TRANSPORTATION LAW

Kyla Ellen Calelao

COMMON CARRIER
Definition: Any person, corporation, 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 (Art. 1732)
Elements of a common carrier:
a. persons' corporations, firms or associations
b. engaged in the business of carrying or transporting passengers, goods or both
c. means of carriage is by land, water or air
d. the carrying of passengers, goods or both is for compensation
e. the service is offered to the public without distinction.
CHARACTERISTICS
1. ANCILLARY BUSINESS: 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, L-
47822]
6. The Civil Code does not provide that the transportation should be by motor vehicle.
[First Philippine Industrial Corporation vs CA, 125948]
7. 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. vs CA, 147246]
8. A person or entity need not be engaged in the business of public transportation for
the provisions of the Civil Code on common carrier to apply to them. [Fabre vs. CA,
111127]
9. The carrier can also be a common carrier even if the operator does not own the
vehicle or vessel that he operates or has to actually hire one. [Torres-Madrid
Brokerage vs FEB Mitsui Marine Insurance, 194121; Cebu Salvage Corporation vs
Philippine Home Assurance, 150403]
10. The carrier can also be a common carrier even if the operator sub-contracts the
carriage of goods to another entity. [Torres-Madrid Brokerage vs FEB Mitsui Marine
Insurance, 194121]

