BASIC CONCEPTS OF TRANSPORTATION

CARRIAGE OF PASSENGERS
 A person is still considered a passenger even if he is being carried gratuitously or under a reduced fare.
Subject to the rule in Art.1758 of CC that provides that when a passenger is carried gratuitously (reduced
fare not included), a stipulation limiting the common carrier’s liability for negligence is valid.
 In a breach of contract of carriage, it is the injured passenger, if of legal age, who can file an action. Not
the parents. (Baliwag Transit Corp v CA)
 There may be cases when the party who contracted with the carrier is not the passengers (e.g.,
employers or school hiring services of a bus) In which case, the party to the contract are the
school/employer and the carrier.
 PERFECTION
o By mere consent – consensual contract. Issuance of ticket not required.
 There is perfected contract of carriage if it can be established that the passenger had checked-in, passed
through customs and immigrated, boarded the shuttle bus, proceeded the ramp of the aircraft and that
his baggage had already been loaded in the aircraft. (Korean Airlines Co. Ltd v CA) (p8 book)
 CONTINUING OFFER RULE, in buses, jeepneys and street cars: it is the duty of the drivers to stop their
conveyances for a reasonable length of time in order to afford passengers an opportunity to board and
enter and they are liable for injuries suffered from the sudden starting up of the carrier.
 TRAINS: A person who wants to board a train must:
o purchase a ticket and must present himself at the proper place and in a proper manner for
transportation; or
o must have a bona fide intention to use the facilities of the carrier, possess sufficient fare with
which to pay for his passage, and present himself to the carrier for transportation in the pace and
manner provided. (not sure pa)
o Otherwise, he will not be considered a passenger.
o Remember Light Rail Transit Authority v Marjorie Natividad? The passenger who having
purchased a “token” fell while he was on the platform waiting for a train. Breach of contract of
carriage. (p.9 book) while the deceased might not have then as yet boarded the train, a contract
of carriage theretofore had already existed when the victim entered the place where passengers
were supposed to be after paying the fare and getting the corresponding token therefor. The law
requires common carriers to carry passengers safely using the utmost diligence of very cautious
persons with due regard for all circumstances. Such duty of a common carrier to provide safety to
its passengers so obligates it not only during the course of the trip but for so long as the
passengers are within its premises and where they ought to be in pursuance to the contract of
carriage.

CARRIAGE OF GOODS
 Parties are the shipper and carrier
 When Consignee is bound?
o If he is also the shipper
o When a consignee, although not a signatory to the contract of carriage between the shipper and the
carrier, becomes a party to the contract by reason of either:
 The relationship of agency between the consignee and the shipper/consignor; or
 The unequivocal acceptance of the bill of lading delivered to the consignee., with full
knowledge of its contents (there is manifest acceptance); or
 Availment of the stipulation pour autrui, i.e., when the consignee, a third person, demands
before the carrier the fulfillment of the stipulation made by the consignor/shipper in the
consignee’s favor, specially the delivery of the goods/cargoes shipped. (MOF Company Inc v
Shin Yan Brokerage Corp) (p.5 book)
o Consignee became a party when he sued the carrier
 PERFECTION
 Real contract – for not until the facilities of the carrier are actually used can the carrier be said to
have already assumed the obligation of the carrier.
 TEST: is the control and possession of the cargo been completely surrendered by the shipper to the
carrier?
 Where the carrier company sent a local vessel (lighters) to pick-up the cargo of the shipper at the latter’s
place free of charge, which is then to be transferred to a larger vessel which will be transporting the
cargos to the agreed destination, the contract of carriage is already perfected when the cargo was in
possession of the carrier regardless it is still not in the final vessel (for lack of better term) for such is a
preparatory step and a part and parcel of said contract of carriage. The fact that the carrier sent its
lighters free of charge to take the cargo from Macleod’s wharf at Sasa preparatory to its loading onto the
ship Bowline Knot does not in any way impair the contract of carriage already entered by the shipper and
carrier. (p.7 book)

