudicial demand it
had made against thecarrier within the one-year period, pursuant to
Article 1155of the Civil Code providing that the prescription of actions
is interrupted when there is a written extrajudicial demandby the
creditors.
a) Has the action in fact prescribed? Why?
b) If the consignee‗s action were predicated on
misdelivery or conversion of the goods, would your answer
be the same? Explain briefly.
SUGGESTED ANSWER:
a) The action taken by the local consignee has, in fact,prescribed. The
period of one year under the Carriage ofGoods by Sea Act (COGSA) is
not interrupted by a writtenextrajudicial demand. The provisions of Art
1155 of theNCC merely apply to prescriptive periods provided for
insaid Code and not to special laws such as COGSA exceptwhen
otherwise provided. (Dole v Maritime Co 148 s 118).
b) If the consignee‗s action were predicated onmisdelivery or
conversion of goods, the provisions of theCOGSA would be
inapplicable. In these cases, the NCCprescriptive periods, including Art
1155 of the NCC willapply (Ang v Compania Maritama 133 s 600)
COGSA; Prescription of Claims (2000)
RC imported computer motherboards from the UnitedStates and had
them shipped to Manila aboard an oceangoingcargo ship owned by BC
Shipping Company. Whenthe cargo arrived at Manila seaport and
delivered to RC,the crate appeared intact; but upon inspection of the
contents, RC discovered that the items inside had all beenbadly
damaged. He did not file any notice of damage oranything with
anyone, least of all with BC ShippingCompany. What he did was to
proceed directly to youroffice to consult you about whether he should
have given anotice of damage and how long a time he had to initiate a
suit under the provisions of the Carriage of Goods by SeaAct (CA 65).
What would your advice be? (2%)
SUGGESTED ANSWER:
My advice would be that RC should give notice of thedamage
sustained by the cargo within 3 days and that hehas to file the suit to
recover the damage sustained by thecargo within one year from the
date of the delivery of thecargo to him.
COGSA; Prescriptive Period (1995)
What is the prescriptive period for actions involving lostor damaged
cargo under the Carriage of Goods by SeaAct?
SUGGESTED ANSWER:
ONE YEAR after the delivery of the goods or the datewhen the goods
should have been delivered (Sec 3(6),COGSA)
What is the effect of EXTRAJUDICIAL DEMAND made to the
carrier?
G.R. No. L-61352 February 27, 1987 DOLE PHILIPPINES, INC., plaintiff-appellant,
vs.
MARITIME COMPANY OF THE PHILIPPINES, defendant-appellee.
NARVASA, J.:
These arguments might merit weightier consideration were it not for
the fact that the question has already received a definitive answer,
adverse to the position taken by Dole, in The Yek Tong Lin Fire &
Marine Insurance Co., Ltd. vs. American President Lines,
Inc. 15 There, in a parallel factual situation, where suit to recover for
damage to cargo shipped by vessel from Tokyo to Manila was filed
more than two years after the consignee's receipt of the cargo, this
Court rejected the contention that an extrajudicial demand toiled the
prescriptive period provided for in the Carriage of Goods by Sea Act,
viz:
In the second assignment of error plaintiff-appellant argues that it was
error for the court a quo not to have considered the action of plaintiff-
appellant suspended by the extrajudicial demand which took place,
according to defendant's own motion to dismiss on August 22, 1952.
We notice that while plaintiff avoids stating any date when the goods
arrived in Manila, it relies upon the allegation made in the motion to
dismiss that a protest was filed on August 22, 1952 — which goes to
show that plaintiff-appellant's counsel has not been laying the facts
squarely before the court for the consideration of the merits of the
case. We have already decided that in a case governed by the
Carriage of Goods by Sea Act, the general provisions of the Code of
Civil Procedure on prescription should not be made to apply. (Chua
Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27, 1953.)
Similarly, we now hold that in such a case the general provisions of the
new Civil Code (Art. 1155) cannot be made to apply, as such
application would have the effect of extending the one-year period of
prescription fixed in the law. It is desirable that matters affecting
transportation of goods by sea be decided in as short a time as
possible; the application of the provisions of Article 1155 of the new
Civil Code would unnecessarily extend the period and permit delays in
the settlement of questions affecting transportation, contrary to the
clear intent and purpose of the law. * * *
Instances Where the One [1] Year Prescriptive Period under the
COGSA is INTERRUPTED:
1. In case an action has been already filed in court
[F.H.Stevens v. Nordeutscher Lloyd [6 SCRA 180]
2. When there is an express agreement to the effect
[Universal Shipping v. IAC [188 SCRA 170]
G.R. No. L-25266 January 15, 1975
AETNA INSURANCE COMPANY, plaintiff-appellant,
vs.
BARBER STEAMSHIP LINES, INC., and/or LUZON STEVEDORING
CORPORATION and/or LUZON BROKERAGE
CORPORATION, defendants-appellees.
AQUINO, J.:
The trial court correctly held that the one-year statutory and contractual
prescriptive period had already expired when appellant company filed
on April 7, 1965 its action against Barber Line Far East Service. The
one year period commenced on February 25, 1964 when the damaged
cargo was delivered to the consignee. (See Chua Kuy vs. Everrett
Steamship Corporation, 93 Phil. 207; Yek Tong Fire & Marine
Insurance Co., Ltd. vs. American President Lines, Inc., 103 Phil. 1125).
XXX
Appellant company invokes the rule that where the original complaint
states a cause of action but does it imperfectly, and afterwards an
amended complaint is filed, correcting the defect, the plea of
prescription will relate to the time of the filing of the original complaint
(Pangasinan Transportation Co. vs. Phil. Farming Co., Ltd., 81 Phil.
273). It contends that inasmuch as the original complaint was filed
within the one year period, the action had not prescribed.
That ruling would apply to defendants Luzon Stevedoring Corporation
and Luzon Brokerage Corporation. But it would not apply to Barber
Line Far East Service which was impleaded for the first time in the
amended complaint.
It should be recalled that the original complaint was dismissed as to
Barber Steamship Lines, Inc. in the lower court's order of April 19,
1965. New summons had to be issued to Barber Line Far East Service which had replaced Barber Steamship Lines, Inc. as a defendant.

The filing of the original complaint interrupted the prescriptive period as to Barber Steamship Lines, Inc. but not as to Barber Line Far East Service, an entity supposedly distinct fr

The defendant-appellee, Philippine Ports Terminals, Inc., is neither a charterer nor a ship

From what point should the 1 year prescriptive period be

counted? It depends:

1. If delivery was made – from the date of delivery [includes

delivery to arrastre operator]
2. If NO delivery – from the date when the goods should have
been delivered
 Effects of Prescriptive Period under the COGSA on the such goods have been declared by the shipper before
Liability of the Insurer shipment and inserted in the bill of lading

1. ONLY the carrier‘s liability is extinguished if no suit is 2. This declaration, if embodied in the bill of lading, shall be
brought within one [1] year from delivery of goods prima facie evidence, BUT shall not be conclusive on the
2. BUT the liability of the insurer is NOT extinguished carrier.
3. Insurers are governed by the Insurance Code and not
the COGSA [Mayer Steel v. CA 274 SCRA 432] 3. Shipper and carrier may agree on another maximum amount
4. BUT the insurer CANNOT file an action against the but should not be less than $500
carrier beyond the one [1] year prescriptive period
[Filipino Merchants v. CA 179 SCRA 638] 4. Carrier can NOT be liable for:

Limit of the Liability

G.R. No.ofL-22491
the Carrier for January
Loss or27,
Damage
1967 to Goods a. MORE than the amount of damage ACTUALLY
Transported Sec.DOMINGO
4[5](1): ANG, plaintiff-appellant, vs. sustained
AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellee. b. Loss or damage to goods if the value thereof has
1. $500 per package – UNLESS
BENGZON, the nature and value of
J.P., J.: been knowingly and fraudulently MISSTATED by
the shipper in the bill of lading
or a misdelivery, as alleged in the complaint in this case. XXX

ar after delivery of the goods or the date when the goods should have been delivered," does not apply. The reason is not difficult to see. Said one-year period of limitation is designed to mee
the ship arrived in Manila and he filed suit on October 30, 1963.
On the US $500 Per Package Limitation:

It is to be noted that the Civil Code does not of itself limit the liability of the common car

ARRASTRE

General Definition of Arrastre

A broad tern which refers to a contract for the unloading of goods from
a vessel

Arrastre in Mercantile Law

The term ‗arrastre‘ has a technical meaning as it applies only to

overseas trade

When cargo from abroad arrives on board a vessel, the consignee

cannot unload and deliver the cargo by himself.

This is done by the arrastre operator, who will then deliver the cargo to
the customs warehouse

Parties in Arrastre Contract

1. Republic of the Philippines
3. Formal Adherence – Sep 23, 1955 by Proclamation 201
2. The party awarded the privilege of operating the arrastre
issued by President Ramon Magsaysay
service
Applicability [Art. 1.1]
INITIALS
 CIF [Cost, Insurance and Freight]
 FOB [Free On Board] or FAS [Free Alongside Ship]
A price quotation on CIF presumes that the seller shall cost of crating
A price quotation with FOB presumes that the seller shall comply with and packaging, insurance and the freightage.
his obligation to deliver the cargo to the vessel.
The carrier is deemed to be the agent of the seller, so that throughout
Thereupon, it is the BUYER who shall pay the freightage and thus the the entire trip ownership is retained by the SELLER and only passes
carrier is deemed agent of the buyer so that delivery to the vessel is to the buyer upon reaching the point of destination and the cargo is
delivery to the buyer. discharged in favor of the buyer.

Ownership of the cargo will pass to the buyer upon delivery by the
seller to the vessel. AIR TRANSPORTATION
 The Warsaw Convention shall apply to:  territories of 2 High Contracting Parties, or
 territory of a single High Contracting Party, IF there is an
 All INTERNATIONAL transportation of persons, baggage or agreed stopping place within a territory subject to the
goods sovereignty, mandate or authority of another power, even
 Performed by aircraft FOR HIRE though that power is not a party to this convention

Meaning of International Transportation [Art. 1.2] What is a High Contracting Party?

Any transportation, in which according to the CONTRACT made by the A signatory to the Warsaw Convention and one who subsequently
parties, the place of departure and the place of destination, w/n there adheres to it Montreal Convention 1999
be a break in the transportationare situated either within the: Convention for the Unification of Certain Rules for International
Carriage by Air, opened for Signature at Montreal on 28 May
Regulatory Body in Air Transportation: Civil Aeronautics Board 1999 (ICAO Doc No 4698)
[CAB] Article 1 — Scope of Application

Requisite to Engage in Air Commerce: A Certificate of Public 1. This Convention applies to all international carriage of persons,
Convenience and Necessity is a permit issued by the CAB authorizing baggage or cargo performed by aircraft for reward. It applies equally to
a person to engage in air commerce and/or air transportation, foreign gratuitous carriage by aircraft performed by an air transport
and/or domestic [RA 776 Sec. 11] undertaking.