2. Article 1732 avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service
CASES:
on an occasional, episodic or unscheduled basis. [De Guzman vs CA, L-47822]
1. Carriers that provide bus service to schoolchildren are common carriers. The
3. Article 1732 does not distinguish between a carrier offering its services to the
clientele of the school buses is limited to students of particular schools where their
general public, i.e., the general community or population, and one who offers
passengers study. Despite catering to a limited clientele, the petitioners operated as
services or solicits business only from a narrow segment of the general population.
a common carrier because they held themselves out as a ready transportation
[De Guzman vs CA, L-47822]
indiscriminately to the students of a particular school living within or near where
they operated the service and for a fee. The Court concluded that the petitioners as
4. A person or entity is a common carrier and has the obligations of the common
the operators of a school bus service were: a.) engaged in transporting passengers
carrier under the Civil Code even if he did not secure a Certificate of Public
generally as a business, not just as a casual occupation; b.) undertaking to carry
Convenience. [De Guzman vs CA, L-47822]
passengers over established roads by the method by which the business was
5. The Civil Code makes no distinction as to the means of transporting, as long as it is conducted; and c.) transporting students for a fee. [Sps. Penera vs Sps. Zarate,
by land, water, or air. [First Philippine Industrial Corporation vs CA, 125948] 157917]
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2. Pipeline operators are common carriers. Such operators are common carriers even
if the oil or petroleum products are being transported not through motor vehicles
but through pipelines. The petitioner is a common carrier because it is engaged in
the business of transporting or carrying goods; i.e.; petroleum products, for hire as a
public employment. It undertakes to carry for all persons indifferently, that is, to all
persons who choose to employ its services and transports the goods by land and for
compensation. The fact that the petitioner has a limited clientele does not exclude it
from the definition of a common carrier. [First Philippine Industrial Corporation vs
CA, 125948]
3. Customs brokers have been regarded as common carriers if transportation of
goods is an integral part of their business. A broker may be contracted to facilitate,
process and clear the shipments form the customs authorities, withdraw them from
the pier, then transport and deliver them to the consignee. [Loadmaster Customs
Services vs Global Brokerage Corporation, 179446]
4. Operators of barges operator may be engaged in lighterage or drayage. The
petitioner was also involved in the business of carrying goods through its barges. It
has no fixed and publicly known route, maintains no terminals, and issues no tickets.
The principal business of the petitioner is that of lighterage and drayage and it offers
its barges to the public for carrying or transporting by water for compensation. A
common carrier need not have a fixed and publicly known route, nor does it have to
maintain terminals or issue tickets. [Asia Lighterage and Shipping vs CA, 147246]
5. Freight forwarder refers to a firm holding itself out to the general public (other than
as a pipeline, rail, motor, or water carrier) to provide transportation of property for
compensation and, in the ordinary course of its business, 1.) to assemble and
consolidate, or to provide for assembling and consolidation, shipments, and to
perform or provide for break-bulk and distribution operations of the shipments; 2.)
to assume responsibility for the transportation of goods form 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. A freight forwarder’s
liability is limited to damages arising from its own negligence in choosing the
carrier, however, where the forwarder contracts to deliver goods to their
destination instead of merely arranging for their transportation, it becomes liable
as a common carrier for loss or damage to goods. [Unsworth Transport
International vs CA, 166250]
6. Operator of a 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 is considered a common carrier. Its ferry services are so intertwined with
its main business as to be properly considered ancillary thereto. The constancy of
the operator’s ferry services in its resort operations is underscored by it having its
own boats. The tour packages it offers, which include the ferry services, may be
availed by anyone who can afford to pay the same. These services are available to
the public. [Sps. Cruz vs Sun Holidays, 186314]
7. In a time or voyage charter, in contrast to a bareboat charter, the ship remains a
common or public carrier. A shipowner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be the
property of the charterer. [Planters Products vs CA, 101503]
8.
LAWS GOVERNING TRANSPORTATION CONTRACT
Law of the country of destination: ART. 1753, NCC. The law of the country to which the
goods are to be transported shall govern the liability of the common carrier for their
loss, destruction or deterioration.
ART. 1766. In all matters not regulated by the Civil Code, the rights and obligations of
common carriers shall be governed by the Code of Commerce and by special laws, such
as the COGSA.
a.) The New Civil Code, not COGSA, is still the primary law in international shipment of
goods by sea from a foreign country to the Philippines.
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b.) However, in the case of co-loading and cabotage under RA 10668, the COGSA is the
primary law. The reason for this is that the foreign vessel engaged in cabotage and
co-loading is not considered a common carrier under the special law.
PRIVATE CARRIER
A private carrier is one who, without making the activity a vocation, or without holding
himself or itself to the public as ready to act for all who may desire his or its services, to
transport goods or persons from one place to another either gratuitously or for hire.
[Perena vs Zarate]
The extent of a private carrier’s obligation is dictated by the stipulations of a contract it
entered into, provided its stipulations, clauses, terms and conditions are not contrary to law,
morals, good customs, public order, or public policy. [Malayan Insurance vs Philippines First
Insurance]
COMMON CARRIER DISTINGUISHED FROM PRIVATE CARRIER
A. What law governs: The provisions on ordinary contracts of the Civil Code govern the
contract of private carriage. The provisions on common carriers of the Civil code,
the Public Service Act, and other special laws relating to transportation govern
contracts of common carriage
B. Due diligence: The diligence required of a private carrier is that of a good father of a
family. A common carrier is required to observe extraordinary diligence, and is
presumed to be at fault or to have acted negligently in case of loss of the effects of
passengers, or the death or injuries to passengers.
C. Clientele: private carriage does not involve the general public.
D. Note: While a common carrier cannot stipulate that it is exempt from liability for the
negligence of its agents or employees, a private carrier may validly enter into such
stipulation. The stipulation involving a common carrier is void for being contrary to
public policy. There is no presumption on the part of the private carrier.
-A stipulation with private carrier that would disclaim responsibility for simple
negligence of the carrier’s employees is a valid stipulation. Such stipulation,
however, will not hold in case of liability for gross negligence or bad faith.
WHEN CAN COMMON CARRIER BE CONVERTED INTO PRIVATE CARRIER
A charter party may transform a common carrier into a private carrier. It must be a bareboat
or demise charter where the charter mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated. The common carrier is not
transformed into a private carrier if the charter party is a contract of affreightment like a
voyage charter or a time charter.
a.) Contract of affreightment involves the use of shipping space on vessels leased by
the owner in part or as a whole, to carry goods for others.
a.1.) Time charter- the vessel is leased to the charterer to a fixed period of
time.
a.2.) Voyage charter- the ship is leased for a single voyage.
b.) Charter by demise or bareboat charter, by the terms of which the whole vessel is let
to the charterer with a transfer to him of its entire command and possession and
consequent control over its navigation, including the master and the crew, who are
his servants.
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and he will then become entitled to the same rights in regard to the goods as he would have
had if he had never parted with the possession. The right is available if:
DILIGENCE REQUIRED OF COMMON CARRIERS
1. The buyer of goods is or becomes insolvent;
Extraordinary diligence: ART. 1733. Common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence in the vigilance 2. The unpaid seller has parted with the possession of the goods; and
over the goods and for the safety of the passengers transported by them, according to all
the circumstances of each case. 3. The goods are still in transit