GENERAL NOTES
 The presence of a ticket or a bill of lading or any written contract is not necessary for the perfection of
the contract of carriage.
 Bill of lading is not essential to the contract, although it may become obligatory by reason of the
regulations of railroad companies, or as a condition imposed in the contract by the agreement of the
parties themselves. Nevertheless, the bill of lading is juridically a documentary proof of the stipulations
and conditions agreed upon by the parties.
 COMMON CARRIER
 The concept of “common carrier” may be seen to coincide neatly with the notion of “pubic service”
under the Public Service Act (CA 141) that at least partially supplements the law on common carrier.
o (b) The term "PUBLIC SERVICE" includes every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general 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 vehicle, either for
freight or passenger, or both with or without fixed route and whether may be its classification,
freight or carrier service of any class, express service, steamboat or steamship line, pontines,
ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard,
marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant,
canal, irrigation system, gas, electric light, heat and power water supply and power, petroleum,
sewerage system, wire or wireless communications system, wire or wireless broadcasting stations
and other similar public services…”
 TEST to be considered common carrier:
o “the TRUE TEST FOR A COMMON CARRIER is not the quantity or extent of the business actually
transacted, or the number and character of the conveyances used in the activity, but whether
the undertaking is a part of the activity engaged in by the carrier that he has held out to the
general public as his business or occupation. If the undertaking is a single transaction, not a part
of the general business or occupation engaged in, as advertised and held out to the general
public, the individual or the entity rendering such service is a private, not a common, carrier.
The question must be determined by the character of the business actually carried on by the
carrier, not by any secret intention or mental reservation it may entertain or assert when
charged with the duties and obligations that the law imposes.” (Sps. Perena v Sps. Nicolas)
 CHARACTERISTICS (p.14 book)
o Article 1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity
(sideline). (De Guzman vs. CA)
o Article 1732 makes no distinction between an enterprise offering transportation on a regular or
scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.
(Ibid)
o Article 1732 does not distinguish between a carrier offering its services to the “general public”
and one who offers services or solicits business only from a narrow segment of the population
(Ibid)
o A person or entity is a common carrier and has the obligations of the common carrier under the
Civil Code even if he did not secure a Certificate of Public Convenience. (Ibid)
o The Civil Code makes no distinction as to the means of transporting, as long as it is by land,
water or air. (First Phil Industrial Corp v CA)
o The Civil Code does not provide that the transportation should be by motor vehicle.
o A person or entity may be a common carrier even if he has no fixed and publicly known route,
maintains no terminals, and issues no tickets. (Asia Lighterage and Shipping Inc v CA)
o A person or entity need not be engaged in the business of public transportation for the
provisions of the Civil Code on common carriers to apply to them. (Fabre Jr v CA)
 Additional Cases:
o It is not always necessary, to be a PUBLIC SERVICE, that an organization be dedicated to
public use, i.e., ready and willing to serve the public as a class. It is only necessary that it must
in some way be impressed with a public interest ; and whether the operation of a given
business is a PUBLIC UTILITY depends upon whether or not the service rendered by it is of a
public character and of public consequences and concern. Thus, a business may be affected
with public interest and regulated for public good although not under any duty to serve the
public. (Luzon Stevedoring Co. Inc. v The Public Service Commission)(p15 book)
 Limited Clientele
o Although the clientele is limited, the regularity of the activities of a carrier may indicate that the
same carrier is a common carrier. (Luzon Brokerage Company v Public Service Commission)
o A public utility may not evade control and supervision of its operation by the government by
selecting its customers under the guise of private transactions.
 AS DISTINGUISHED FROM PRIVATE CARRIER
o Private Carrier – requires only ordinary diligence of a good father of a family; no presumption of
negligence; may disclaim any responsibilities for the acts or omissions of the driver or defective
condition of the engine. (p.30)

CONSIDERED AS COMMON CARRIER

 ANCILLARY BUSINESS
o Beach resort that accepts clients by virtue of a tour package-contracts that included
transportation to and from the Resort and the point of departure in Batangas. The ferry
services are so intertwined with its main business as to be properly considered ancillary
thereto. (Sps. Cruz v Sun Holidays Inc.)
o Junk dealer that utilize two six-wheeler trucks that he owned for hauling the scrap materials to
Manila. On the return trip, the dealer would load his vehicles with cargo at a lower freight rates
than the commercial rates. Thus, even if the transportation of goods was ancillary to the main
business of buying and selling scrap metals, he is a common carrier. (De Guzman v CA)
 LIMITED CLIENTELE
o Customs Broker that has been receiving, depositing and delivering goods discharged from ships
at the pier to its customers regardless that it was rendering transportation service for
compensation to a limited clientele, not to the public at large.
o School Bus Operators (Sps. Perena v Sps. Nicolas)
o Airport Free Shuttle Operator – Although the entity is not paid directly by the passengers,
payment is still made to the entity directly by the airport agency or appropriate government
agency and indirectly by the public through airport gees and/or taxes.
 MEANS OF TRANSPORTATION
o Pipeline Operators even if the oil or petroleum products are being transported not through
motor vehicles but through pipelines. (First Phil Industrial Corp v CA)