NOTE: Compare & Contrast Warsaw and Montreal Convention 2. For the purposes of this Convention, the expression international
carriage means any carriage in which, according to the agreement
NG IN THE ACCESSION TO THE 1999 MONTREAL CONVENTION FOR THE UNIFICATION OF CERTAIN RULES between the parties, the
FOR INTERNATIONAL place BY
CARRIAGE of AIR
departure and the place of
destination, whether or not there be a break in the carriage or a
transhipment, are situated either within the territories of two States
Parties, or within the territory of a single State Party if there is an
agreed stopping place within the territory of another State, even if that
XXX
State is not a State Party. Carriage between two points within the
territory of a single State Party without an agreed stopping place within
Rules for International Carriage by Air signed on 28 May 1999 in Montreal, with the reservation thatthe territory of shall
the Convention another State
not apply to is not international carriage for the
purposes
d duties as a sovereign State; and (b) the carrige of persons, cargo, and baggage for its military authoritIes of thisregistered
on aircraft Convention.
in or leased by the Philippines, the whole capacity of which h
NOTE: All boxes similarly shaded were taken from Montreal Convention

G.R. No. 122308 July 8, 1997

PURITA S. MAPA, CARMINA S. MAPA and CORNELIO P.
MAPA, petitioners,
vs.
COURT OF APPEALS and TRANS-WORLD AIRLINES
INC., respondents.
DAVIDE, JR., J.:
Carrier:TWA
Place of purchase of ticket: Bangkok
Sectors: LAX-NYC-BOS-STL-CHI

The pitch issue to be resolved under the petitioner's first assigned error
is whether the contracts of transportation between Purita and
WARSAW CONVENTION CarminaMapa, on the one hand, and TWA, on the other, were
contracts of "international transportation" under the Warsaw
In General: Convention.

1. Full Title – Warsaw Convention for the Unification of Certain There are then two categories of international transportation, viz., (1)
Rules Relating to International Carriage by Air that where the place of departure and the place of destination are
2. Date and Place Signed – Warsaw Poland, October 12, situated within the territories of two High Contracting Parties regardless
1929 of whether or not there be a break in the transportation or a
 transshipment;
ginal conjunction ticket. The and (2) that argument
petitioner's where thethat
place
it of departure
is not and the
a designated placeinofthe
carrier destination are within the
original conjunction territory
tickets of a itsingle
and that High
issued its Contracting
own ticket isParty if there of
not decisive is an
its agreed
liability.stopping
The newpla
tic
The contracts of transportation in this case are evidenced by the two TWA tickets, No. 015:9475:153:304 and No. 015:9475:153:305, both
purchased and issued in Bangkok, Thailand. On the basis alone of the provisions therein, it is obvious that the place of departure and the place of destination are all in the territo
tract as a single operation. The evident purpose underlying this Article is to promote international air travel by facilitating the procurement of a series of contracts for air transportation throu

Effect when Transportation is Performed by Several Successive

Air Carriers [Art. 1.3)]

1. It shall be deemed, for the purposes of the WC, to be one

undivided transportation, PROVIDED It has been
regarded by the parties as a single operation, whether it
has been agreed upon under the form of a single contract or
of a series of contracts, and

2. It shall not lose its international character merely

because one contract or a series of contracts is to be
performed entirely within a territory subject to the
sovereignty, suzerainty, mandate, or authority of the same
High Contracting Party Liability of Carrier [Art. 17]

1.3. Carriage to be performed by several successive carriers is Art. 17 provides for the liability of the carrier for damage suffered by a
deemed, for the purposes of this Convention, to be one undivided passenger, sustained in the event of:
carriage if it has been regarded by the parties as a single operation,
whether it had been agreed upon under the form of a single contract or 1. the death, or
of a series of contracts, and it does not lose its international character 2. the wounding of a passenger, or
merely because one contract or a series of contracts is to be 3. any other bodily injury
performed entirely within the territory of the same State.
Conditions for Liability [Art. 17]
G.R. No. 116044-45 arch 9, 2000
AMERICAN AIRLINES petitioner, vs. The accident, which caused the damage so sustained, took place:
COURT OF APPEALS, HON. BERNARDO LL. SALAS and
DEMOCRITO MENDOZA, respondents. 1. on board the aircraft, or
2. in the course of any of the operations of embarking or
GONZAGA-REYES, J.:
disembarking

Liability of Carrier [Art. 18]

Art. 18 provides for the liability of the carrier for damage sustained in
the event of the

1. destruction or
2. loss of, or
3. of damage to any checked baggage or goods
wed even by telephone and it has become an accepted practice among them. A member airline which enters into a contract of carriage consisting of a series of trips to be performed by differ
The occurrence, which caused the damage, so sustained took place
during the transportation by air.

What comprises Transportation by Air in reference to Art. 18[1]?

It shall comprise the period during which the baggage or goods are in
charge of the carrier whether:

1. in an airport, or
2. on board an aircraft, or,
3. in the case of a landing outside an airport, in any place
whatsoever

Does the period of the transportation by air shall extend to any

transportation by land, by sea, or by river performed outside an
airport?
As a General Rule, NO. If, however, such transportation takes place in of loading, delivery or transshipment, any damage is PRESUMED,
the performance of a contract for transportation by air, for the purpose subject to proof to the contrary, to have been the result of an event, which
took place during the transportation by air
damages notwithstanding, international carriers have not been dissuaded from repeati
Liability of Carrier for Delay [Art. 19]
Limitations to Liability of Air Carriers [Art. 22]
The carrier shall be liable for damages occasioned by delay in the
transportation by air of passengers, baggage, or goods.  In transportation of PASSENGERS – 125,000 francs [or
equivalent], but carrier and pax may agree to a higher limit of
G.R. No. 77011 July 24, 1990 liability;
ALITALIA AIRWAYS, petitioner,  In transportation of CHECKED BAGGAGE or GOODS –
vs. 125 francs [or equivalent] per kilo, unless the consignor
COURT OF APPEALS, and SPS. JOSE O. JULIANO and VICTORIA declares a higher value and pays a supplementary sum
JULIANO, respondents.  As regards OBJECTS of which pax takes charge HIMSELF
SARMIENTO, J.: [hand carried luggage] – 5,000 francs [or equivalent] per
Thus we re-affirm the ruling laid down by the Court in a long line of pax
cases 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.

Accordingly, the respondent court erred in holding that the Julianos are
not entitled to a refund because the purchase of the Thai Airways
tickets was unnecessary. XXX

When a passenger contracts for a specific flight he has a purpose in

making that choice which must be respected. This choice, once
exercised, must not be impaired by a breach on the part of the airline
without the latter incurring any liability. Besides, why should the
Julianos be compelled to wait for another Alitalia tight to risk a similar
rebuff and suffer the consequent further delay? XXX

It was already too much of a coincidence that, at Fumicino Airport, the

Julianos would find another Filipino, in the person of Ms. Estanislao, in
the same predicament that they were in. 27 We will no longer go to the
extent of indulging in the conjecture that Ms. Estanislao and the
Julianos were singled out to be discriminated against because of their
color. What is plain to see is that the airline had deliberately
overbooked and in doing so took the risk of having to deprive some
passengers of their seats in case all of them would show up for check-
in.

That Alitalia had no intention to accommodate all who had 'confirmed

their flight reservations could be seen in the absence of any measure
to contract all possible passengers for each flight who might be within
the airport premises. 28 As a result, some passengers would really be
left behind in the long and disorderly queue at the check-in counter.

Common carriers, like commercial airlines, are in the business of

rendering service, which is the primary reason for their recognition in
our law. They can not be allowed to disregard our laws as if they are
doing the passengers any favor by accommodating them.

Because the passengers in a contract of carriage do not contract

merely for transportation, they have a right to be treated by the carrier's
employees with kindness, respect, courtesy, and
consideration. 29 Hence the justification why passengers must be
spared from the indignity and inconvenience of being refused a
confirmed seat on the last minute.

As held in Trans World Airlines v. Court of Appeals, 30 such inattention

to and lack of care [by the petitioner airline] for the interest of its
passengers who are entitled to its utmost consideration, particularly as
to their convenience, amount to bad faith which entitles the passenger
to the award of moral damages. Ergo, we affirm the respondent court's
award of moral damages at P200.000.00. This award should be
sufficient to indemnify the Julianos for the delay, inconvenience,
humiliation, and embarrassment they suffered.

Likewise the award of exemplary damages is well-grounded. With

dismay, we note, that the imposition of substantial amounts of
 Carriage; Valuation of Damaged Cargo (1993)

A shipped thirteen pieces of luggage through LG Airlinesfrom Teheran

to Manila as evidenced by LG Air Waybillwhich disclosed that the
actual gross weight of the luggagewas 180 kg. Z did not declare an
inventory of the contentsor the value of the 13 pieces of luggage. After
the saidpieces of luggage arrived in Manila, the consignee was able
to claim from the cargo broker only 12 pieces, with a totalweight of 174
kg. X advised the airline of the loss of one ofthe 13 pieces of luggage
and of the contents thereof.Efforts of the airline to trace the missing
luggage werefruitless. Since the airline failed to comply with the
demandof X to produce the missing luggage, X filed an action for
breach of contract with damages against LG Airlines. In itsanswer, LG
Airlines alleged that the Warsaw Conventionwhich limits the liability of
the carrier, if any, with respectto cargo to a sum of $20 per kilo or
$9.07 per pound,unless a higher value is declared in advance and
additionalcharges are paid by the passenger and the conditions of the
contract as set forth in the air waybill, expressly subject thecontract of
the carriage of cargo to the WarsawConvention. May the allegation of
LG Airlines besustained? Explain.