Note: Failure to exercise extraordinary diligence will result in breach of the obligation of the
carrier through negligence.
PRESUMPTION OF NEGLIGENCE
Meaning of Extraordinary Diligence: Extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to know and to follow the required In case of loss of effects or cargo or passengers or death or injuries to passengers, the
precaution for avoiding damage to, or destruction of the goods entrusted to it for safe common carrier is presumed to be at fault or to have acted negligently unless he had
carriage and delivery. It requires common carriers to render service with the greatest skill observed extraordinary diligence in the vigilance thereof. (ART. 1736 and ART. 1756)
and foresight and to use all the reasonable means to ascertain the nature and characteristics
of goods tendered for shipment, and to exercise due care in the handling and stowage, The presumption of negligence arises as long as there is evidence showing that:
including such methods as their nature requires. [Compania Maritima vs CA, L-31379]
1. There exists a contract between the passenger or the shipper and the common
Duration to exercise extraordinary diligence in a contract of carriage of goods: ART. 1736, carrier; and
NCC. The obligation to exercise extraordinary diligence commences from the time the goods
2. That the loss, deterioration, injury or death took place during the existence of the
are unconditionally placed in the possession of, and received by the carrier for
contract.
transportation and ends when the goods are delivered, actually or constructively, by the
carrier to the consignee or to the person who has a right to receive them.
Once the requisites are established, the burden shifts to the common carrier to prove its
observance of extraordinary diligence. Unless the presumption is rebutted, the court need
Note: the common carrier’s duty to observe extraordinary diligence over the goods remains
not even make an express finding of fault or negligence on the part of the common carrier.
in full force and effect even when they are temporarily unloaded or stored in transit. (ART.
1737, NCC). This means that the goods have not yet been delivered to the consignee and
Note: Mere proof of delivery of the goods in good order to a common carrier and of their
that the voyage of the carrier will resume.
arrival in bad order at their destination constitutes a prima facie case of negligence against
the carrier. [Unsworth Transport vs CA, 166250]
Exception of Art. 1737: STOPPAGE IN TRANSITU: extraordinary diligence need not be
exercised over the goods that are unloaded temporarily if the shipper owner has made use
DEFENSES OF COMMON CARRIER IN CASE OF LOSS, DESTRUCTION OR DETERIORATION OF
of the right of stoppage in transitu. The right of stoppage in transitu is the right of an
THE GOODS:
unpaid seller to resume possession of the goods at any time while the goods are in transit,
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Kyla Ellen Calelao
1. Flood, storm, earthquake, lightning and other natural disaster and calamity;
2. Acts of the public enemy at war, whether international or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the packaging of the goods in the packing or in the containers;
5. Order or act of the competent authority; and
6. Exercise of extraordinary diligence
FORTUITUOS EVENT
Fortuitous event, to be a valid defense, must be established to be the proximate cause of
the loss. Fortuitous event may be produced by two general causes, that is, by nature and by
acts of man like armed invasion, attacks of bandits, governmental prohibition and armed
robbery.
Requisites of fortuitous event in order for the carrier to properly invoke fortuitous events
as a defense:
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 that constitutes the caso fortuito, or if it
can be foreseen, it must be impossible to avoid.
3. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner.
4. The obligor (debtor) must be free from any participation in or the aggravation of the
injury resulting to the creditor.
Natural disaster: The carrier will be excused from liability if the natural disaster is the
proximate and only cause of the loss. The common carrier must prove that it did not
contribute to the occurrence of the incident due to its own or its employees’ negligence.
When the loss is caused by the act of God, if the negligence of the common carrier mingles
with it as an active and cooperative cause, the common carrier is still liable.
ART. 1739. In order that the common carrier may be exempted from responsibility, the
natural disaster must have been the proximate and only cause of the loss. However, the
common carrier must exercise due diligence to prevent or minimize loss before, during and
after the occurrence of flood, storm or other natural disaster in order that the common
carrier may be exempted from liability for the loss, destruction, or deterioration of the
goods. The same duty is incumbent upon the common carrier in case of any act of the public