CHARTERING
 EFFECT OF CHARTER PARTY
Time Charter
Contract of Affreightment
(COMMON CARRIER)
Voyage Charter
Charter Parties
Charter by Demise or Bareboat Charter
(PRIVATE CARRIER)

o The fact that it did not own the vessel it decided to use to consummate the contract of carriage
(voyage charter) did not negate its character and duties as common carrier. The MCCII
(charterer) could not be expected to inquire about the ownership of the vessels which
petitioner carrier offered to utilize. (p.26 book)
o While it is true that a bill of lading may serve as contract of carriage between the parties, it
cannot prevail over the express provision of the voyage charter that MCCII and petitioner
executed. – because petitioner in this case is not the one who issued the bill of lading but the
owner of the boat that is why petitioner argued that it should be the boat owner and not him
who should be liable for the value of the cargos. (p.27 book)
 COMMON CARRIER DISTINGUISHED FROM OTHER CONTRACTS
 TOWAGE
o One vessel is hired to bring another vessel to another place.
o Private carrier
o It does not follow, however, that a corporation that operates its business using tugboats that
pulls barges is engaged in mere towage. The circumstances may indicate that the corporation
is engaged in business as common carrier. (p.31)
o IN SUIT FOR COMPENSATION FOR TOWAGE, WHO ARE ENTITLED TO RECOVER?
 If what is involved is TOWAGE, it is the shipowner who is entitled for compensation.
 If what is involved is SALVAGE, it is the members of the crew of the vessel performing
the salvage. (p.32)
 ARRASTRE
o Hauling of cargo; handling of cargo on the wharf or between the establishment of the
consignee or shipper and the ship’s tackle. The responsibility last until the delivery of the
cargo to the consignee. Longshoremen usually perform the service.
o Functions of an arrastre operator have nothing to do with the trade and business of
navigation, nor to the use or operation of vessels. They are, in fact, no different from those
of a depositary or warehouseman.
 In Summa Insurance Corporation v CA and Port Service, the SC imposed a higher
degree of diligence (extraordinary diligence) on the arreste operator explaining
that being 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. (p.33)
o JOINT TORTFEASORS: where the arrastre operator was the one that actually unloaded the
cargoes from the vessel, the arrastre operatoir and the carrier were made solidarily liable
when the cargoes fell while being unloaded. The carrier’s obligation to exercise due
diligence remained until actual delivery to the consignee.
o VALID STIPULATION:
 That the liability of the arrastre operator is limited to a certain amount unless the
value of the importation is otherwise specified or communicated in wring together
with the invoice value and supported by a certified packing list to the arrastre
operator by the interested party before the arrival of the goods.
 Requiring consignee to inform the arrastre operator and give an advance notice of
actual invoice value of the goods to be put in its custody is valid.
 Purpose? Not to determine the degree of care it must exercise but to
determine its liability so that it may obtain compensation commensurable
to the risk it assumes. (p.34)
 STEVEDORING
o Refers to the handing of cargo in the holds of the vessel or between the ship’s tackle and
the holds of the vessel.
o Function of stevedores involves the loading and unloading of coastwise vessels calling at
the port.
o Responsibility ends upon the loading and stowing of the cargo in the vessel.
o Private Carrier
 TRAVEL AGENCY
o NOT A COMMON CARRIER
o Contract between the travel agency and the passenger is a contract of service and not a
contract of carrier.
o However, the travel agency and the carrier may be made jointly and severally liable.
(Cathay Pacific Airways v Reyes) (p.36)
 TRAM SERVICE AND LINE SERVICE
o TRAM SERVICE – operation of contract carrier which has no regular and fixed routes and
schedules but accepts cargo wherever and whenever the shipper desires, is hired on a
contractual basis, or chartered by any one or few shippers under ,mutually agreed terms
and usually carries bulk or break bulk cargoes.
 Nevertheless, those engaged in “Tramp Service” may also be considered
common carriers depending on the circumstances. (p.37)
o LINE SERVICE – operation of a COMMON CARRIER which publicly offers services without
discrimination to any user, has regular ports of call/destination, fixed sailing schedules and
frequencies and published freight rates and attendant charges and usually carries multiple
consignments.