SUGGESTED ANSWER:

Yes. Unless the contents of a cargo are declared or thecontents of a

lost luggage are proved by the satisfactoryevidence other than the self-
serving declaration of oneparty, the contract should be enforced as it is
the onlyreasonable basis to arrive at a just award. The passenger
orshipper is bound by the terms of the passenger ticket or
the waybill. (Panama v Rapadas 209 s 67)

Common Carrier; Defenses; Limitation of Liability (1998)

X took a plane from Manila bound for Davao via Cebuwhere there was
a change of planes. X arrived in Davaosafely but to his dismay, his two
suitcases were left behindin Cebu. The airline company assured X that
the suitcaseswould come in the next flight but they never did. X
claimed P2,000 for the loss of both suitcases, but theairline was willing
to pay only P500 because the airlineticket stipulated that unless a
higher value was declared,any claim for loss cannot exceed P250 for
each piece ofluggage. X reasoned out that he did not sign the
stipulationand in fact had not even read it. X did not declare a greater
value despitethe fact that the clerk had called his attention to
thestipulation in the ticket. Decide the case (5%)

SUGGESTED ANSWER:

Even if he did not sign the ticket, X is bound by thestipulation that any
claim for loss cannot exceed P250 foreach luggage. He did not declare
a higher value. X isentitled to P500 for the two luggages lost.

G.R. No. 70462 August 11, 1988

PAN AMERICAN WORLD AIRWAYS, INC., petitioner,
vs.
INTERMEDIATE APPELLATE COURT, RENE V. PANGAN, SOTANG BASTOS PRODUCTIONS and ARCHER
PRODUCTIONS, respondents.
CORTES, J.:
 On the basis of the foregoing stipulations printed at the back of the
ticket, petitioner contends that its liability for the lost baggage of private
n the extentrespondent
of recoverablePangan
damagesis beyond
limitedthe
to Warsaw
$600.00limitations.
($20.00 xUnder
30 kilos) as the
domestic law and jurisprudence (the Philippines being the country of destination), the attendance of gross neglige
latter did not declare a higher value for his baggage and pay the
corresponding additional charges.

To support this contention, petitioner cites the case of Ong Yiu v. Court
of Appeals [G.R. No. L-40597, June 29, 1979, 91 SCRA 223], where
the Court sustained the validity of a printed stipulation at the back of an
airline ticket limiting the liability of the carrier for lost baggage to a
specified amount and ruled that the carrier's liability was limited to said
amount since the passenger did not declare a higher value, much less
pay additional charges.
G.R. No. 121824 January 29, 1998 BRITISH AIRWAYS, petitioner,
We find the ruling in Ong Yiu squarely applicable to the instant case. vs.
XXX COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE
AIRLINES, respondents.
In view thereof petitioner's liability for the lost baggage is limited to ROMERO, J.:
$20.00 per kilo or $600.00, as stipulated at the back of the ticket.
t is the position of BA that there should have been no separate award for the luggage and the contents thereof since Mahtani failed to declare a separate higher valuation for the luggage, 18
G.R. No. 92501 March 6, 1992 PHILIPPINE AIR LINES, petitioner,
vs.
Considering the facts of the case, we cannot assent to such specious argument. XXX
HON. COURT OF APPEALS and ISIDRO CO, respondents.
GRIÑO-AQUINO, J.:
n addition, we have held that benefits of limited liability are subject to waiver such as when the air carrier failed to raise timely objections during the trial when questions and answers regard
t as private respondent Co did not declare the contents of his baggage nor pay traditional charges before the flight (p. 3, tsn, July 18, 1985).
Given the foregoing postulates, the inescapable conclusion is that BA had waived the defense of limited liability when it allowed Mahtani to testify as to the actual damages he incurred due to

rothe loss of the

compound passenger's
matters for BA,luggage.
its counsel failed, not only to interpose a timely objection, but even conducted his own cross-examination as well.

ent's evidence, proving that the carrier's negligence was the proximate cause of the loss of his baggage. Furthermore, petitioner acted in bad faith in faking a retrieval receipt to bail itself out

When an Air Carrier NOT is entitled to the WC provisions which

EXCLUDE or LIMIT Liability?
G.R. No. 104685 March 14, 1996
SABENA BELGIAN WORLD AIRLINES, petitioner, When the loss or damage is caused by the WILLFUL MISCONDUCT
vs. of the carrier or its agent… x xx[Art. 25]
HON. COURT OF APPEALS and MA. PAULA SAN
AGUSTIN, respondents. What is the effect of receipt by the person entitled to delivery of
VITUG, J.:p luggage or goods without complaint?
It remained undisputed that private respondent's luggage was lost
while it was in the custody of petitioner. It was supposed to arrive on It is prima facie evidence that the goods have been delivered in good
the same flight that private respondent took in returning to Manila on condition and in accordance with the document of transportation [Art.
02 September 1987. When she discovered that the luggage was 26]
missing, she promptly accomplished and filed a Property Irregularity
Report. She followed up her claim on 14 September 1987, and filed, on What is the duty of the shipper or consignee when the goods are
the following day, a formal letter-complaint with petitioner. She felt DAMAGED or when there is DELAY in their delivery?
relieved when, on 23 October 1987, she was advised that her luggage
had finally been found, with its contents intact when examined, and He must make a complaint to the carrier:
that she could expect it to arrive on 27 October 1987. She then waited
anxiously only to be told later that her luggage had been lost for the 1. In case of DAMAGE – the complaint must be made forthwith
second time. Thus, the appellate court, given all the facts before it, after the discovery of the damage, and, at the latest, within:
sustained the trial court in finding petitioner ultimately guilty of "gross
negligence" in the handling of private respondent's luggage. The "loss a. 3 days from the date of receipt in the case of
of said baggage not only once but twice, said the appellate court, luggage, and
"underscores the wanton negligence and lack of care" on the part of b. 7 days from date of receipt in the case of goods
the carrier.
2. In case of DELAY - the complaint must be made at the latest
The above findings, which certainly cannot be said to be without basis, within 14 days from the date on which the luggage or
foreclose whatever rights petitioner might have had to the possible goods have been placed at his disposal [Art. 26]
limitation of liabilities enjoyed by international air carriers under the
Warsaw Convention (Convention for the Unification of Certain Rules Form of the Complaint:
Relating to International Carriage by Air, as amended by the Hague
1. In writing upon the document of carriage, or
 2. by separate notice in writing dispatched within the times
aforesaid [Art. 26]
h of other relevant laws which may provide a different period or procedure for filing a claim. Considering that petitioners indeed filed a claim which private respondent admitted having receiv
Effect of Failure to File Complaint within Periods Provided:

5 refers onlyGeneral Rule – no

to the monetary action
ceiling on shall lie against
damages found inthe
Art.carrier
22 should damage be caused by the carrier's willful misconduct. Hence, only the provisions of Art. 22 limiting the carrier's liabi

Exception
the acts complained – save
of were in the by
impelled case of fraud on
an intention his [carrier‘s]
to violate the law,part [Art.in26]
or were persistent disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or improper

G.R. No. 150094 August 18, 2004

FEDERAL EXPRESS CORPORATION, petitioner,
vs.
AMERICAN HOME ASSURANCE COMPANY and PHILAM
INSURANCE COMPANY, INC., respondents.
DECISION

PANGANIBAN, J.:
s. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementione

being charged with liability therefor; and (2) to give it an opportunity to examine the nature and extent of the injury. "This protects the carrier by affording it an opportunity to make an inve

be prevented and the liability cannot be imposed on the carrier. To stress, notice is a condition precedent, and the carrier is not liable if notice is not given in accordance with the stipulation.

period. While respondents may have had a cause of action then, they cannot now enforce it for their failure to comply with the aforesaid condition precedent.

Jurisdiction Art. 28[1]

An action for damages must be brought, at the option of the plaintiff, in

the territory of one of the High Contracting Parties, either before the
court of the domicile of the carrier or of his principal place of business,
or where he has a place of business through which the contract has
been made, or before the court at the place of destination.

ss, or where it has a place of business through which the contract has been made or before the court at the place of destination.

n which at the time of the accident the passenger has his or her principal and permanent residence and to or from which the carrier operates services for the carriage of passengers by air, eit
G.R. Nos. 100374-75 November 27, 1992
RUFINO Y. LUNA, RODOLFO J. ALONSO and PORFIRIO
RODRIGUEZ, petitioners,
vs.
HON. COURT OF APPEALS, HON. CRISTINA M. ESTRADA in her
capacity as Presiding Judge, RTC-Pasig, Br. 69, Metro Manila,
HON. TERESITA D. CAPULONG in her capacity as Presiding
Judge, RTC-Valenzuela, Br. 172, Metro Manila, and NORTHWEST
AIRLINES, INC., respondents.

BELLOSILLO, J.:
Previously, We ruled that the Warsaw Convention was a treaty
commitment voluntarily assumed by the Philippine government;
consequently, it has the force and effect of law in this country. 15 But,
in the same token, We are also aware of jurisprudence that the
Warsaw Convention does not operate as an exclusive enumeration of
the instances for declaring an airline liable for breach of contract of
carriage or as an absolute limit of the extent of that liability. 16 The
Convention merely declares the carrier liable for damages in the
enumerated cases, if the conditions therein specified are
present. 17 For sure, it does not regulate the liability, much less
exempt, the carrier for violating the rights of others which must simply
be respected in accordance with their contracts of carriage. The
 ket was bought, Adopting
nationality of the
the plaintiffs'
passengertheory would
shall not at adetermining
be the minimum blur these
factor carefully
in this drawn distinctions by creating a third intermediate category. It would obviously introduce uncertainty
regard.

4. Questions of procedure shall be governed by the law of the court seised of the case

Where a Complaint for Damages Against an Air Carrier May be

Instituted [Art. 28]:
he place of destination, the article clearly meant that these three other places were not comprehended in the term "domicile."
1. The court of the domicile of the carrier;
2. The court of its principal place of business;
3. The court where it has a place of business through which the
contract had been made;
4. The court of the place of destination.