enemy referred to in Art. 1734, No.2.
Case: M/V Princess of the Orient, a passenger vessel owned and operated by Sulpicio lines
sank. The carrier was made liable even if there was a storm because the immediate and
proximate cause of the sinking of the vessel had been the gross negligence of its captain in
maneuvering the vessel. [Sulpicio Lines vs Sesante, 172682]
Fire: Fire is not considered a natural disaster or calamity.
Case: The smoke came from these hatches but it was only after 24 hours that they started
opening the hatches and fighting the fire. Also, after the cargoes were stored in the hatches,
no regular inspection was made as to their condition during the voyage. Consequently, the
crew could not even have even explained what could have caused the fire. The carrier failed
to satisfactorily show that extraordinary vigilance and care had been made by the crew to
prevent the occurrence of the fire.
Hijacking: Hijacking of the carrier does not fall among the five categories of exempting
causes. The carrier’s vehicle must be dealt with under Art. 1735, NCC- the commo carrier is
presumed at fault or to have acted negligently unless there is a proof of extraordinary
diligence on its part of the common carrier. To exculpate the carrier from liability arising
from hijacking, the common carrier must prove that the robbers or the hijackers acted with
grave or irresistible threat, violence or force. [De Guzman cs CA,
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Kyla Ellen Calelao
Theft/Robbery: Generally, theft or robbery of the goods is not considered a fortuitous event
or a force majeure. Exception: A common carrier may absolve itself of liability for a resulting
loss: 1.) If it proves that it exercised extraordinary diligence in transporting and safekeeping
the goods; or 2.) if it stipulated with the shipper/owner of the goods to limit its liability for
the loss, destruction, or deterioration of the goods to a degree less than extraordinary
diligence; or 3.) if a robbery attended by “grave or irresistible threat, violence or force”
under Art. 1745, NCC.
Note: there is no fortuitous event if it was the employee of the carrier who stole the cargo.
Thus, the carrier was made liable when it failed to deliver the soya beans to the shipper
because the carrier’s driver absconded with them. The loss of the soya beans was not
attended by grave or irresistible threat, violence or force. Instead, it was brought about by
the carrier’s failure to exercise extraordinary diligence when the carrier neglected vetting its
driver or providing security for the cargo and failing to take out insurance on the shipment’s
value. [Tan vs Great harvest Enterprises, 220400]
Mechanical Defects: Damage or injury that can be traced to mechanical defects is not a
damage or injury that is caused by fortuitous event. Thus, carrier is liable. [Necesito vs Paras,
L-10605]
Tire Blowouts: the rule on mechanical defects applies to “tire blow-outs”.
PUBLIC ENEMY
General Rule: Public enemy pre-supposes the existence of an actual state of war, and refers
to the government of a foreign nation at war with the country to which the carrier belongs,
though not necessarily with that to which the owner of the goods owes allegiance.
Exceptions: Acts of pirates on high seas are included in the exception under Art. 1734 (3)
even there is no declaration of a state of war.
Civil war: there is also public enemy “when the parties in rebellion occupy and hold in a
holistic manner a certain portion of territory, when they have declared their independence,
cast off their allegiance, and have in the field a regularly organized force in armed hostility
to the government, and the authority of the latter is for the time overthrown, such an
uprising may take on the dignity of a civil war, and when so magnified and matured, the
parties are belligerents and respectively entitled to belligerent rights.
In order that the common carrier may be exempted from responsibility, the act of the public
enemy must have been the proximate and only cause of the loss.
NATURE OF GOODS AND IMPROPER PACKAGING
The carrier is not responsible if the loss occurs because of the inherent nature of the
shipment.
Case: Soybean meals: the carrier is not responsible for the shortage in the cargo if there will
be, because of its nature, an inevitable decrease in its weight during the voyage. The
soybean meals were transported from the US to Manila. The carrier was not made
responsible for the shortage because soybean meals are hygroscopic materials that will
either lose (desorb) or gain (adsorb) moisture from the surrounding air. Taking into
consideration the phenomenon of desorption, the change in temperature surrounding the
soybean meal from the time it left wintertime in the US and the time it arrived in Manila and
the fact that voyage up to the point of unloading was 36 days, the shipment could have
definitely lost weight, corresponding to the amount of moisture it lost during transit. [Asian