G.R. No. 116044-45 March 9, 2000

AMERICAN AIRLINES petitioner, vs.
COURT OF APPEALS, HON. BERNARDO LL. SALAS and
DEMOCRITO MENDOZA, respondents.
GONZAGA-REYES, J.:

Manila, and Philippine courts are clothed with jurisdiction over this case. We note that while this case was filed in Cebu and not in Manila the issue of venue is no longer an issue as the petitio

G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner, vs.
BRITISH AIRWAYS, Respondent.
DEL CASTILLO, J.:

ted by both the petitioner and respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the third jurisdictional rule, the petitioner has the option to bring her case
G.R. No. 101538 June 23, 1992
AUGUSTO BENEDICTO SANTOS III, represented by his father and
legal guardian, Augusto Benedicto Santos, petitioner,
vs.
NORTHWEST ORIENT AIRLINES and COURT OF
APPEALS, respondents.
CRUZ, J.:
The petitioner claims that the lower court erred in not ruling that
under Article 28(1) of the Warsaw Convention, this case was
properly filed in the Philippines, because Manila was the
destination of the plaintiff. XXX

The place of destination, within the meaning of the Warsaw

Convention, is determined by the terms of the contract of carriage or,
specifically in this case, the ticket between the passenger and the
carrier. Examination of the petitioner's ticket shows that his ultimate
destination is San Francisco. Although the date of the return flight was Prescriptive Period in Filing a Case for Damages against Carrier
left open, the contract of carriage between the parties indicates that [Art. 29]:
NOA was bound to transport the petitioner to San Francisco from
Manila. Manila should therefore be considered merely an agreed Within two [2] years, reckoned from:
stopping place and not the destination.
 the date of arrival at the destination, or
The petitioner claims that the lower court erred in not ruling that  the date on which the aircraft ought to have arrived, or
under Art. 28(1) of the Warsaw Convention, this case was  the date on which the transportation stopped
properly filed in the Philippines because the defendant has its
domicile in the Philippines. XXX Effect of Failure to File Action against the Carrier within 2 years:

The private respondent notes, however, that in Compagnie Nationale The right to damages shall be extinguished
Air France vs. Giliberto, 19 it was held:
In United Airlines v. Uy,18 this Court distinguished between the (1)
The plaintiffs' first contention is that Air France is domiciled in the damage to the passenger‘s baggage and (2) humiliation he suffered at
United States. They say that the domicile of a corporation includes any the hands of the airline‘s employees. The first cause of action was
country where the airline carries on its business on "a regular and covered by the Warsaw Convention which prescribes in two years,
substantial basis," and that the United States qualifies under such while the second was covered by the provisions of the Civil Code on
definition. The meaning of domicile cannot, however, be so extended. torts, which prescribes in four years.
The domicile of a corporation is customarily regarded as the place
where it is incorporated, and the courts have given the meaning to the
term as it is used in article 28(1) of the Convention. (See Smith v.
Canadian Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d 798, 802; Nudo G.R. No. 127768 November 19, 1999 UNITED AIRLINES, petitioner,
v. Societe Anonyme Belge d' Exploitation de la Navigation Aerienne vs.
Sabena Belgian World Airlines (E.D. pa. 1962). 207 F. Supp, 191;
WILLIE J. UY, respondent.
Karfunkel v. Compagnie Nationale Air France (S.D.N.Y. 1977), 427 F.
Suppl. 971, 974). Moreover, the structure of article 28(1), viewed as a
whole, is also incompatible with the plaintiffs' claim. The article, in BELLOSILLO, J.:
stating that places of business are among the bases of the jurisdiction,
 As for respondent's second cause of action, indeed the travaux
preparatories of the Warsaw Convention reveal that the delegates
thereto intended the two (2)-year limitation incorporated in Art. 29 as
an absolute bar to suit and not to be made subject to the various tolling
provisions of the laws of the forum. This therefore forecloses the
application of our own rules on interruption of prescriptive periods.
Article 29, par. (2), was intended only to let local laws determine
whether an action had been commenced within the two (2)-year
period, and within our jurisdiction an action shall be deemed
commenced upon the filing of a complaint. Since it is indisputable that
respondent filed the present action beyond the two (2)-year time frame
his second cause of action must be barred. Nonetheless, it cannot be
doubted that respondent exerted efforts to immediately convey his loss
to petitioner, even employed the services of two (2) lawyers to follow
up his claims, and that the filing of the action itself was delayed
because of petitioner's evasion.
In this regard, Philippine Airlines, Inc. v. Court of Appeals 19 is
instructive. In this case of PAL, private respondent filed an action for
damages against petitioner airline for the breakage of the front glass of
the microwave oven which she shipped under PAL Air Waybill No. 0-
79-1013008-3. Petitioner averred that, the action having been filed
seven (7) months after her arrival at her port of destination, she failed
to comply with par. 12, subpar. (a) (1), of the Air Waybill which
expressly provided that the person entitled to delivery must make a
complaint to the carrier in writing in case of visible damage to the
goods, immediately after discovery of the damage and at the latest
within 14 days from receipt of the goods. Despite non-compliance
therewith the Court held that by private respondent's immediate
submission of a formal claim to petitioner, which however was not
immediately entertained as it was referred from one employee to
another, she was deemed to have substantially complied with the
requirement. The Court noted that with private respondent's own
zealous efforts in pursuing her claim it was clearly not her fault that the
letter of demand for damages could only be filed, after months of
exasperating follow-up of the claim, on 13 August 1990, and that if
there was any failure at all to file the formal claim within the
prescriptive period contemplated in the Air Waybill, this was largely
because of the carrier's own doing, the consequences of which could
not in all fairness be attributed to private respondent.
In the same vein must we rule upon the circumstances brought before
us. Verily, respondent filed his complaint more than two (2) years later,
beyond the period of limitation prescribed by the Warsaw Convention
for filing a claim for damages. However, it is obvious that respondent
was forestalled from immediately filing an action because petitioner
airline gave him the runaround, answering his letters but not giving in
to his demands. True, respondent should have already filed an action
at the first instance when his claims were denied by petitioner but the
same could only be due to his desire to make an out-of-court
settlement for which he cannot be faulted. Hence, despite the express
mandate of Art. 29 of the Warsaw Convention that an action for
damages should be filed within two (2) years from the arrival at the
place of destination, such rule shall not be applied in the instant case
because of the delaying tactics employed by petitioner airline itself.
Thus, private respondent's second cause of action cannot be
considered as time-barred under Art. 29 of the Warsaw Convention.
G.R. No. 149547 July 4, 2008
PHILIPPINE AIRLINES, INC., petitioner,
vs.
N. ADRIANO SAVILLO, Presiding Judge of RTC Branch 30 , Iloilo City, and SIMPLICIO GRIÑO,respondents.
CHICO-NAZARIO, J.:
motional harm suffered by the private respondent as a result of having been unreasonably and unjustly prevented from boarding the plane should be distinguished from the actual damages w
The instant case is comparable to the case of Lathigra v. British
Airways.23
In Lathigra, it was held that the airlines‘ negligent act of reconfirming
the passenger‘s reservation days before departure and failing to inform
the latter that the flight had already been discontinued is not among
the acts covered by the Warsaw Convention, since the alleged
negligence did not occur during the performance of the contract of
carriage but, rather, days before the scheduled flight.
In the case at hand, Singapore Airlines barred private respondent from
boarding the Singapore Airlines flight because PAL allegedly failed to
endorse the tickets of private respondent and his companions, despite
PAL‘s assurances to respondent that Singapore Airlines had already
confirmed their passage. While this fact still needs to be heard and
established by adequate proof before the RTC, an action based on
these allegations will not fall under the Warsaw Convention, since the
purported negligence on the part of PAL did not occur during the
performance of the contract of carriage but days before the scheduled
flight. Thus, the present action cannot be dismissed based on the
statute of limitations provided under Article 29 of the Warsaw
Convention.
Had the present case merely consisted of claims incidental to the
airlines‘ delay in transporting their passengers, the private
respondent‘s Complaint would have been time-barred under Article 29
of the Warsaw Convention. However, the present case involves a
special species of injury resulting from the failure of PAL and/or
Singapore Airlines to transport private respondent from Singapore to
Jakarta – the profound distress, fear, anxiety and humiliation that
private respondent experienced when, despite PAL‘s earlier assurance
that Singapore Airlines confirmed his passage, he was prevented from
boarding the plane and he faced the daunting possibility that he would
be stranded in Singapore Airport because the PAL office was already
closed.
These claims are covered by the Civil Code provisions on tort, and not
within the purview of the Warsaw Convention. Hence, the applicable
prescription period is that provided under Article 1146 of the Civil
Code:
Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
(2) Upon a quasi-delict.
Private respondent‘s Complaint was filed with the RTC on 15 August
1997, which was less than four years since PAL received his
extrajudicial demand on 25 January 1994. Thus, private respondent‘s
claims have not yet prescribed and PAL‘s Motion to Dismiss must be
denied.
Rule when Transportation Performed by Successive Carriers
under Art. 1.3
Each carrier who accepts pax, baggage or goods shall be:
 subject to the rules set out in the WC, and
 deemed to be one of the contracting parties to the contract
of transportation insofar as the contract deals with the part of
transportation which is performed under his supervision [Art.
30]
Against whom can Pax take Action:
General Rule – only against the carrier who performed the
transportation during which the accident or delay occurred,
Exception – against the first carrier when, by express agreement, it
has assumed liability for the whole journey
G.R. No. L-31150 July 22, 1975
KONINKLIJKE LUCHTVAART MAATSHAPPIJ N.V., otherwise
known as KLM ROYAL DUTCH AIRLINES,petitioner, vs.
THE HONORABLE COURT OF APPEALS, CONSUELO T.
MENDOZA and RUFINO T. MENDOZA, respondents.
 CASTRO, J.: contract of carriage with Antiporda and remains to be so, regardless of those instances w
ne which issued those tickets with the knowledge that the respondents would be flown on the various legs of their journey by different air carriers, the KLM was chargeable with the duty and

nally prestigious KLM, naturally had the right to expect that their tickets would be honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect guaranteed the perf

G.R. No. 152122 July 30, 2003

CHINA AIRLINES, petitioner, vs.
DANIEL CHIOK, respondent.
PANGANIBAN, J.:

ondent, with the former endorsing to PAL the Hong Kong-to-Manila segment of the journey. Such contract of carriage has always been treated in this jurisdiction as a single operation. This ju

ip agreement, the ticket-issuing airline is the principal in a contract of carriage, while the endorsee-airline is the agent. XXX

CAL. In the same way that we ruled against British Airways and Lufthansa in the aforementioned cases, we also rule that CAL cannot evade liability to respondent, even though it may have b

Rule with Respect to Baggage or Goods

 The pax or consignor shall have a right to action against the

FIRST carrier
 The pax or consignee who is entitled to delivery shall have a
right of action against the LAST carrier
 Each may take action against the carrier WHO
PERFORMED the transportation during which the
destruction, loss, damage or delay took place
 The carriers shall be JOINTLY liable to the pax or to the
consignor or consignee

Is the Warsaw Convention Binding in the Philippines?