Terminals vs Simon Enterprises, 177116]
The defense that the damage was due to the way the goods were packaged may fail if there
is no proof that the defect in the package already existed at the time the carrier accepted
the same.
The carrier must receive the goods under protest; the acceptance with reservation
regarding such defect which must be duly noted in the bill of lading. If the carrier accepted
the cargo without reservation or without protest with respect to the alleged defective
packages, it can be inferred that there was no damage to the package at the time of
acceptance of the cargo. The same is true if the carrier issues a ‘clean bill of lading’. [A.F.
Sanchez Brokerage cs CA]
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Note: if the fact of improper packaging is known to the carrier or its servants, or apparent
upon ordinary observation, but the carrier accepts the goods notwithstanding such
condition, it is not relieved of liability for loss or injury resulting therefrom. The carrier must
exercise due diligence in forestalling or lessening the loss.
Art. 1742: even if the loss, destruction, or deterioration of the goods should be caused by
the character of the goods, or the faulty nature of the packaging or of the containers, the
common carrier must exercise due diligence to forestall or lessen the loss.
ORDER OF PUBLIC AUTHORITY
An order of a public authority may be used to excuse liability only if the public authority who
issued the order is duly authorized to issue the order. Hence, the defense is not available if:
1. the public authority has no authority to issue the subject order; or 2. If the public
authority exceeded his authority.
Art. 1743. If through the order of public authority, the goods are seized or destroyed, the
common carrier is not responsible, provided said public authority had power to issue the
order.
Neither the carrier nor the ship shall be responsible for loss or damage resulting from
“arrest or restraint of princes, rulers or people, or seizure under legal process” and from
”quarantine restrictions.” (COGSA)
ACTS OF THE SHIPPER OR THE PASSENGER
If the act or omission of the shipper or owner of the goods or the passenger is the proximate
and only cause of the damage, then the common carrier is not liable.
Contributory negligence of the shipper: contributory negligence on the part of the shipper
is not a defense that will excuse the carrier from liability. It will only mitigate such liability.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or
deterioration of the goods, the proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages, which however, shall be equitably
reduced.
STIPULATION ON LIMITATIONOF LIABILITY OF COMMON CARRIER
ART. 1744. A stipulation between the common carrier and the shipper or owner limiting the
liability of the former for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence shall be valid, provided it be:
1. In writing, signed by the shipper or owner;
2. Supported by a valuable consideration other than the service rendered by the
common carrier; and
3. Reasonable, just and not contrary to public policy.
ART. 1745. Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
1. That the goods are transported at the risk of the owner or shipper;
2. That the common carrier will not be liable for any loss, destruction or deterioration
of the goods;
3. That the common carrier need not observe any diligence in the custody of the
goods;
4. That the common carrier shall exercise a degree of diligence less than that of a good
father of a family, or of a man of ordinary prudence in the vigilance over the
movables transported;
5. That the common carrier shall not e responsible for the acts or omissions of his or its
employees;
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6. That the common carrier’s liability for acts committed by thieves, or of robbers who
do not set with grave or irresistible threat, violence or force, is dispensed with or
diminished;

7. That the common carrier is not responsible for the loss, destruction, or
deterioration of goods on account of the defective condition of the car, vehicle,
ship, airplane or other equipment used in the contract of carriage.

TRANSPORT NETWORK CORPORATION (TNC): an organization whether a corporation,

partnership or sole proprietorship that provides pre-arranged transportation services
for compensation using an internet-based technology application or digital platform
technology to connect passengers with drivers using their personal vehicles.

DOCTRINES:

1. Limited Liability Doctrine: Art. 587 of the Code of Commerce 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, Art. 587 does not apply. Such s
situation will be covered by the New Civil Code on common carriers.

-Common carriers are 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. Whenever death or injury to a passenger
occurs, common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence by Articles
1733 and 1755