General Rule: YES, it has the force and effect of a law, being a treaty
commitment assumed by the Philippine Government

However – it does NOT operate as:

G.R. No. 83612 November 24, 1994 a) an EXCLUSIVE enumeration of the instances for
LUFTHANSA GERMAN AIRLINES, petitioner, declaring a carrier liable for breach of contract of
vs. carriage, or
COURT OF APPEALS and TIRSO V. ANTIPORDA, b) an ABSOLUTE limit of the extent of that liability
SR., respondents.
ROMERO, J.: The WC must NOT be construed as to PRECLUDE the operation of
Lufthansa maintains that its liability to any passenger is limited to the Civil Code and other pertinent laws
occurrences in its own line, and, thus, in the case at bench, its liability
to Antiporda is limited to the extent that it had transported him from It does not regulate, much less exempt the carrier from liability for
Manila to Singapore and from Singapore to Bombay; that therefrom, damages for violating the rights of the passengers under the contract
responsibility for the performance of the contract of carriage is of carriage, ESPECIALLY if willful misconduct on the part of then
assumed by the succeeding carriers tasked to transport him for the carrier‘s employees is found or established.
remaining leg of his trip because at that stage, its contract of carriage
with Antiporda ceases, with Lufthansa acting, no longer as the principal
in the contract of carriage, but merely as a ticket-issuing agent for the
other carriers.XXX FREEDOMS OF THE AIR
First Freedom of the Air - the right or privilege, in respect of scheduled international air services, granted by one State to another State or States to fly across its te
We, therefore, reject Lufthansa's theory that from the time another
carrier was engaged to transport Antiporda on another segment of his
trip, it merely acted as a ticket-issuing agent in behalf of said carrier. In
the very nature of their contract, Lufthansa is clearly the principal in the
Second Freedom of the Air - the right or privilege, in respect of 2. Damages cannot be presumed – to be recoverable, they
scheduled international air services, granted by one State to another must be pleaded and proven in court; in no instance may
State or States to land in its territory for non-traffic purposes (also a judge award more than those so pleaded and proven
known as a Second Freedom Right). 3. Speculative damages cannot be awarded
4. The award thereof must be based on the evidence
Third Freedom of The Air - the right or privilege, in respect of presented, not on the personal knowledge of the court;
scheduled international air services, granted by one State to another and certainly not on flimsy, remote, speculative and non-
State to put down, in the territory of the first State, traffic coming from substantial proof
the home State of the carrier (also known as a Third Freedom Right).
In Breach of Contract of Carriage – If the Common Carrier is in:
Fourth Freedom of The Air - the right or privilege, in respect of
scheduled international air services, granted by one State to another 1. GOOD Faith – it shall be responsible for:
State to take on, in the territory of the first State, traffic destined for the
home State of the carrier (also known as a Fourth Freedom Right). a. The NATURAL and PROBABLE consequences of
the breach of the obligations; AND
Fifth Freedom of The Air - the right or privilege, in respect of
scheduled international air services, granted by one State to another b. Damages which the parties FORESAW or COULD
State to put down and to take on, in the territory of the first State, traffic HAVE FORESEEN
coming from or destined to a third State (also known as a Fifth
Freedom Right). 2. BAD Faith – it shall be responsible for ALL damages which
may be REASONABLE ATTRIBUTED to the non-
ICAO characterizes all "freedoms" beyond the Fifth as "so-called" performance of the obligation (relation of cause and effect is
because only the first five "freedoms" have been officially recognized enough) [Art. 2201]
as such by international treaty.
In Crimes and Quasi-Delicts:
Sixth Freedom of The Air - the right or privilege, in respect of
scheduled international air services, of transporting, via the home 1. The common carrier shall be liable for ALL damages which
State of the carrier, traffic moving between two other States (also are the natural and probable consequences of the act or
known as a Sixth Freedom Right). The so-called Sixth Freedom of the omission complained of
Air, unlike the first five freedoms, is not incorporated as such into any
widely recognized air service agreements such as the "Five Freedoms 2. It is not necessary that such damages have been foreseen
Agreement". or could have reasonably been foreseen by the common
carrier [Art. 2202]
Seventh Freedom of The Air - the right or privilege, in respect of
scheduled international air services, granted by one State to another Moral Damages
State, of transporting traffic between the territory of the granting State
and any third State with no requirement to include on such operation Moral Damages include:
any point in the territory of the recipient State, i.e the service need not
connect to or be an extension of any service to/from the home State of 1. physical suffering,
the carrier. 2. mental anguish,
3. fright,
Eighth Freedom of The Air - the right or privilege, in respect of 4. serious anxiety,
scheduled international air services, of transporting cabotage traffic 5. besmirched reputation,
between two points in the territory of the granting State on a service 6. wounded feelings,
which originates or terminates in the home country of the foreign 7. moral shock,
carrier or (in connection with the so-called Seventh Freedom of the Air) 8. social humiliation, and
outside the territory of the granting State (also known as a Eighth 9. similar injury
Freedom Right or "consecutive cabotage").
In Breach of Contract of Carriage:
Ninth Freedom of The Air - the right or privilege of transporting
cabotage traffic of the granting State on a service performed entirely
within the territory of the granting State (also known as a Ninth 1. General Rule – Moral Damages are NOT recoverable in
Freedom Right or "stand alone"cabotage). damage actions predicated on a breach of contract of
carriage
Source: Manual on the Regulation of International Air Transport (Doc
9626, Part 4) 2. Exceptions – moral damages may be awarded when:

DAMAGES a. The mishaps results in the DEATH of the pax

b. It is proven that the carrier is guilty of FRAUD or
Kinds of Damages [Art. 2197 Civil Code] BAD FAITH, even if death does not result [Art.
2220]
1. Actual or compensatory
Bad Faith
2. Moral Breach of a known duty through some motive of interest or ill will
3. Nominal
4. Temperate or Moderate When Moral Damages may be Recovered [ART. 2219]
5. Liquidated
6. Exemplary 1. In criminal offenses resulting in physical injuries
2. Quasi-delicts causing physical injuries
Actual Damages; Features: 3. xxx

1. They pertain to such injuries or losses that are actually G.R. No. 124110 April 20, 2001
sustained and susceptible of measurement
 UNITED AIRLINES, INC., Petitioner vs.
COURT OF APPEALS, ANICETO FONTANILLA, in his personal
capacity and in behalf of his minor sonMYCHAL ANDREW FONTANILLA, Respondents.
KAPUNAN, J.:
Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages [Art. 2229]
Note:

1. Exemplary Damages can ONLY be granted in ADDITION to:

a. moral damages
b. temperate damages
arises, and the passenger has every right to except that he would fly on that flight and on that date. If he does not, then
c. the carrier opens itself toora suit for breach of contract of carriage. Wh
liquidated damages,
d. actual or compensatory damages

2. If exemplary damages are granted, nominal

damages CANNOT be awarded

When Exemplary Damages may be Recovered:

1. In Criminal Offenses – if the crime was committed with one

or more aggravating circumstances [Art. 2230]

2. In Quasi-delicts – if the common carrier acted with

gross negligence [Art. 2231]

3. In Contracts & Quasi-contracts – if the common carrier

acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner [Art. 2232]

Nominal Damages G.R. No. 116617 November 16, 1998

METRO MANILA TRANSIT CORPORATION (MMTC), PEDRO A.
Nominal Damages are Adjudicated: MUSA, CONRADO TOLENTINO, FELICIANA CELEBRADO and
THE GOVERNMENT SERVICE INSURANCE SYSTEM, petitioners,
1. in order that a right of the pax, shipper, or consignee, which vs.
has been violated or invaded by the common carrier, may be COURT OF APPEALS, SPS. RODOLFO V. ROSALES and LILY R.
vindicated or recognized, and ROSALES, respondents.

2. not for the purpose of indemnifying the pax, shipper or Indemnity for Death. Art. 2206 provides for the payment of indemnity
consignee for any loss suffered by him [Art. 2221] for death caused by a crime or quasi-delict. Initially fixed in said article
of the Civil Code at P3,000.00, the amount of the indemnity has
Note: through the years been gradually increased based on the value of the
peso. At present, it is fixed at P50,000.00. 26 To conform to this new
1. Nominal Damages stand alone ruling, the Court of Appeals correctly increased the indemnity it had
originally ordered the spouses Rosales to be paid from P30,000.00 to
a. There can NO longer be an award for nominal P50,000.00 in its resolution, dated September 12, 1996. XXX
damages IF there already has been an award for
actual, moral, temperate, liquidated and exemplary Actual Damages. Art. 2199 provides that "except as provided by law or
damages by stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved." The
b. An award of nominal damages precludes the spouses Rosales are claiming actual damages in the amount of
award of actual, moral, temperate, liquidated and P239,245.40. However, during the trial, they submitted receipts
exemplary damages showing that expenses for the funeral, wake, and interment of Liza
Rosalie amounted only to P60,226.65 XXX The spouses Rosales claim
2. When the act of the common carrier did not amount to fraud, moral damages in the amount of P5,000,000.00. In People v.
malice or bad faith, moral damages cannot be awarded. Teehankee, Jr., 32 this Court awarded P1 million as moral damages to
However, if there was an invasion of the plaintiff‘s right, the heirs of a seventeen-year-old girl who was murdered. This amount
nominal damages may be awarded. seems reasonable to us as moral damages for the loss of a minor
child, whether he or she was a victim of a crime or a quasi-delict.
Temperate or Moderate Damages Hence, we hold that the MMTC and Musa are solidarily liable to the
spouses Rosales in the amount of P1,000,000.00 as moral damages
 which are more than nominal but less than compensatory for the death of Liza Rosalie.
damages,
 may be recovered when the court finds that some pecuniary Moral Damages. Under Art. 2206, the "spouse, legitimate and
loss has been suffered illegitimate descendants and ascendants of the deceased may demand
 but its amount can not, from the nature of the case, be moral damages for mental anguish by reason of the death of the
provided with certainty [Art. 2224] deceased." XXX In the instant case, the spouses Rosales presented
evidence of the intense moral suffering they had gone through as a
result of the loss of Liza Rosalie who was their youngest child.
Liquidated Damages

Liquidated damages are those agreed upon by the parties to a
contract, to be paid in case of breach thereof [Art. 2226]
Exemplary Damages
Exemplary Damages. Art. 2231 provides that exemplary damages may
be recovered in cases involving quasi-delicts if "the defendant acted
with gross negligence." This circumstance obtains in the instant case.
The records indicate that at the time of the mishap, there was a
pending criminal case against Musa for reckless imprudence resulting
 in slight physical injuries with another branch of the Regional Trial Court, Quezon City. 33 The evidence also shows that he failed to stop his vehicle at once even after eye witnes

and the noncommittal responses to private respondent's entreaties for settlement of her claim for damages belies petitioner's pretension that there was no bad faith on its part. This unprof

G.R. No. 119706 March 14, 1996

PHILIPPINE AIRLINES, INC., petitioner,
vs.
COURT OF APPEALS and GILDA C. MEJIA, respondents.
REGALADO, J.:p
In the case at bar, it will be noted that private respondent signified an
intention to declare the value of the microwave oven prior to shipment,
but was explicitly advised against doing so by PAL's personnel in San
Francisco, U.S.A. XXX

It cannot be denied that the attention of PAL through its personnel in

San Francisco was sufficiently called to the fact that private
respondent's cargo was highly susceptible to breakage as would
necessitate the declaration of its actual value. Petitioner had all the
opportunity to check the condition and manner of packing prior to
acceptance for shipment, 22 as well as during the preparation of the air
waybill by PAL's Acceptance Personnel based on information supplied
by the shipper, 23 and to reject the cargo if the contents or the packing
did not meet the company's required specifications. Certainly, PAL
could not have been otherwise prevailed upon to merely accept the
cargo. XXX

There is no absolute obligation on the part of a carrier to accept a

cargo. Where a common carrier accepts a cargo for shipment for G.R. No. 150843 March 14, 2003
valuable consideration, it takes the risk of delivering it in good condition CATHAY PACIFIC AIRWAYS, LTD., petitioner,
as when it was loaded. And if the fact of improper packing is known to vs.
the carrier or its personnel, or apparent upon observation but it accepts SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL
the goods notwithstanding such condition, it is not relieved of liability VAZQUEZ, respondents.
for loss or injury resulting therefrom. DAVIDE, JR., C.J.:
es by the Court of Appeals is correct. It is a requisite in the grant of exemplary damages that the act of the offender must be accompanied by bad faith or done in wanton, fraudulent or male
The acceptance in due course by PAL of private respondent's cargo as
packed and its advice against the need for declaration of its actual
value operated as an assurance to private respondent that in fact there
was no need for such a declaration. Petitioner can hardly be faulted for
relying on the representations of PAL's own personnel.

In other words, private respondent Mejia could and would have

complied with the conditions stated in the air waybill, i.e., declaration of
a higher value and payment of supplemental transportation charges,
entitling her to recovery of damages beyond the stipulated limit of US
$20 per kilogram of cargo in the event of loss or damage, had she not
been effectively prevented from doing so upon the advice of PAL's
personnel for reasons best known to themselves. XXX

Considering the abovementioned incidents and private respondent

Mejia's own zealous efforts in following up the claim, 34 it was clearly
not her fault that the letter of demand for damages could only be filed,
after months of exasperating follow-up of the claim, on August 13,
1990. 35 If there was any failure at all to file the formal claim within the G.R. No. 99301 March 13, 1997
prescriptive period contemplated in the air waybill, this was largely VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO
because of PAL's own doing, the consequences of which cannot, in all LEGASPI, petitioners, vs.
fairness, be attributed to private respondent. THE COURT OF APPEALS and PANTRANCO NORTH EXPRESS,
INCORPORATED, respondents.
Even if the claim for damages was conditioned on the timely filing of a
PANGANIBAN, J.:
formal claim, under Article 1186 of the Civil Code that condition was
deemed fulfilled, considering that the collective action of PAL's
personnel in tossing around the claim and leaving it unresolved for an
indefinite period of time was tantamount to "voluntarily preventing its
fulfillment." On grounds of equity, the filing of the baggage freight
ila's physicalclaim, whichcannot
appearance sufficiently informed
but affect PAL right
their marital of the damage sustained
to "consortium" by have remained normal were it not for the accident. Thus, the moral damages awarded in favor of
which would
private respondent's cargo, constituted substantial compliance with the
requirement in the contract for the filing of a formal claim.

All told, therefore, respondent appellate court did not err in ruling that
the provision on limited liability is not applicable in this case. We,
however, note in passing that while the facts and circumstances of this
case do not call for the direct application of the provisions of the
 Victor's claim for deprivation of his right to consortium, although argued
before Respondent Court, is not supported by the evidence on record.
His wife might have been badly disfigured, but he had not testified that,
in consequence thereof, his right to marital consortium was affected.
Clearly, Victor (and for that matter, Lucila) had failed to make out a
case for loss of consortium, unlike the Rodriguez spouse. Again, we
emphasize that this claim is factual in origin and must find basis not
only in the evidence presented but also in the findings of the
Respondent Court. For lack of factual basis, such claim cannot be
ruled upon by this Court at this time.
Respondents in the instant case should be awarded moral damages to
compensate for the grief caused by the death of the deceased
resulting from the petitioner‘s breach of contract of carriage.
Furthermore, the petitioner failed to prove that it exercised the
extraordinary diligence required for common carriers, it is presumed to
have acted recklessly. Thus, the award of exemplary damages is
proper. Under the circumstances, we find it reasonable to award
respondents the amount of P100,000.00 as moral damages and
P100,000.00 as exemplary damages. These amounts are not
excessive.

Fourth Issue: Exemplary Damages G.R. No. 157009 March 17, 2010
SULPICIO LINES, INC., Petitioner, vs.
The claim of Lucila has been favorably considered in view DOMINGO
of the E. CURSO, LUCIA E. CURSO, MELECIO E. CURSO, SEGUNDO E. CURSO, VIRGILIO E. CURSO, DIOSD
finding of gross negligence by Respondent Court on the part of CURSO, and CECILIA E. CURSO, Respondents.
Pantranco. This is made clear by Respondent Court in granting BERSAMIN, J.:
Lucila's claim of exemplary damages:

(P)ublic utility operators like the defendant, have made a mockery of

our laws, rules and regulations governing operations of motor vehicles
bañez, to the effect that in case of death caused by quasi-delict, the brother of the deceased was not entitled to the award of moral damages based on Article 2206 of the Civil Code. XXX
and have ignored either deliberately or through negligent disregard of
their duties to exercise extraordinary degree of diligence for the safety
of the
er Article 1003 travelling
of the public
Civil Code they and their passengers.
succeeded to the entire .estate
. . . of the late Dr. Curso in the absence of the latter‘s descendants, ascendants, illegitimate children, and surviving spouse. Ho

To give teeth to this warning, the exemplary damages awarded to

not include succession in the collateral line as a source of the right to recover moral damages. The usage of the phrase analogous cases in the provision means simply that the situation must b
Petitioner Lucila is increased to P200,000.00. The fact of gross
negligence duly proven, we believe that Legaspi, being also a victim of
gross
) where death of anegligence, should
passenger results, or also
(b) it receive
is provedexemplary damages.
that the carrier Under
was guilty the and bad faith, even if death does not result. Article 2206 of the Civil Code entitles the descendants,
of fraud
facts proven, the Court awards him P25,000 as exemplary damages.

G.R. No. 159636 November 25, 2004

VICTORY LINER, INC., petitioner, vs.
ROSALITO GAMMAD, APRIL ROSSAN P. GAMMAD, ROI ROZANO
P. GAMMAD and DIANA FRANCES P. GAMMAD, respondents. YNARES-SANTIAGO, J.:

ons and, as in this case, when the act of breach of contract itself constitutes the tort that results in physical injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code,

PUBLIC SERVICE ACT CA 146, AS AMENDED

Purposes:

1. To secure adequate service for the public, for the least

possible cost
2. To protect and conserve investments which have already
been made for the purpose

SECTION 13 PUBLIC SERVICE

or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehi
 Section
passengers or freight or both, shipyard, marine railways, marine repair shop, [warehouse]
preceding section:
What do you mean by public? This means individuals in general
without restriction or selection to the extent that the capacity of the
utility may admit of such service or use
Public Utility - business or service which is engaged in regulating,
supplying the public with some commodity or service of public
consequence, such as transportation
Principal determinative characteristic of a public utility – service or
readiness to serve an indefinite public which has the right to demand
and receive its services or commodities
Public utilities are privately owned and operated businesses whose service are essential reasonable
 The fact that the service is limited to a particular district or
town does not prevent the business from being a public
utility
 The number of people actually served does not determine
whether a person or company is a public utility
 Such person or company which holds himself out to serve all
who which to avail themselves of the service may be apublic
utility even though only one or two people actually receive
the service
Regulation of Public Utilities
Basis: Police Power; The legislature may interfere with the
management of public utilities whenever public interest demands
What is the extent of police power?
1. Regulation of rates and charges
2. Prevent discrimination upon the part of the public utility
against those who employ it
3. To make orders governing the conduct of the public utility
Entities that are exempt from the provisions of Public Service Act
14.
wharf or Theice
dock, following are exemptedplant,
plant, ice-refrigeration from the provisions
canal, irrigation of the gas, electric lig
system,
(a) Warehouses;
(b) Vehicles drawn by animals and bancas moved by oar or sail,
and tugboats and lighters;
(c) Airships within the Philippines except as regards the fixing of
their maximum rates on freight and passengers;
(d) Radio companies except with respect to the fixing of rates;
(e) Public services owned or operated by any instrumentality of the
National Government or by any government-owned or controlled
corporation, except with respect to the fixing of rates. (As amended
by Com. Act 454, RA No. 2031, and RA No. 2677 )
Requisite for operation of public utility
Section 15. With the exception of those enumerated in the preceding
section, no public service shall operate in the Philippines without
possessing a valid and subsisting certificate from the Public Service
Commission known as "certificate of public convenience," or
"certificate of public convenience and necessity," as the case may be,
to the effect that the operation of said service and the authorization to
do business will promote the public interests in a proper and suitable
manner.
The Commission may prescribe as a condition for the issuance of the
certificate provided in the preceding paragraph that the service can be
acquired by the Republic of the Philippines or any instrumentality
thereof upon payment of the cost price of its useful equipment, less
to the general public. They are
depreciation; andenterprises which
likewise, that thespecially catershall
certificate to the
beneeds
valid of the publ
only for a definite period of time; and that the violation of any of these
conditions shall produce the immediate cancellation of the certificate
without the necessity of any express action on the part of the
Commission.
In estimating the depreciation, the effect of the use of the equipment,
its actual condition, the age of the model, or other circumstances
affecting its value in the market shall be taken into consideration.
The foregoing is likewise applicable to any extension or amendment of
certificates actually in force and to those which may hereafter be
issued, to permit to modify itineraries and time schedules of public
services, and to authorizations to renew and increase equipment and
properties.
Entities exempt from obtaining a CPC:
1. Public Service owned or operated by Government or
GOCCs
2. Grantees of legislative franchise when expressly exempted
from obtaining a CPC
3. Those expressly exempted from the jurisdiction of the
regulating bodies
Distinction
 CPC CPCN

Issued when it is found that the Issued upon approval of any

operation of the proposed public
service will promote the public
interest in a proper and suitable
manner, for which a municipal or
legislative franchise is not
necessary
franchise or privilege granted by
any political subdivision or the RP
when in the judgment of the
regulatory body, such franchise or
privilege will properly conserve
the public interest

―Prior or Old Operator Rule‖ under thePublic Service Act only applies as a policy of the
Requisites for the Grant of a CPC or CPCN

1. Applicant – must be:

a. citizen of the RP, or

b. corporation or association organized under the laws of

the RP at least 60% of its capital is owned by such
citizens;

2. Applicant must be financially capable of undertaking the
proposed service and meeting the responsibilities incident to its
operation;
3. Applicant must prove that the operation of the public service
proposed and the authorization to do business will promote the public
interest in a proper and suitable manner
When ―Protection of Investment‖ Rule NOT Applicable:
If the application of the rule would be conducive to monopoly of
service, and contrary to the principle that promotes healthy competition
[Villa Rey v. Pangasinan, 5 SCRA 234]
Grounds for Suspension or Revocation of CPC:

What is the primordial consideration in granting franchises or 1. Sec. 16(m) – The facts and circumstances on the strength
CPC’s? PUBLIC INTEREST on which CPC was issued have been misrepresented or
materially changed
Rules in Issuing CPC
The Commission shall have power, upon proper notice and hearing in
Prior Operator Rule accordance with the rules and provisions of this Act, subject to the
limitations and exceptions mentioned and saving provisions to the
Before permitting a new operator to invade the territory of another contrary :
already established with a CPC, the prior operator must first be given
the opportunity to extend its service in order to meet the public (m) To amend, modify or revoke at any time certificate issued under
needs in the matter of transportation the provisions of this Act, whenever the facts and circumstances on
the strength of which said certificate was issued have been
Prior Applicant Rule misrepresented or materially changed.

2. Sec. 16(n) – The holder thereof has violated or willfully and

Where there are various applicants for a public utility over the same
contumaciously refused to comply with any order, rule, or
territory, ALL CONDITIONS BEING EQUAL, priority in filing of the
regulation of the regulatory bodies or any provision of the
application for a CPC becomes an important factor in granting or
Public Service Act
refusal of the CPC

Protection of Investment Rule
One of the purposes of the Public Service Law is to protect and
conserve investments which have already been made for that purpose
by public service operators
When ―Prior Operator‖ Rule NOT Applicable:
1. Where public interest would better be served by the new
operator [Guico v. Estate of Buan, Aug 30, 1957]
2. Where the prior operator has failed to make an offer to meet
the increase in traffic [Manila Yellow Taxicab v. Castelo,
May 30, 1960]
3. Where the CPC granted to the new operator is a maiden
CPC, which does not overlap with the entire route of the old
operator but only a short portion thereof as a convergence
point [Mandbusco v. Francisco, 32 SCRA 405]
(n) To suspend or revoke any certificate issued under the provisions of
this Act whenever the holder thereof has violated or willfully and
contumaciously refused to comply with any order rule or regulation of
the Commission or any provision of this Act: Provided, That the
Commission, for good cause, may prior to the hearing suspend for a
period not to exceed thirty days any certificate or the exercise of any
right or authority issued or granted under this Act by order of the
Commission, whenever such step shall in the judgment of the
Commission be necessary to avoid serious and irreparable damage or
inconvenience to the public or to private interests.
3. Art. 1765, Civil Code – The common carrier repeatedly fails
to comply with his duty to observe extraordinary diligence as
prescribed by law
Due Process in Revocation or Cancellation of CPC:
1. Notice and Hearing
2. Formal Charge – not necessary for as long as the holder of
CPC is given his day in court [CIR v. Buan, Jul 31, 1958]

Sec. 16[c] – Regulations of Rates – PSC has the Power:

pite its efforts of improving thesame. Pasok Transportation, Inc., now applies for theissuance to it by To
the Land
fix Transportation
and determine Franchising andRegulatory
individual or joint Board
rates,of tolls,
a certificate of public conven
charges,
classifications, or schedules thereof, as well as commutation, mileage,
kilometrage, and other special rates which shall be imposed observed
and followed thereafter by any public service.

(c) To fix and determine individual or joint rates, tolls, charges, classifications, or schedu
and notice to the concerns operating in the territory affected: Provided, further, That in What requirements
case the public servicemust be metofbefore
equipment a certificate
an operator is usedofpublic
principally or secondarily for the
convenience may be granted under the PublicService Act?

SUGGESTED ANSWER:

The following are the requirements for the granting of acertificate of

public convenience, to wit:
Note:
a) The applicantmust be a citizen of the Philippines, or a corporation,
1. The power to regulate rates does not give the State the right co-partnership or association organizedunder the laws of the
to prescribe rates which are so low as to deprive the public Philippines and at least 60% ofthe stock of paid-up capital of which
utility of a reasonable return on investment. [RP v. Meralco, must belong tocitizens of the Philippines. (Sec 16a, CA 146, as
Nov 15, 2002] amended)

2. The only standard which the legislature is required to
prescribe for the guidance of the administrative authority is
that the rate be reasonable and just. [RP v. Meralco, Nov
15, 2002]
3. The power to fix the rates of public utilities is a power that
has been delegated to the regulatory administrative
agencies. As such it cannot be further delegated by the said
administrative agencies. [KMU v. Garcia, Dec 23, 1994]
4. Discrimination in the charging of rates is NOT allowed [US v.
Quinajon, Jul 30, 1915]
b) The applicant must prove public necessity.
c) The applicant must prove that the operation ofthe public service
proposed and the authorization to dobusiness will promote the public
interest in a proper andsuitable manner. (Sec 16a CA 146 as
amended)
d) The applicant must be financially capable ofundertaking the
proposed service and meeting theresponsibilities incident to its
operation.
Revocation of Certificate (1993)

1) Robert is a holder of a certificate of public convenienceto operate a

Certificate of public Convenience (1998)
taxicab service in Manila and suburbs. Oneevening, one of his taxicab
units 1.was EO 213 [Nov
boarded 28, 1994] – instituted
by threerobbers as they the deregulation
escaped of domestic
after staging a
The Batong Bakal Corporation filed with the Board ofEnergy an shippingofsaid
rates incident, the LTFRB revoked the certificate of
hold-up. Because
application for a Certificate of PublicConvenience for the purpose of
publicconvenience of Robert on the ground that said operatorfailed to
supplying electric powerand lights to the factory and its employees 2. safe,
MCproper
issuedand
by MARINA
render adequateon Dec 16,
service 1999 – further
asrequired under implemented
Sec 19a of
living within thecompound. The application was opposed by the
the Public deregulation
Service Act.
BulacanElectric Corporation contending that the Batong
BakalCorporation has not secured a franchise to operate andmaintain 3. Sec. 8 of RAof9295 passed onofMay 2004 – mandates
a) Wasthe revocation the certificate public convenience
an electric plant. Is the opposition‗s contentioncorrect? (5%) deregulation
of Robert justified? Explain.
SUGGESTED ANSWER: FOB [Free Onthe
Board] or FAS [Free Alongside
b) When can Commission(Board) exercise itsShip]
power to suspend or
revoke certificateof public convenience?
No. A certificate of public convenience may be granted toBatong Bakal
A price quotation with FOB presumes that the seller shall comply with his
Corporation, though not possessing a legislative franchise, if it meets
obligation
SUGGESTED to deliver the cargo to the vessel.
ANSWER:
all the other requirements.There is nothing in the law nor the
Constitution, whichindicates that a legislative franchise is necessary or
1a) No. A single
Thereupon, hold-up
it is the BUYERincident
whowhich
shall does notfreightage
pay the linkRobert‗s andtaxicab
thus the
requiredfor an entity to operate as supplier of electric power and
cannot isbedeemed
carrier construed
agentthat he buyer
of the rendered aservice
so that thatto is
delivery theunsafe,
vessel is
light to its factory and its employees living within thecompound.
inadequate
delivery andbuyer.
to the improper (Manzanalv Ausejo 164 s 36)
Certificate of Public Convenience; inseparability
1b) Under Sec
Ownership 19acargo
of the of thewill
Public
passService Act, theCommission
to the buyer (Board)
upon delivery by the seller
of certificate and vessel (1992)
can
to suspend
the vessel. or revoke a certificate ofpublic convenience when the
operator fails to provide aservice that is safe, proper or adequate, and
Antonio was granted a Certificate of Public Convenience(CPC) in 1986
refuses
CIF torender
[Cost, any service
Insurance which can be reasonably demanded and
and Freight]
to operate a ferry between Mindoro andBatangas using the motor
furnished.
vessel ―MV Lotus.‖ He stoppedoperations in 1988 due to
unserviceability of the vessel. In1989, Basilio was granted a CPC for A price quotation on CIF presumes that the seller shall cost of crating and
packaging, insurance Revocation of Certificate (1993)
and the freightage.
the same route. After afew months, he discovered that Carlos was
operating onhis route under Antonio‗s CPC. Because Basilio filed a
Pepay,
The a holder
carrier of a certificate
is deemed to be the of public
agent convenience,failed
of the to registerthe
seller, so that throughout
complaint for illegal operations with the Maritime IndustryAuthority,
to the trip
entire complete number
ownership of unitsby
is retained requiredby
the SELLER her and
certificate. However,
only passes to the
Antonio and Carlos jointly filed an applicationfor sale and transfer of
she tried
buyer uponto justify such
reaching thefailureby
point ofthe accidentsand
destination thatthe
allegedly
cargo isbefell her,
discharged
Antonio‗s CPC and substitution ofthe vessel ―MV Lotus‖ with another
claiming
in favor ofthat shewas so shocked and burdened by the successive
the buyer.
owned by CarlosShould Antonio‗s and Carlos‗ joint application be
accidentsand misfortunes that she did not know what she wasdoing,
approved? Giver your reasons.
she was confused and thrown off tangentmomentarily, although she
General Definition of Arrastre
always had the money andfinancial ability to buy new trucks and repair
SUGGESTED ANSWER:
the destroyedone. Are the reasons given by Pepay sufficient grounds
A broad tern
her which refers to a units?
contract for the unloading of goods from a
toexcuse from completing Explain.
The joint application of Antonio and Carlos for the saleand transfer of vessel
Antonio‗s CPC and substitution of thevessel MV Lotus with another
SUGGESTED ANSWER:
vessel owned by thetransferee should not be approved. The certificate Arrastre in Mercantile Law
ofpublic convenience and MV Lotus are inseparable.
No. The reasons given by Pepay are not sufficient groundsto excuse
Theunserviceability of the vessel covered by the certificate hadlikewise The term ‗arrastre‘
her from completinghas
hera units.
technical
Themeaning as it applies
same couldbe only to by
undertaken overseas
her
rendered ineffective the certificate itself, and theholder thereof may not trade
children or by other authorizedrepresentatives (Sec 16n Pub Serv Act;
legally transfer the same toanother. (Cohon v CA 188 s 719).
Halili v Herras 10 s769)
When cargo from abroad arrives on board a vessel, the consignee
Certificate of Public Convenience; Requirements (1995) cannot unload and deliver the cargo by himself.

Domestic Shipping Rates This is done by the arrastre operator, who will then deliver the cargo to
the customs warehouse
Acts Which are UNLAWFUL Without Approval of the Commission
[Sec. 20]
Parties in Arrastre Contract
 Sec. 20[a] – To increase its rates
1. Republic of the Philippines
 Sec. 20[b] – To operate new units [Ammen Transportation
2. The party awarded the privilege of operating the arrastre
v. Francisco, Nov 29, 1957]
service
 Sec. 20[g] – Sell, mortgage or lease its CPC, property,
franchise or rights [Cogeo-Cubao v. CA 207 SCRA 346]
Sec. 16[n] – Suspension of CPC:
Requirement to Entitle a Common Carrier to Increase his Unit
May be done PRIOR to a hearing BUT cannot exceed 30 days
1. He must show that there is a PUBLIC NEED for it, in other
Ground – to avoid serious and irreparable damage or inconvenience
words, he must prove that:
to the public or private interests 2. He had regularly undertaken all his authorized trips
3. His vehicles were sufficiently loaded with pax
Operators of Public Services 4. Many travelers could not be conveniently accommodated
Unlawful Service (Sec. 19[a]) Effect of Sale or Lease of CPC Without Prior Approval of
Regulatory Body:
It shall be unlawful for any public service to:
1. The sale or lease is valid and binding between the parties
 provide or maintain any service that is unsafe, improper, or 2. BUT it is not effective against the regulatory body concerned
inadequate, or 3. The approval is only necessary to protect the public interest
 withhold or refuse any service which can reasonably be 4. The registered owner is liable for damages sustained by a
demanded and furnished 3rd person [regardless of who the actual owner is]

Registered Owner; Conclusive Presumption (1990)

Johnny owns a Sarao jeepney. He asked his neighbor Van ifhe could
operate the said jeepney under Van‗s certificate ofpublic convenience.
Van agreed and, accordingly, Johnnyregistered his jeepney under Van
name. On June 10, 1990,one of the passenger jeepneys operated by
Van bumpedTomas. Tomas was injured and in due time, he filed a
complaint for damages against Van and his driver for theinjuries he
suffered. The court rendered judgment in favorof Tomas and ordered
Van and his driver, jointly andseverally, to pay Tomas actual and moral
damages,attorney‗s fees, and costs.The Sheriff levied on the jeepney
belonging to Johnny butregistered in the name of Van. Johnny filed a
3rd partyclaim with the Sheriff alleging ownership of the jeepneylevied
upon and stating that the jeepney was registered in
the name of Van merely to enable Johnny to make use ofVan‗s
certificate of public convenience. May the Sheriffproceed with the
public auction of Johnny‗s jeepney.Discuss with reasons.

SUGGESTED ANSWER:

Yes, the Sheriff may proceed with the auction sale ofJohnny‗s
jeepney. In contemplation of law as regards thepublic and third
persons, the vehicle is considered theproperty of the registered
operator (Santos v Sibug 104 S 520)

Prescriptive Period [Sec. 28.]

1. 60 days – for violations of orders, decisions and regulations

of the regulatory bodies
2. 180 days – for violations of the provisions of the Public
Service Act

Kabit System - An arrangement whereby:

 a person who has been granted a CPC

 allows another person who owns motor vehicles
 to operate under such franchise
 for a fee

Kabit System – Legal or Not?

1. It is not penalized outright as a criminal offense

2. But it is invariably recognized as contrary to public policy and
therefore VOID and INEXISTENT under Art.1409 of the Civil
Code
3. It is one of the root causes of the prevalence of graft and
corruption in the government transportation offices
 4. It is an abuse of the CPC which is a special privilege granted (1) when the fault, is on the part of both contracting parties, neither
by the government may recover what he has given by virtue of the contract, or demand
the performance of the other's undertaking.
G.R. No. L-26815 May 26, 19810
ADOLFO L. SANTOS, petitioner, vs. The defect of inexistence of a contract is permanent and incurable,
ABRAHAM SIBUG and COURT OF APPEALS, respondents. and cannot be cured by ratification or by prescription. As this Court
MELENCIO-HERRERA, J.: said in Eugenio v. Perdido, 2 "the mere lapse of time cannot give
efficacy to contracts that are null void."
s the public and third persons 7 even if the vehicle involved in the accident had been sold to another where such sale had not been approved by the then Public Service Commission. 8 For the
The principle of in pari delicto is well known not only in this jurisdiction
but also in the United States where common law prevails. Under
American jurisdiction, the doctrine is stated thus: "The proposition is
universal that no action arises, in equity or at law, from an illegal
contract; no suit can be maintained for its specific performance, or to
recover the property agreed to be sold or delivered, or damages for its
property agreed to be sold or delivered, or damages for its violation.
The rule has sometimes been laid down as though it was equally
universal, that where the parties are in pari delicto, no affirmative relief
of any kind will be given to one against the other." 3 Although certain
exceptions to the rule are provided by law, We see no cogent reason
why the full force of the rule should not be applied in the instant case.

Kabit System (2005)

Discuss the ―kabit system‖ in land transportation and itslegal

consequences. (2%)\

SUGGESTED ANSWER:

The kabit system is an arrangement where a persongranted a

certificate of public convenience allows otherpersons to operate their
motor vehicles under his license,for a fee or percentage of their
earnings (Lim v. Court of Appealsand Gonzalez, G.R, No. 125817,
January 16, 2002, citing BaliwagTrannit v. Court of Appeals, G.R. No.
57493, January 7, 1987) Thelaw enjoining the kabit system aims to
identify the personresponsible for an accident in order to protect the
ridingpublic. The policy has no force when the public at large is
neither deceived nor involved.

The law does not penalize the parties to a kabit agreement.But the
kabit system is contrary to public policy and therefore void and
No. L-64693 April 27, 1984 LITA ENTERPRISES, INC., petitioner, inexistent.(Art. 1409[1], Civil Code)
vs.
OND CIVIL CASES DIVISION, INTERMEDIATE APPELLATE COURT, NICASIO M. OCAMPO and FRANCISCA P. Kabit System; Agent of the Registered Owner (2005)
GARCIA, respondents.
Procopio purchased an Isuzu passenger jeepney fromEnteng, a holder
ESCOLIN, J.:
of a certificate of public convenience forthe operation of public utility
vehicle plying theCalamba-Los Baños route. While Procopio
nferred by the government . Abuse of this privilege by the grantees thereof cannot be countenanced.continuedoffering
The "kabit system"the
hasjeepney for public
been Identified transport
as one of the services,
root causesheofdid
the prevalence of gr
not have the registration of the vehicle transferred in hisname. Neither
did he secure for himself a certificate ofpublic convenience for its
where it finds them. Upon this premise, it was flagrant error on the part of both the trial and appellateoperation. Thus,
courts to have per thethe
accorded recordsof the Land
parties relief from Transportation Franchising
their predicament. Article 1412 of the Ci
and RegulatoryBoard, Enteng remained its registered owner and
operator.One day, while the jeepney was traveling southbound,
itcollided with a ten-wheeler truck owned by Emmanuel.
The driver of the truck admitted responsibility for theaccident,
explaining that the truck lost its brakes.Procopio sued Emmanuel for
damages, but the lattermoved to dismiss the case on the ground that
Procopio isnot the real party in interest since he is not the registered
owner of the jeepney. Resolve the motion with reasons.(3%)

SUGGESTED ANSWER:

The motion to dismiss should be denied because Procopio,as the real

owner of the jeepney, is the real party in interest.Procopio falls under
the Kabit system. However, the legalrestriction as regards the Kabit
system does not apply inthis case because the public at large is not
deceived norinvolved. (Lim v. Court of Appeals, G.R. No. 125817,
January16, 2002, citing Baliwag Transit v. Court of Appeals, G.R. No.
57493, January 7, 1987)In any event, Procoprio is deemed to be "the
agent" of theregistered owner. (First Malayan Leasing v. Court of
Appeals,G.R. No. 91378, June 9,1992; and "F" Transit Co., Inc.
v.NLRC, G.R. Nos, 88195-96, January 27, 1994)
 Boundary System transfer to public ownership utilities and other private enterprises to be operated by the Government

An arrangement between:

1. the owner of a motor vehicle who holds a CPC, and Art. XII. Sec. 19.
2. the driver who uses the motor vehicle for a fixed number
of hours and pays to the owner a fixed amount and The State shall regulate or prohibit monopolies when the public interest
shoulders the gasoline used so requires.

The share of the driver in lieu of a fixed compensation is the excess of No combinations in restraint of trade or unfair competition shall be
the total amount of fares earned or collected over and above the allowed.
amount paid to the owner

It is a contract of employment between:

1. the owner of the public utility, and

2. the driver

Boundary System (2005)

Baldo is a driver of Yellow Cab Company under theboundary system.

While cruising along the SouthExpressway, Baldo‗s cab figured in a
collision, killing his passenger, Pietro. The heirs of Pietrosued Yellow
Cab Company for damages, but the latterrefused to pay the heirs,
insisting that it is not liablebecause Baldo is not its employee. Resolve
with reasons.(2%)

SUGGESTED ANSWER:

Yellow Cab Company shall be liable with Baldo, on asolidary basis, for
the death of passenger Pietro. Baldo isan employee of Yellow Cab
under the boundary system.As such, the death of passenger Pietro is
breach ofcontract of carriage, making both the common carrierYellow
Cab and its employee, Baldo, solidarily liable.(Hernandez v. Dolor,
G.R, No. 160286, July 30, 2004)

Constitutional Provisions

Art. XII Sec. 11 – Filipinization

No franchise, certificate, or any form of authorization for the operation

of a public utility shall be granted except to citizens of the RP or to
corporations or association organized under the laws of the RP at least
60% of whose capital is owned by such citizens, nor shall such
franchise, certificate, or authorization be exclusive in character or for a
longer period than 50 years.

Neither shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal by
the Congress when the common good so requires.

The State shall encourage equity participation in public utilities by the

general public.

The participation of foreign investors in the governing body of any

public utility enterprise shall be limited to their proportionate share in its
capital, and all the executive and managing officers of such
corporation or association must be citizens of the Philippines.

Art. XII. Sec. 17.

In times of national emergency, when the public interest so requires,

the State may, during the emergency and under reasonable terms
prescribed by it, temporarily take over or direct the operation of any
privately owned public utility or business affected with public interest.

tionalization

e interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation,