TRANSPORTATION LAW

Joshua L Custodio

GENERAL PROVISIONS

● Definition of Contract of Transportation

It is a contract whereby a person obligates himself to transfer a person or property from one
place to another.

● Contract of carriage

It is a contract whereby a person or association of persons obligate themselves to transport

persons, things, or news from one place to another for a fixed price.

● Who are the parties to a contract of transportation?

The parties to a contract of transportation depends on whether it is a contract of carriage of

passengers or a contract of carriage of goods.

1. Contract of carriage of passengers – the carrier/operator and passenger

2. Contract of carriage of goods – the shipper and carrier

● Who is a passenger?

One who travels in a public conveyance by virtue of a contract with a carrier, either express or
implied, subject to payment of fare or its equivalent. But a passenger is still considered such
even if he is being carried gratuitously or under a reduced fare.

● What is the effect of being carried gratuitously?

The effect of being carried gratuitously or under a reduced fare is that, a stipulation limiting the
common carrier’s liability for negligence is valid.

● SITUATION: X contracted R to transfer him from place 1 and 2. They got into an
accident. Parents of X sued R for breach of contract. Is this valid?

No, this is not valid. The real party-in-interest was the injured passenger, X, because he is the
contracting party.

● TD is a taxi driver, driving the car of O. He accepted P as passenger. They got into
an accident. P sued TD for breach of contract, is this valid?

No, this is not valid. In Sanico v Colipano, only the operator can breach the contract of carriage,
being the real party-in-interest. The driver is not a party to the contract. The parties are the
operator/car owner and the passenger.

● A school hired the services of common carrier of D to transport their students and
faculty to attend an event. They got into an accident. Who is the real
party-in-interest?
Whether or not there is a written agreement, the carrier owes a duty of extraordinary diligence
directly to the passengers.

● Who is the shipper in carriage of goods?

The shipper is the one who delivers the goods to the carrier for transportation.

● Who is the cosignee?

The cosignee is the person to whom the goods are to be delivered. It can be the shipper, as in
the case where the goods will be delivered to one of the branch offices of the shipper. He can
also be a third person who is not a party to the contract of carriage.

● What is a bill of lading?

It is a legal document issued by a carrier to a shipper that details the type, quantity, and
destination of the goods being carried.

● When is a cosignee bound by the contract of carriage even if he is not a party

thereof?

The cosignee is bound by the contract of carriage, notwithstanding that he is not a party thereto,
when:

1. When he accepts the bill of lading and is trying to enforce the agreement

2. Becomes a party by accepting a contract of agency with the shipper/cosignor

3. Unequivocal acceptance of the bill of lading delivered to the cosignee, with full knowledge of
its contents

4. When he accepts a stipulation pour autrui (stipulation that benefits third party)

● A enters into a contract with B to carry a cellphone towards D. B sub-contracts the

same to C. In the process, C lost the phone. Should A sue C for breach of
contract?

No, A should still sue B. In MOF Company v Shin Yang, the Court ruled that if the carrier
sub-contracts the transportation of goods, he sub-contractor is not directly liable to the
consignee for the loss of the cargo if the cause of action is a breach of contract. Sub-contractor
has no direct contractual relationship with the cosignee since he is not a party to the contract of
carrier and cosignee. A however, may still sue C under Article 2176 of the Code, quasi-delict
(Culpa aquiliana).

Article 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done.

● What are the elements of a valid contract of carriage?

The following are the elements of a valid contract of carriage:

1. Consent – Consent given by the carrier and passenger/shipper

2. Object – Prestation to transfer passenger or goods from one place to another

3. Consideration – Consideration for carrier is the fare or freight to be paid by the passenger or
shipper; Consideration for passenger or shipper is the promise to transport the passenger or the
goods

● Two types of contract of carriage.

The following are the types of contract of carriage:

1. Contract to carry – Agreement to carry the passenger at some future date. This contract is
consensual and perfected by mere consent.

2. Contract of carriage or common carriage – This is a real contract. It is perfected by the

unconditional placement of the goods in the possession and control of the carrier. Liability and
responsibility of the carrier under a contract for the carriage of goods commence on their actual
delivery to, or receipt by, the carrier or an authorized agent.

Note: Liability of common carrier begins with the actual delivery of goods for transportation and
not merely with formal execution of a receipt or bill of lading.

● Doctrine in British Airways v CA

Even if no tickets are issued, a verbal contract to carry is already a binding consensual contract.
The presence of a ticket, bill of lading, or any written contract is not necessary for the perfection
of the contract of carriage. They are only documentary proofs of the stipulations and conditions
of the parties.

● But how about in case of boarding an airplane through a contract of carriage?

There is a perfected contract of carriage between a passenger and an airline if it can be

established that the passenger had checked in at the departure counter, passed through
customs and immigration, boarded the shuttle bus and proceeded to the ramp of the aircraft and
that his baggage had already been loaded in the aircraft to be flown with the passenger to his
destination.

● What is the “Continuing offer rule”?

When a bus or a jeepney stops, it is in effect making a continuing offer to its riders. Under this
rule, it is the duty of the drivers to stop their conveyances for a reasonable length of time to
afford passengers an opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up of the carrier.

● Contract of Carriage for trains.

A person who wants to board a train in a railway station must purchase a ticket and present
himself at the proper place and in a proper manner for transportation. He must have the
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 place and manner provided.
Thus, when a passenger falls on the train tracks and is struck by a moving train at the exact
moment that he fell, he is treated as passenger and the station is liable for breach of contract of
carriage.

If he was not permitted by the train station, he is not a passenger but a stowaway. There is no
contract of carriage perfected.

● What are common carriers?

Article 1732 of the Civil Code provides that common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both,
by land, water, or air, for compensation, offering their services to the public.

● What is the test to determine if a carrier is a common carrier?

The test to determine is that, whether the undertaking to transport goods and/or passengers 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, the individual or entity rendering such service is a
private carrier.

● Meaning of “public use”.

Public use is use which is not confined to privileged individuals but is open to the indefinite
public. The carrier must hold himself out to the public for the purpose of transporting goods as a
business.

● Characteristics of common carriers.

The following are the characteristics of common carriers:

1. P - It 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.

2. S - It does not make any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an occasional,
episodic or unschedulued basis.

3. G - It 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 general population.

4. C - He has the obligations of a common carrier even if he did not secure a Certificate of
Public Convenience. (An authorization issued for the operation of public services)

5. M - It does not make a distinction as to the means of transporting as long as it is by land,

water, or air.

6. M - It does not provide that the transportation be of a motor vehicle.

7. R - 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.
8. DO - The carrier can also be a common carrier even if the operator does not own the vehicle
or vessel that he or she operates or has to actually hire one.

9. The carrier can also be a common carrier even if the operator sub-contracts the carriage of
goods to another entity.

10. 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.

● Difference of a common carrier and a private carrier.

Common Carrier Private Carrier

Holds himself out to the general public as Only contracts some private individual for
ready to carry for hire. hire.
Bound to carry all who tender compensation Is not bound to carry those who tender
for carrying them compensation for carrying them
Extraordinary diligence Ordinary diligence
Law governing is the: Law governing is law on ordinary contracts.
1. Civil Code
2. Code of Commerce and Special Laws
3. Law of the country to which the goods will
be transported if regarding liability for loss or
destruction.

● Does the number of people served as a common carrier matter?

No, public utility in the definition of common carriers is not defined by statue, is not defined by
the number of people actually served, nor does the mere fact that service is rendered only
under contract prevent a company from being a public utility.

For instance, carriers that provide bus service to schoolchildren are common carriers. Even if
the clientele of the school bus is limited to students of a particular school.

● Doctrine in Perena v Spouses Nicolas.

The Court concluded that Perena as the operator of the school bus was engaged in transporting
passengers generally as a business, not just as a casual occupation, undertaking to carry
passengers over established roads by the method by which the business was conducted, and
transports students for a fee.

● Are pipeline operations considered as common carriers?

Yes, pipeline operators are considered as common carriers. They are common carriers even if
the oil or petroleum products are being transported not through motor vehicles but through
pipelines. It is engaged in the business of transporting or carrying goods, 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.

● Is Angkas a common carrier?

Yes, when Angkas drivers log in to the application, they make their services publicly available.
When they put themselves online, their services are bound for indiscriminate public
consumption. It is an app that seeks to pair an available and willing Angkas biker with a
potential passenger, who requested for a motorcycle ride.

● What is a charter party?

It is a contract by which an entire ship or some principal part thereof, is let by the owner to
another person for a specified time or use.

● Two types of charter party.

Charter party has two types:

1. Contract of affreightment which involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others; and

2. Charter by demise or bareboat charter, by the terms of which the whole vessel is lent to the
charterer with a transfer to him of its entire command and possession

Note: When the charter includes both the vessel and the crew, it is considered a private
vessel.

● Distinction of a common carrier to other contracts.

Common Carrier Private Carrier

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
such services to the public.
Requires extraordinary diligence in the
performance of obligation.
One who without making the activity a
vocation, or without holding himself out to the
public as ready to act for all who may desire
his service, undertakes by special agreement
to transport goods or persons from one place
to another either gratuitously or for hire.
Requires ordinary diligence (diligence of a
good father of a family) in the performance of
obligation.

Common Carrier Towage

Person, corporation, firm or association One vessel is hired to bring another vessel to
engaged in the business of carrying or another place.
transporting passengers or goods or both, by
land, water, or air for compensation, offering
such services to the public.

Diligence required is extraordinary diligence.

Diligence required is that of a good father of a
family.
Contract is between the carrier/operator and Contract is between the owner of the towing
the passenger for contract of carriage of vessel and the shipowner of the vessel.
passengers.
Contract is between the shipper and the
carrier for contract of carriage of goods.

Common Carrier Arrastre

Function is for transporting or carrying
passengers or goods or both, by land, water,
or air for compensation, offering such
services to the public.
Receives, handles, cares for, and delivers all
merchandise imported and exported upon or
passing over government-owned wharves
and piers in the port. It records merchandise
to be delivered to said port at shipside.

Functions have nothing to do with trade and

business of navigation. They are no different
from depository or warehouseman.

Travel Agency
Only the agency’s service of arranging and
facilitating the booking, ticketing, and
accommodation in a package tour.

● Meaning of “diligence of a good father of a family”.

It is the ordinary care or that diligence which an average reasonable and prudent person
exercises over particular circumstances.

● Until when does the liability of the carrier exists?

The liability of the carrier exists until actual delivery to the consignee.

● What law governs the rights and obligations of common carriers?

The rights and obligations of common carriers are governed by the Code of Commerce and by
special laws.

Article 1753, 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.

● What is the registered owner rule?

The registered owner rule states that, the person who is the registered owner of a vehicle is
liable for any damage caused by the negligent operation of the vehicle although the same was
already sold or conveyed to another person at the time of the accident.
Under the same rule, the registered owner remains to be liable to third persons without
knowledge of the transfer. As to third persons, the registered owner of a motor vehicle is its true
owner regardless of any unregistered sale of the vehicle.

Under the registered owner rule, holders of franchises are liable to the public even if their
vehicles are leased to another without prior approval of the appropriate government agency.

● When is a public carrier changed into a private carrier?

When the public carrier is used as a charter party by demise. When the boat and the crew is
leased in such manner that the whole vessel is lent to the charterer with a transfer to him of its
entire command and possession.

● What is the kabit system?

The kabit system is an arrangement whereby a person who has been granted a certificate of
public convenience allows other persons who own motor vehicles to operate them under his
license. It is recognized as contrary to public policy and is therefore void and inexistent.

● Pari delicto rule

Parties of the kabit system cannot invoke the same as against each other either to enforce their
illegal agreement or to invoke the same to escape liability.

● Cases

British Airways v CA

First International had a cause of action for damages against British Airways. A cause of action
is an act or omission of one party in violation of the legal right or rights of the other. Under the
New Civil Code, a contract to carry is consensual and is perfected by the mere consent of the
parties. There is no dispute as to First International’s contract to carry the contract workers from
Manila to Jeddah. Consent was manifested by its acceptance of the PTA that ROLACO has
prepaid. Even if a PTA is merely an advice from the sponsors that an airline is authorized to
issue a ticket and thus no ticket was yet issued, the fact remains that the passage had already
been paid for by the ROLACO, and the British Airways had accepted such payment. The
existence of this payment was never objected to nor questioned by British Airways. Thus, the
cause or consideration which is the fare paid for the passengers exists in this case.

De Guzman v CA

Under Article 1732 of the New Civil Code, “Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both,
by land, water, or air for compensation, offering their services to the public.” The above article
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. It also avoids
making any distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Here, Cendana is properly characterized as a common carrier even though
he merely “back-hauled” goods for other merchants from Manila to Pangasinan, although such
backhauling was done on a periodic or occasional rather than regular or scheduled manner, and
even though his principal occupation was not the carriage of goods for others. There is no
dispute either that he charged his customers a fee for hauling their goods.

Although common carriers, “by the nature of their business and for reasons of public policy,” are
held to a very high degree of care and diligence (“extraordinary diligence”) in the carriage of
goods as well as of passengers, and not withstanding Article 1734 which establishes the
general rule that common carriers are responsible for the loss, destruction or deterioration of the
goods which they carry, “unless the same is due to any of the following causes only: (1) Flood,
storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in
war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; The
character of the goods or defects in the packing or in the containers; and (4) Order or act of
competent public authority, which is a closed list. Causes falling outside the foregoing list, even
if they appear to constitute a species of force majeure. This can be overthrown by proof of
extraordinary diligence. Under Article 1745 (6) above, a common carrier is held
responsible—and will not be allowed to divest or to diminish such responsibility—even for acts
of strangers like thieves or robbers, except where such thieves or robbers in fact acted “with
grave or irresistible threat, violence or force.” The limits of the duty of extraordinary diligence in
the vigilance over the goods carried are reached where the goods are lost as a result of a
robbery which is attended by “grave or irresistible threat, violence or force. Here, Cendana was
held up by armed men, which was determined to be robbery in band. In these circumstances,
the occurrence of the loss must reasonably be regarded as quite beyond the control of the
common carrier and properly regarded as a fortuitous event. It is necessary to recall that even
common carriers are not made absolute insurers against all risks of travel and of transport of
goods, and are not held liable for acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous standard of extraordinary diligence.

First Philippine Industrial Corporation v CA

First Philippine Industrial Corporation is a common carrier. A “common carrier” may be defined,
broadly, as one who holds himself out to the public as engaged in the business of transporting
persons or property from place to place, for compensation, offering his services to the public
generally. 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 petitioner has a limited clientele does not exclude it from the
definition of a common carrier. The definition of “common carriers” in the Civil Code makes 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 passengers or goods should be by motor vehicle. In fact, in
the United States, oil pipe line operators are considered common carriers. Under the Petroleum
Act of the Philippines (Republic Act 387), First Philippine is considered a “common carrier. It
regards petroleum operation as a public utility. It is exempt from paying business taxes under
the Local Government Code.

Perena v Zarate
A carrier is a person or corporation who undertakes to transport or convey goods or persons
from one place to another, gratuitously or for hire. The carrier is classified either as a
private/special carrier or as a common/public carrier. 10 A private carrier is one who, without
making the activity a vocation, or without holding himself or itself out to the public as ready to
act for all who may desire his or its services, undertakes, by special agreement in a particular
instance only, to transport goods or persons from one place to another either gratuitously or for
hire. A carrier is a person or corporation who undertakes to transport or convey goods or
persons from one place to another, gratuitously or for hire. The carrier is classified either as a
private/special carrier or as a common/public carrier. 10 A private carrier is one who, without
making the activity a vocation, or without holding himself or itself out to the public as ready to
act for all who may desire his or its services, undertakes, by special agreement in a particular
instance only, to transport goods or persons from one place to another either gratuitously or for
hire. 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. Here, applying these considerations to the case
before us, there is no question that the Pereñas as the operators of a school bus service were:
(a) engaged in transporting passengers generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over established roads by the method by which
the business was conducted; and (c) transporting students for a fee. Despite catering to a
limited clientèle, the Pereñas operated as a common carrier because they held themselves out
as a ready transportation indiscriminately to the students of a particular school living within or
near where they operated the service and for a fee. As common carrier, it is 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 of the Civil
Code specifies that the common carrier should “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.”

OBLIGATIONS OF THE COMMON CARRIER

● What are the basic obligations of the carrier?

The following are the basic obligations of the carrier:

1. To accept passengers and goods without discrimination

2. To seasonably deliver the goods or bring the passenger to the destination

3. To deliver the goods or bring the passenger to the proper place or destination

4. To deliver the goods to the proper person

5. To exercise extraordinary diligence in the performance of its duties

● Action to file in case of breach of contract of carriage.

Through any manner that contravenes the tenor of the obligation, breach of contract may be
filed. It is the failure, without legal reason, to comply with the agreement of the contract.
 ● Duty of a Common Carrier who has Certificate of Public Convenience.

Common carrier that is granted a certificate of public convenience is duty bound to accept
passengers or cargo without any discrimination, unless such discrimination in such goods is
reasonable and necessary. Mere whim or prejudice will not suffice.

Present law forbid failure or refusals to receive persons or property for carriage that have the
effect of giving an unreasonable or unnecessary preference or advantage to any person,
locality, or particular kind of traffic.

Valid grounds for non-acceptance

1. When the goods sought to be transported are dangerous objects or substances, dynamites
and other explosives

o Certificate of public convenience may include the authority to transport explosives, also,
those not authorized by MARINA cannot carry such goods

2. Goods are unfit for transportation

o Means improperly packaged or there is a defect in their container;

o Carrier may choose to transport the goods and limit his liability, but he must still exercise
due diligence to forestall or lessen the loss
o A common carrier is entitled to fair representation of the nature and valud of the goods to
be carried with the concomitant right to rely thereon, he has no obligation to inquire into
the correctness or sufficiency of such information

3. Acceptance would result to overloading;

4. Goods are contrabands or illegal goods;

5. Goods are injurious to health;

6. Goods will be exposed to untoward danger like flood or capture by enemies;

7. Goods will be exposed to disease;

8. Strike;

9. Failure to tender goods on time; and

10. Goods are not the goods agreed upon

o Agreement to transport money is not the same as agreement to transport negotiable

instruments, which are substitutes of money.

● Duty in transporting animals.

It is the duty of the owner or operator of any land, air or water public utility transporting pet,
wildlife, and all other animals to provide in all cases adequate, clean, and sanitary facilities for
the safe conveyance and delivery thereof to their consignee at the place of consignment.
No transport of such animal is allowed without any written permit from the Bureau of Animal
Industry.

No cruel confinement or restraint is allowed during transportation.

Cruelty includes overcrowding, placing of animals in the trunks or under the hood trunks of the
vehicles.

● When should the goods or passengers be delivered?

Goods or passengers must be delivered within the stipulated time. If there is no stipulation,
within a reasonable time.

Reasonable time

1. Expected date of arrival in the bill of lading

2. Depends upon the nature of goods (potato)

● Consequence of Delay.

Excusable delays, suspend, but not terminate the contract of carriage, and when the cause is
removed, the master must proceed with the voyage and make the delivery. The vessel
continues to be liable as a common carrier, not a warehouseman, and remains duty bound to
exercise extraordinary diligence.

1. Carrier will be liable even if there is natural disaster if there is inexcusable delay, as where
there is negligence on the part of carrier. EOD must be exercised before, during, and after the
occurrence of the loss.

2. Stipulation limiting the liability of the carrier is inoperative.

3. Carrier is liable for damages caused by delay.

4. Consignee may exercise his right to abandon the goods.

● Right to abandon when there is delay.

Code of Commerce provides that in case of delay on account of the fault of the carrier, the
consignee may leave the goods transported in the hands of the carrier, informing him thereof in
writing before the arrival of the same at the point of destination. Consignee has an exceptional
right to abandon the goods transported when the fault of the carrier produces a delay.

● To whom delivered?

The goods should be delivered to the consignee or any other person to whom the bill of lading
was validly transferred or negotiated, or to someone lawfully authorized by him to receive the
goods for his account.

● When there is conflict between consignee and shipper?

The right of the shipper to countermand the shipment terminates when the consignee or
legitimate holder of the bill of lading appears with such bill of lading before the carrier. Prior to
this time, he is a stranger to the contract.

● May CC refuse to surrender the goods, absent the consignee’s surrender of bill of
lading?

General rule is that upon receipt of the goods, the consignee surrenders the bill of lading to the
carrier and their respective obligations are considered canceled. The law provides two
exceptions:

1. When the bill of lading gets lost;

2. For other cause. In either case, the consignee must issue a receipt to the carrier upon the
release of the goods to produce the same effect as the surrender of the bill of lading.

● When a person forged the bill of lading and received the good to be transported?

The carrier is still liable. The carrier is relieved from the responsibility for loss or damage to the
goods upon actual or constructive delivery of the same by the carrier to the consignee or to the
person who has the right to receive them. There is actual delivery in contracts for the transport
of goods when possession has been turned over to the consignee or to his duly authorized
agent and a reasonable time is given him to remove the goods.

● Refusal of consignee to accept.

Return the goods to shipper.

● Remedies of consignee when transported goods are damaged.

Consignee may reject the goods and demand the payment of such goods at their market price.

Damaged is when goods are rendered useless or unfit for its intended purpose.

Consignee may accept undamaged goods and reject the damaged goods. But if consignee can
prove that the undamaged goods are useless without the damaged goods, he may reject it.

● Instances when there is contravention of tenor in the contract of carriage.

Common carrier has the duty to transport the passenger safely to his destination.

There is contravention of tenor of obligation when the carrier will force the passenger to transfer
to a different vessel or to accept a more expensive service.

● Instance when a voyage has already begun but interrupted.

Then the passengers are obliged to pay the fare in proportion to the distance covered, without
right to recover for losses and damages if the interruption is due to fortuitous event or force
majeure, but with a right to indemnity if the interruption should have been caused by the captain
exclusively.
If the interruption is caused by the disability of vessel and a passenger should agree to wait, he
may not be required to pay any increased price of passage, but his living expenses during the
stay.

● What is extraordinary diligence?

It is that diligence wherein 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.

Exception

Article 1763 provides that a common carrier is responsible for injuries suffered by a passenger
on account of the willful acts or negligence of other passengers or of strangers, if the common
carrier’s employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.

● What are the basic obligations of common carrier?

Transport the goods and passenger safely to its destination:

1. Accept passengers or goods without discrimination

2. Seasonably transport or deliver the goods or bring the passenger to his destination

3. Deliver the goods or person to its proper desitination

4. Delivery the goods to proper person

5. Exercise extraordinary diligence in the performance of his duties to deliver

● When do we say that there is timely delivery?

When there is an agreement when to deliver the goods, the goods must be delivered on that
specific date. But when there is no agreement, it should be delivered on the expected time of
delivery which can be seen at Bill of Lading or what we call reasonable time.

If we have perishable goods, urgency is foremost consideration. Consider the nature of goods
being transported when transporting.

● Consequences of delay which are excusable.

The contract of carriage is not terminated but suspended. It is incumbent upon the common
carrier to proceed immediately to the delivery as soon as the cause of delay is removed. But
during the delay, the vessel continues to be a common carrier therefore he is duty bound to
exercise extraordinary diligence. However, if delay is because of the negligence of the carrier,
the contract of carriage still exists.

● If inexcusable negligence?
Carrier will be liable even if there is natural disaster if there is inexcusable delay, as where there
is negligence on the part of carrier. EOD must be exercised before, during, and after the
occurrence of the loss.

Carrier is liable for damages caused by delay.

Consignee may exercise his right to abandon the goods.

● Where is the place of delivery?

Place of delivery is where the parties agreement, on stipulation. If there is no stipulation, then
what was declared in the bill of lading will be followed.

● Shipper wants to change the consignee, if you are the carrier, what measure will
you undertake in order for you not to be liable in case there is a problem in the
case of consignee.

As a common carrier it is incumbent upon you to make the shipper surrender the bill of lading,
and issue a new one, naming the new consignee. This will have the effect of novation, there is a
modification in the substantial component of the contract. Here, we changed the recipient,
creating novation, terminating the old one and creating a new one.

● To whom the goods are supposed to be delivered?

Consignee. His name is mentioned in the bill of lading. But in the negotiable instruments law, a
bill of lading may be negotiable when the original consignee will negotiate it to another for value.

● Words that can be used in order to say that the bill of lading is negotiable so that
the common carrier is aware that somebody else may be presenting the bill of
lading to him, therefore can demand delivery from him.

“To the order of shipper”, “only to the person who has been named in the order of shipper”.

● What is the effect if bill of lading has been validly transferred to another person?

Common carrier is duty bound to deliver those goods to him.

● When there is a change of consignee and there is a conflict between the

consignee and shipper, because there is a possibility that the shipper orders the
carrier return the goods to him, can that be possible?

By the time consignee presents the bill of lading, he makes himself a party to the contract by
demanding delivery, shipper can no longer countermand. The most practical thing to do is to
unahan the consignee.

● When is a consignee automatically a party to the contract?

When there is a stipulation pour autrui, third party or consignee automatically becomes a party
to the contract. He may demand delivery in his favor.

● Note: General Rule: EOD is expected.

 ● Note: EOD also requires the duty to make sure that the carrier’s employees treat
the passengers with kindness, respect, courtesy, and due consideration.
Passengers are entitled to be protected against personal misconduct, injurious
language, indignities, and abuses of employees.

● What is EOD?

It is the highest form of diligence that common carrier must exercise. It is vigilance over the
goods tendered for shipment requires the common carrier requires to follow the required
precaution to avoid damage or destruction to such goods entrusted by the shipper to the carrier.

Highest degree of care as far as human care and foresight can provide under the
circumstances.

● Can the responsibility of EOD be delegated?

The duty can never be delegated by common carrier to his employees or agents. This is a
violation of the orders of common carrier. He cannot exempt himself from liability because it is
the common carrier who is presumed negligent under the situation for not exercising EOD.

● In the absence of EOD, there is negligence, but in this special situation, the
common carrier upon the happening of the loss, destruction, or accident, is
already presumed negligent. What do we mean by presumption of negligence?

If you are the claimant, you need not prove facts supporting that claim for negligence because
there is already presumption.

● Temporary unloading or storage.

CC’s duty to observe EOD over the goods remains in full force and effect even when they are
temporarily unloaded or stored in transit.

● Who has the burden of proof?

Common carrier has the burden of proof, and only proof of EOD may overcome the
presumption.

● But before the presumption of negligence must arise, there are requisites that
must be present.

The following are the requisites:

1. There is a contract between the common carrier and the passenger

2. The loss, destruction, or deterioration must happen during the existence of contract,

● If you are the claimant, you would want to file for breach and claim for damages, in
claiming for damages, bad faith should be established. Is there presumption of
bad faith?
Badfaith is not presumed, it is particularly necessary for the award of moral and exemplary
damages so you need to present clear and convincing evidence to entitle you to this. The law
also presumes people to be good, so that there is no presumption of badfaith.

● Is there a presumption of gross negligence?

While there is a presumption of negligence, there is no presumption of gross negligence

because this equates to badfaith.

● There is an action claim. Where the driver is acquitted for criminal case, does it
mean that civil action should also stop?

When civil action is based from obligation not arising from act or omission complained of, such
civil action may proceed independently of the criminal proceedings and regardless of result of
the latter. Because of independent civil action, whatever happens in the criminal case, it will not
affect the civil action. No effect on the presumption of negligence, because the presumption is
on the common carrier and not on the driver.

● What is that duration to exercise EOD?

Will start the moment the goods are placed in the possession of carrier until it is delivered to the
consignee.

● Stoppage in transitu. When is the duty to exercise EOD in stoppage in transit?

It is the right of an unpaid seller to resume possession of the goods at any time while the goods
are in transit, 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:

1. The buyer of goods is or becomes insolvent

2. Unpaid seller has parted with the possession of goods

3. Goods are still in transit

Stoppage in transitu happens when the shipper or seller will order the common carrier for the
stoppage of delivery of the goods because the buyer has not paid, due to insolvency of buyer.
The seller then demands not to deliver the goods to the supposed consignee.

This is a preventive measure on the part of shipper to halt any further damage to himself. This is
a situation where he found out that he will not be paid. He found out that the buyer cannot pay
anymore because of insolvency.

● What is the effect of stoppage to the duty of common carrier to exercise EOD?

It is as if he never parted to his goods where constructively he obtained possession of the

goods. The CC duty to exercise EOD will also be halted and he is not expected to exercise EOD
anymore.
 ● When the goods arrive, after passing through the customs authority, they either
find the goods damaged, decreased, or missing. Do we still expect EOD from CC
here?

EOD should still be exercised. It must exist before, during, and after the occurrence of loss so
that it should not be affected by the fact that goods have entered into customs inspection.
Jurisprudence however says that CC has no control on the actions of customs official, therefore,
CC should stipulate in bill of lading and limit liability over the goods for the duration that it is
under customs inspection. “I already stipulated that I will not be responsible should there be
damage under customs”.

● What about for passengers? When does duty of EOD start and end?

Duty is commenced in the following:

1. Trains – purchase a ticket, present in the proper place and manner, and bonafide intention to
ride

2. Sea – purchase a ticket, present in the proper place and manner, and bonafide intention to
ride

3. Land – vehicles stopped for the loading of passengers, or the continuing offer rule

4. Air - purchase a ticket, present in the proper place and manner, and bonafide intention to ride

They end when:

Delivery to proper destination safely. Passenger must be given a reasonable time to leave the
premises and collect baggage.

● There should be EOD, is there a chance that EOD will be lowered? Can we
stipulate that the duty of CC will be lowered?

With respect to goods, EOD may be lowered. But there are formal requirements to maket this a
valid stipulation:

1. Writing signed by shipper or owner;

2. Supported by a valuable consideration other that the service rendered by common carrier;
and

3. Should not be contrary to public policy

Not valid when it comes to passengers because it is for the security, safety, and the lives of
persons or passengers which are at stake.

● With respect to passengers, there can be any degree of diligence than that of
EOD?

1758 says limiting liability for negligence. Lowering the degree of negligence is not equivalent to
limiting the liability of negligence. It is possible here that the law talks about lessening the
amount of liability, and not necessarily the degree of diligence involved, so much so that EOD is
still important, except that there can be a valid stipulation that the CC may have a lower amount
of liability for transporting you as a gratuitous passenger.

● When is a vessel sea worthy?

When vessel is well equipped and is able to withstand the perils and rigors of the voyage. The
vessel should also be properly manned.

● Sea worthiness is an implied warranty.

There is no express provision in the civil code providing for this warranty.

● If an accident happens, does the passenger or shipper need to prove that the
vessel is unworthy at the time of voyage?

No, because there is a presumption of negligence. There is no need to present proof about the
facts surrounding the common carrier’s negligence or unseaworthiness. CC must prove that he
exercised EOD/sea worthiness.

● If the CC presented a certificate of sea worthiness, would that suffice as proof that
the vessel is sea worthy?

While it is good proof, it cannot be considered as a sufficient conclusive proof to prove sea
worthiness because it is only secured prior to the voyage. The proof must be that the vessel is
sea worthy at the time of voyage.

● When do we say that there is proper manning?

Properly manned if the number in the vessel is adequate, the crew in the vessel should be
competent officers to navigate the vessel to its destination, they should also have sufficient
knowledge in navigating the same. More importantly, they should be licensed because what will
qualify them as competent personnel.

● Importance of regulating fare is to make an equilibrium to meet the needs of both

the business sector and the riding public.

Regulations of fare is by virtue of police power of the state. There needs to be balance.
Because the common carriers as business operators. If they will be able to impose so high rates
in order for them to profit, it is the riding public who will suffer in the end because nobody can
afford there services. On the other hand, if we will impose rates that are so low in order to meet
the demands of the riding public, it is the business operators who will be at a loss because they
wont be able to have funds and profits that they can spend in order to maintain adequate safe
facilities and to pay the salaries of their employees. It is the riding public who will suffer.

● Who pays the freight or the fair?

If it is a contract of carriage of goods, payment may be made by the shipper, or when there is
stipulation, the consignee.

When it comes to a contract of transportation or carriage of passenger, it is the passenger who

pays the fair.
 ● When is the time to pay the freight or fare?

Depending on their agreement. If none, before or at the time of delivery of the goods, or upon
the receipt of the consignee.

● If in a situation where the consignee was unable to pay?

When the consignee is unable to pay within 24 hours from the delivery of goods to him, the
carrier has the remedy to exercise his lien on the goods that was unclaimed by consignee.

● Carrier’s lien.

Article 2241 of NCC, on concurrence and preference of credit, there is now preference of credit
for transportation of goods carried and for 30 days thereafter. For passengers, there is no ticket
no boarding policy. Passengers cannot ride a conveyance without purchasing a ticket.

● Loading and unloading. When do we say that there is timely loading and there is
timely unloading?

They will stipulate as to when the shipper is expected to load the goods that are to be
transported and when the carrier will receive it for shipment. There can also be an agreement as
to when the consignee will obtain the delivery. Or there should be loading and unloading in a
“timely manner.”

● What will happen if the consignee fails to obtain the delivery of goods in a “timely
manner”?

Payment of demurrage. It is a compensation, for the detention of the vessel beyond the time
agreed upon by the parties. If there is an agreed time, date, and place of delivery, demurrage is
the compensation paid when it exceeds time (lay days) for the goods will be obtained.

However, it can only be given when it has been specially stipulated by the parties.
Compensation for the detention beyond lay days.

● Shippers load and count.

It may be stipulated in the Bill of Lading that the shipper has the sole responsibility for the
quantity, description, and condition of the cargoes shipped in container vans.

● In a scenario where the goods arrived are damaged, and there is a shippers load
and count transaction?

Shipper will bear the loss since the shippers load and count is a stipulation in the bill of lading
that the shipper has the sole responsibility for the quantity, description, and condition of the
cargoes. The carrier’s duty is merely to transport the goods or passenger.

● Why do shippers enter into this agreement?

General rule, common carrier may investigate the goods to be transported when there is doubt.
Because of urgency, or there may be goods that do not want to be investigated. Or they do not
want to destroy the packaging. The shipper here is risking of claiming liability against the
common carrier.

● Duties of a passenger. (Philippine Civil Aviation Rules and Regulations)

The following are the duties of a passenger:

1. Present yourself in the proper place, time, and manner.

2. No interference with crew members while they are performing their duties. There rendition of
duties must be respected.

3. No person on board shall act recklessly or negligently which will endanger the safety of
airplane.

4. There is no smoking in air crafts.

5. Pay the transportation fee.

6. No person may secrete himself or secrete cargo.

7. Secure the appropriate travel documents. Even if the airline failed to remind you to procure
necessary travel documents, passengers cannot fault their carriers because it is the
responsibility of the passenger to secure the necessary documents for their affairs. When can
the airline be liable when it comes to travel documents? Loss or destruction of travel document
because of negligence of the carrier’s employee. Take note, that defect or destruction of travel
documents (visa) is a ground for refusal of entry in another country.

DEFENSES OF A COMMON CARRIER

● Duty of the common carrier.

The common carrier is not the insurer of the safety of the passenger. What the carrier
guarantees is not their safety, but rather that it will exercise EOD. The common carrier cannot
ensure that there are no accidents that will happen, but rather the exercise EOD. The liability
shall be from the failure to exercise EOD.

● Presumption of negligence of common carriers.

The moment an injury happens, there is presumption that there is negligence. The burden of
proving is in the common carrier to prove that it exercised EOD.

● Requisites for defenses to be availed of.

The defenses have the following requisites:

1) Defense is the only sole and proximate cause of the loss; and

2) There is EOD before, during, and after (at all time) the occurrence of the loss.

Article 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 an act of the public enemy
referred to in article 1734, No. 2.

● Definition of proximate cause.

Proximate cause is the cause of the cause is the cause of the evil caused. It is the natural and
continuous cause, unbroken by any intervening event, that produces the injury.

● Necessity of proximate cause.

In contracts of carriage, we do not need proximate cause because there is already presumption
of negligence on the common carrier when there is breach of contract of carriage. Burden of
proof is shifted to the common carrier.

For the presumption to apply, it has to be established that there is a contract of carriage, and
that the injury happened during the existence of contract. To overthrow this defense, you must
prove EOD. However, the doctrine of proximate cause will matter on the part of common carrier,
he must prove that the damage, injury or loss, cannot be traced to his own act, but can be
traced to the proximate cause.

Note: Claimant need not prove.

Note: Proximate cause is not important in contracts of carriage. However, it may play an
important role or consideration in defenses.

● Classification of defenses.

There are defenses that totally or exempt carrier from liability. But there are only defenses that
only mitigate liability of common carrier, ex is contributory negligence.

Article 1734. Common carriers are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only: (1) Flood, storm,
earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war,
whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The
character of the goods or defects in the packing or in the containers; and (5) Order or act of
competent public authority.

● What is the ultimate defense?

Exercise of EOD. When there is no EOD, all defenses will fail.

Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared
by stipulation, or when the nature of the obligation requires the assumption of risk, no person
shall be responsible for those events which could not be foreseen, or which, though foreseen,
were inevitable. (1105a)
 ● Analogous circumstances of article 1734.

Article 1174 is the umbrella definition of fortuitous events. Dito papasok yung acts of man. Does
not limit events which involve human events. Fortuitous events in general so that we no longer
have to be so confined in 1734 so that we are no longer limited to natural disasters anymore.

In Deguzman, when the high jacking is attended by the presence of armed men or when there is
force violence or intimidation, that would exempt a common carrier from liability.

Fortuitous events can be well provided in 1174, so that we can no longer be defined in 1734, it
does not limit fortuitous events of natural calamities. It already includes human interventions
which may include attacks, armed robbery, etc.

● What is a fortuitous event?

It is an event that is unforeseeable, and if foreseeable, is inevitable.

● The common carrier is claiming as a defense any of the mentioned in 1734. But
the common carrier has participation in causing damage or injury.

Common carrier is liable, but mitigated. Requisites of proximate cause, the proximate cause is
no longer the “ONLY” cause.

● Is fire a natural calamity?

Fire is not a natural calamity. It is man-made, but there is exception when it is caused by
lightning or other natural calamity.

● Would any kind of storm exempt the common carrier from liability?

If the strong wind is foreseeable, if the common carrier will be using it as a defense, he should
present that the strong wind or storm during the contract of carriage is not foreseeable. The fact
of foreseeability will control. For example, CC was held liable because it had knowledge that
there is a storm, which winds are strong enough to overthrow a vessel, but the CC did not
change route.

Another example, there was a coast guard announcement that the storm is not strong. The
vessel continued to venture. But along the voyage, a sudden strong wind came along. The CC
was not held liable. The strong wind was not foreseen.

● Hi-jacking as fortuitous event.

Hi-jacking is not a fortuitous event. But when the hijacking is resorted to with violence or force,
can be considered as fortuitous event under 1174.

● Are mechanical defects fortuitous events?

Mechanical defects such as tire blow outs are not considered fortuitous events. Even if you
purchased new tires yesterday, and you met an accident today, the Court will still presume you
negligent because in the eyes of the law, there are still defects in the other parts of the car that
you did not see. Mechanical defects are FORESEEABLE factors which the common carrier can
guard against by exercising EOD.

● You are the operator of a bus, the bus carries goods. Driver of your bus called
you that there is a mechanical defect in the bus. You told the driver to drive the
bus to the nearest talier. The repairman told the driver that he cannot do it rush.
Rather, you have to park your bus overnight in their garage because they have yet
to purchase spare parts that are needed. During that night while it was parked in
the garage of repairman. A strong storm came along. The storm flooded the area
where the bus was parked, damaging the goods. Owner of goods now are
claiming damages.

The flood which caused damage to the goods is not the proximate cause nor it is the proximate
and only cause of the loss. Rather, there is a factor of mechanical defects. Mechanical defects
is not considered as one of those defenses.

● You are the driver, owner. You are carrying goods. You anticipated the traffic, you
left early. But to your surprise, you ended up at your destination 3 hours earlier.
Because you are early, you went to the house of your gf. Much to your dismay,
when you returned, you found the lock of truck destroyed. Merong mga armed
lalaki that robbed the truck.

The court will not allow my defense. The armed robbery was not the sole or proximate cause of
the loss. Carrier has participation of negligence. You deviated from the right track.

● How may a common carrier exempt himself liability under public enemy?

There must be an actual state of war, not only a mere misunderstanding between nations.
Rather, there must be an actual war going on between the government of a foreign nation, and
that with of a country to which the carrier belongs. The common carrier, in case there is damage
or loss to the goods, they may claim public enemy as a defense.

● Who is a public enemy?

● What about thieves, robbers, rioters, are they considered public enemies?

While they are at war with social order, they are not considered to be public enemies as to
exempt a common carrier from liability.

Except:

Even if the war is civil in nature, they are considered public enemy when they are occupying in a
hostile manner a particular portion of territory and they declare the independence or allegiance
from the state, they are considered public enemies at war with the present government.
(Beligerency)

● How do we treat pirates?

They are considered public enemies because they are enemies of all civilized nations and of
humanity.

Article 1742. Even if the loss, destruction, or deterioration of the goods should be caused by
the character of the goods, or the faulty nature of the packing or of the containers, the
common carrier must exercise due diligence to forestall or lessen the loss.

● Nature of goods and improper packaging.

When the goods have inherent defects or improperly packaged, the common carrier can escape
himself from liability. Full knowledge of the defect, the common carrier may not use it as a
defense.

● Meaning of defect.

The container or proper packaging must be defective and not only one of inferior quality. Defect
is not equal to inferior quality. When there is defect, there is want of something for its
completeness (kulang), on the other hand, when we talk about inferior quality, it is one of poor
quality, mediocre or second rate.

● Other precautions to exercise in order to fully exempt himself from liability using
this defense.

When you stipulate in the bill of lading that you have accepted the goods despite knowledge of
its faulty nature or improper packaging, it is as if that the common carrier is limiting his liability.

But to escape full liability, the common carrier must exercise due diligence to forestall or lessen
the loss as provided in 1742.

Article 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.

● Order of competent public officer as a defense.

● Can goodfaith be a defense? You believed in good faith as a common carrier that
he is duly authorized?

The last phrase in 1743, public authority must have power to issue the order. We are not talking
about an apparent power but a real power to issue the order. Good faith is not part of EOD. Part
of EOD is to ascertain whether or not the public officer has the real authority to issue the order,
and not only an apparent authority.

● Requisites for public authority as defense.

The following are the requisites for a common carrier to avail of the defense:

1. It must be the proximate or only cause of the loss, destruction, or deterioration

2. There is no negligence on the part of carrier

3. The public authority must have power or authority to issue an order to seize or destroy the
goods.

Article 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.

● The rule on liability when the shipper or owner contributed to the loss.

For acts or omissions of the shipper or owner, common carrier will not be liable for the loss,
destruction or deterioration. If it is caused purely by his act. But if it is merely contributory, then
the common carrier’s liability may be mitigated or reduced.

● Example

Shipper misdeclares, and it is the only act that can be the reason for the loss, destruction, or
deterioration. However, if there is participation on the part of the common carrier, contributory
negligence, then mitigation of liability.

● Factors that affect the liability of a common carrier.

● There was a man who boarded the bus. The man upon entering the bus, he
declared holdup. He gave a warning shot causing an injury to the passenger.
Should we hold the common carrier under the facts?

Having implemented the rigors of the inspection. That is enough proof that the common carrier
exerted the due diligence that is exempted of them.

● The man boarded a bus, clean and unarmed. In the middle of the way, he
succeeded in holding up the bus. Will the common carrier be liable if an injury
results from that act?

Because he is unarmed, and he could have been prevented or stopped with the exercise of a
good father of a family. Showing no signs that he was possessing a weapon, common carrier or
his employees is negligent in preventing the injury. Thus, liable. Take note that the diligence
required here is ordinary diligence or the diligence of a good father of a family. Common carrier
should also be not negligent.

● A stranger threw a stone at the glass window of a bus. Is the common carrier
liable?

The common carrier was not held liable for force majeur. Because it had no control over the
acts of strangers. The employee of the common carrier could have acted with the diligence of a
good father of family to prevent the injury from happening. But if the bus company, the driver,
and conductor that they are aware that in the area there is rampancy in crimes, nevertheless,
they did not do anything to prevent the situation from happening, then the common carrier may
be liable under the situation.
 ● There is edsa traffic. The driver stopped while the bus is in traffic to pee. He went
outside the buss and peed without closing the door. Is the common carrier liable?

He left the vehicle open, therefore he is negligent so that the common carrier is liable. There is a
different view. The throwing of stone is independent from the negligence of the drive. Either way,
mababato pa din yun ke bukas yung pinto or hindi. But if there is rampancy in crime in the area
and the driver knew of such fact, the driver should not have stopped under any circumstances
so that it will not be held liable.

● If through the diligence of a good father of a family, they could have prevented or
stopped the omission, the common carrier is not responsible.

Article 1759. Common carriers are liable for the death of or injuries to passengers through
the negligence or wilful acts of the former's employees, although such employees may have
acted beyond the scope of their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees.

● The employees acts are the acts of common carrier.

Even if the employees acted beyond the scope of their authorities or in violation of the orders of
the common carrier, the common carrier would nevertheless be held liable.

● The defense of due diligence in the selection and supervision of employees, is

this available for common carriers?

No. The employers or the common carriers must exert extraordinary diligence so much so that
they cannot use as defense due diligence in the selection and supervision of employees. When
we ride conveyances, we are not expected to inquire whether or not the employees are acting
within the scope of their authority. It is immaterial whether the employee acted beyond the scope
or not. So long when the passenger enters the conveyance, he is not expected to inquire. Also,
the highest degree of protection and care of common carriers is likewise expected from the
employees.

● In quasi-delicts, this defense is available by proving that there is due diligence in

the selection and supervision of employees.

● Rule on contributory negligence.

There is a degree of diligence expected from you as a shipper or passenger, and among that is
the fact that you should avoid injury to your person or property. Failing so, you are contributing
negligence to your loss. The effect of this contributory negligence mitigates

● When the negligence of the shipper or passenger is the ONLY and proximate
cause of the loss, then the common carrier is not liable. Otherwise, it may mitigate
the liability of common carrier.
 ● Doctrine of avoidable consequences.

It is a well-recognized principle of law that damages resulting from avoidable consequences of

the breach of a contract or other legal duty are not recoverable. It is the duty of one injured by
the unlawful act of another to take such measures as prudent men usually take under such
circumstances to reduce the damages as much as possible.

● Doctrine of assumption of risk.

There is no assumption of risk in case the passenger voluntarily boarded a carrier that was filled
to capacity. In Calalas v CA, the SC rejected the argument of the carrier that the student’s taking
an extension seat amounted to an implied assumption of risk. It is true that her being seated
placed her in a peril greater than that to which the other passengers were exposed. However,
the same cannot be construed as assumption of risk and such position is akin to arguing that
the injuries to the many victims of the tragedies in our seas should not be compensated merely
because those passengers assumed a greater risk of drowning by boarding an overloaded ferry.

Even without a bill of laiding, there is still presumption of negligence from a common carrier
even without such issuance because the rights and obligations of the parties are still there.
There is still a perfected contract even without a bill of laiding. And there is still the obligation of
the common carrier to exercise EOD even without the issuance of a bill of laiding.

In the absence of a bill of laiding, the disputes shall be resolved primarily by the Civil Code and
suppletorily by the code of commerce and other special laws. For special laws, you can look for
the e-commerce act which allows e-documents to be used in lieu of paper documents.

There can be the existence of a contract of carriage in the absence of a bill of laiding.

A bill of laiding is a necessary instrument, not indispensable, and common, in contracts of

carriage. It is a written acknowledgment of the receipt of goods and an agreement to transport
and deliver them to a specified place and to a person named therein or his order.

Three fold nature of a bill of laiding. It acts as a receipt, it acts as a contract and a document of
title that makes it a symbol of the goods.

What do we mean when we say that the bill of laiding acts as a receipt. As a receipt, it is an
evidence or a narration, a description of what was received, it includes the date and place of
shipment, literally that this is proof that the goods is received by the carrier from the shipper.

As a contract, it stipulates the rights and obligations agreed upon by the parties involved.

There can be a contract of carriage without a bill of laiding.

When the word contract here was used in the nature of the bill, it only speaks of the nature of
being a contract in general. Contract being a recitation of the terms and conditions of the parties
but not a contract perse, in the real sense which have object, cause and consideration that can
bind the parties. Because while this binds the parties, it is not the contract perse that can exist
independently of a contract of carriage. Bill of laiding is not a contract perse, it is a contract in
the layman or general sense of word.
Document of title, the carrier issues the bill of laiding to the shipper, it is a legal evidence of the
contract of carriage between the carrier and the shipper.

Kinds of bill of laiding:

1. Clean bill of laiding – does not contain any stipulation indicating any defect of the goods.

2. Foul bill of laiding – has a notation of a defect.

On board and receive for shipment. If you are the shipper, which bill of laiding would you benefit
more? There is more security. Why do you think is the reason for receive for shipment bill?
Because there are instances when there are insufficient shipping space. But because of
business, they want to receive your goods with the promise that they will keep it in tact and will
deliver it, however, they are not yet sure which vessel to make the shipment so that you are
issued a receipt for shipment bill. An onboard bill of laiding makes one more secured that his
goods are already being delivered by a specific carrier so that a shipper will benefit more from
an onboard bill of laiding.

When does a bill of laiding becomes effective? It becomes effective upon his delivery to and
acceptance of the shipper. The carrier will issue the bill and the shipper will accept it.

If the bill of laiding is already received from the shipper, however, you found out that instead of
100 boxes of milk which is the actual number of the goods, the common carrier only stated there
that it received for shipment 50 boxes of milk. Can you question the validity of the bill? Are you
estopped? What are the consequences if any.When fraud, concealment, or improper conduct on
the part of the common carrier, then the shipper may be allowed to question the contents. There
is a presumption that when he accepted it, he is already bound by the terms of bill of laiding.

There are times that when we admit of the fact that a consignee may become a party. They are:

1. When there is a relationship of agency between the shipper and consignee;

2. There is an unequivocal acceptance of the consignee and the contents hereof of the bill of
laiding;

3. When there is a stipulation of pour autrui.

When you have the unequivocal acceptance of the bill, then that gives the right to demand
delivery from the common carrier, then that gives you the right to demand delivery to the
common carrier, in effect making you a party to the contract of carriage.

Apart from the three fold nature of the bill of laiding, there are other facets that we need to
consider. One, it is a contract of adhesion. A contract of adhesion is a take it or leave it contract.

A contract of adhesion is not void because the parties are free to reject the terms. He has the
option to leave and refuse. It has the same limitation. So long as they are not contrary to law,
public policy, etc. The bill of laiding although a contract of adhesion is still a valid contract. There
is also a presumption that the bill is regular in the absence of fraud, concealment, and improper
conduct. Generally, the shipper who accepted it is bound by the acceptance whether he has
read the bill or not.
Another facet is that a bill of laiding being under the parole of evidence rule. Under the parole
evidence, the stipulations in the bill of laiding is conclusive between the parties. What is the
effect when there are other agreements that were found as between the parties. The evidence
alunde is not admissible since it is deemed that all the agreement of the parties are merged into
the contract. The bill of laiding, being a recitation of the contract between the parties is
conclusive already between the parties. The court will consider it as the sole agreement of the
parties. In the eyes of the law and in the courts, the contract is conclusive as between the two of
them.

The bill of laiding, being covered by the parole evidence rule says, that all other agreements are
not admissible in order to vary the terms and conditions of their contract. Rule 130 of the Rules
of Court. There are exceptions: 1) when there is a mistake that is mutual between the parties;2)
then they can present evidence showing that there is another term that has been agreed upon
by them.

The bill of laiding is an actionable document. It can be pleaded as a cause of action or as a

defense. Why can we use it as a basis for action or defense. What is the nature of an actionable
document? It can be used as the main evidence,in fact, it can be attached to the pleading as an
exhibit. This will be the best basis for your action or defense. The substance of that instrument
will be that alleged in the pleadings and this can be the basis of your action or defense. That is
an actionable document and a bill of laiding is an actionable document that best evidences the
relationship of the parties and can likewise be the basis for the action or defense.

As stated, the rules on actionable document shall apply. With respect to the genuiness and the
due execution of bill of laiding, it is deemed admitted unless there is denial under oath. In the
absence of such denial. It is deemed admitted by the parties.

Contents of the bill of laiding. One of the most common contents are certain terms generally
accepted in international usage. We call them shipment terms or inco terms. Inco terms are
international commercial terms. These are uniformed, internationally recognized foreign trade
terms that refer to the type of agreement for the shipping of goods internationally. So that you
are engaged in international trade, once you see any of these 13 different terms, you already
know the type of agreement. It makes it more efficient for those engaged in international trade.
Take note that these terms are used in particular common scenarios. 1) It answers about the
cost. Who is responsible for the expenses involved in a shipment at a given point at the
shipment’s journey. 2) control, who owns the goods to a given point in the journey. 3) liability,
who is responsible for paying the damage to goods, at a given point in a shipment’s journey.

What can be found in the bill of lading are stipulations. There are two kinds of stipulations that
can be involved. Prohibited stipulations and limiting stipulations. Prohibited stipulations are
those which except the shipper from any liability which cause from his negligence or there is
unqualified limitation as to his liability. But in limiting stipulation, there is an agreed valuation that
limits the liability of the parties.

An exculpatory contract totally exempts a common carrier from liability and another is an
unqualified limitation of his liability. Both are prohibited stipulations. In effect, they are void
stipulations for being contrary to public policy. It has to be only a limiting stipulation wherein
there is an greed valuation of the parties. They are valied and enforceable.

If Sky is the limit or there is no limit, that is a prohibited stipulation. When there is an agreed
valuation, even if it goes at a higher value so long as they are agreed fairly by the parties, then
this is a valid stipulation called a limiting stipulation. The purpose of these limiting stipulations is
to protect the common carrier and to take measures such as getting insurance to cover or
protect itself.

Does the presence of limiting stipulation remove the duty to exercise EOD? To totally exempt
the common carrier from liability is exculpatory, therefore void. The common carrier is limited
only into saying that with respect to goods, the common carrier shall exercise the diligence of a
good father of afamily. Anything lower is void. Limiting stipulations on the other hand does not
affect the degree of diligence. This is different from deduction of diligence. This only says that
you can exercise below EOD, but that which is not less than the good father of a family.

Requisites for there to be a valid stipulation on the diligence required: 1) stipulation must be in
writing by the parties; 2) stipulation must be supported by a consideration; 3) stipulation must be
reasonable, just and not contrary to law. The diligence must only be until the diligence of a good
father of a family. Absence of diligence required, that is exculpatory, that is void. A prohibited
stipulation.

As to passengers, only EOD, and nothing else. The common carrier shall carry passengers as
far as human care and foresight can provide using the utmost diligence of cautious persons.
Nothing lower than EOD because the law protects human lives.

Situations that limiting stipulations can no longer be invoked. Why would the common carrier be
disallowed to invoke the limiting stipulations agreed upon. 1) when the goods were not accepted
by the common carrier, the limiting stipulation will not work upon them since there was no
contract; 2) when there is delay in transportation of goods; 3) when there is changes on the
stipulation; 4) when there is deviation of the usual route. The common incident here is that the
common carrier committed acts of fault or negligence. In these cases, the common carrier was
negligent. Any stipulation in its favor will be voided already so that it can no longer invoke the
limit that was agreed upon.

Culpa delictual or criminal negligence. Culpa contractual, this is a fault arising from contract,
such as contract of carriage. Culpa aquiliana, this is torts, or quasi-delict. In case of loss,
destruction or deterioration of goods, or injury, or damage to passengers, there are two
scenarios in terms of claiming damages.

Distinguish culpa contractual and culpa delictual. Source of obligation in culpa contractual,
based on contract. In culpa aquiliana, the employee has no liability because there is no privity of
contract between the passengers. Culpa aquiliana, the employee s solidarily liable with the
employer. In defense of employer, in culpa contractual, due diligence in the supervision and
selection of employee is not a defense. In culpa aquiliana, the defense of proper selection and
supervision of employee is a defense. As to the capacity of liability, in culpa contractual, the
liability is as a contracting party between common carrier and passenger. In culpa aquiliana,
common carrier is liable as an employer.

Supposing, that the common carrier was able to prove due diligence. Will he still be liable for
breach of contract of carriage? We cannot fully exempt him from liability, although it can be
mitigated. In case of breach of contractual obligation.

There is a breach and it gives rise to two scenarios. This is concurrent causes of action so that
the act that breaches the contract may give rise to a liability based on the contract and based on
quasi-delict.

A, the driver of a bus, caused an accident, leaving B injured. The bus driver may be liable for
quasi-delict, civil liability. And he may likewise be criminally liable for his negligence. The driver
is not liable for culpa-contractual because there is no privity between the passenger and the
driver. Rather, the passenger has contractual relations with the common carrier. Employees of
the common carrier may also be held liable (captain, crew).

Civil liability of the driver in a criminal case. The liability of the bus driver is direct and primary.
Supposedly, he is the only one who should be liable in the civil aspect in a criminal case. Except
when incase of insolvency of employee, the common carrier, employer, can be liable to the
injured passenger, subsidiary liability.

Common carrier may be held primarily liable if the case is quasi-delict. Article 2180 provides
vicarious liability. Employers shall be liable for damages cause dby their employees and house
hold helpers acting in the scope of their assigned task even though the former are not engaged
in any business or industry.

A is the owner of bus driven by B. C is the owner of a jeepney driven by D, which collided with
the bus A. E is the passenger of the bus of A. This is a situation where the negligence of a third
person, concurs with that of common carrier. Discuss the liabilities of the parties.

D may be liable for quasi-delict and culpa criminal. C, the common carrier, can be held liable
under vicarious liability. D, the driver of A, can be held liable for quasi-delict for his acts or
omissions, or under delict. But for the common carrier, A. Culpa contractual.

Nature of liabilities common to these parties is jointly and severally.

If one party is not impleaded, the other parties can file a third party complaint. Does not matter
whether the liability of one springs from contract, and the other from quasi-delict. Regardless of
the nature of liability that we have against them. This is an alternative cause of action. The
cause of action being the breach of contract and quasi-delict where the plaintiff can file these
alternative causes of action. There is only one limitation. There should be no double recovery
for the same injury.

What is the rule in terms of alleging a cause of action based on culpa contractual? What should
be alleged only is that there is a presence of contract. Another is that there is an injury from the
claiming party. Because there is already a presumption of negligence. There is no need for the
court to make an express finding of fault.
To what extent a common carrier may be liable? If the common carrier is in good faith, the
extent of his liability is on the natural and probable consequences of the breach of contract.
While if the carrier acted in bad faith, or guilty of gross negligence, his liability shall be for all
damages, whether the same can be foreseen or not.

“Juicy transaction”. Mr Sy is claiming that he could have profited from his business venture if not
for the accident from the negligence of common carrier. While the common carrier for all forms
of damages possible in case he is in good faith, you must also be guided by the facts that the
damage is reasonable attributed to the breach. There must be reasonable connection. But in the
absence of bad faith or guilty of gross negligence, those that are the only natural and probable
cause. Most likely, Mr Sy will only be liable for the actual damages that he suffered which is his
injury to his person.

Kinds of damages: 1) Moral; 2) Exemplary; 3) Nominal; 4) Temperate; 5) Actual; and 6)

Liquidated. For actual damages, proof of pecuniary or monetary loss is necessary.Liquidated
damages, if against public policy. Because it is included in the contract. It is one form of damage
not left, as a general rule, to the discretion of the court.

Actual or compensatory damages. When can we recover? It is an adequate compensation for

pecuniary loss suffered. Pecuniary loss here pertains to: 1) Loss of what the person already
possess; 2) failure to receive benefit that would have actually pertained to him. Who has the
burden of proving in this kind of damage? Plaintiff claims for the damage. Damage is not
presumed. You must be able to establish the facts that provide basis for these kinds of
damages.

How do we put value to goods that are loss or destroyed? There value at the time of
destruction. You can find basis in the bill of lading. That which the plaintiff would have to pay for
in the market during that existing time. But what if personal injuries? Those that are reasonably
connected with the injury, all medical expenses will be reimbursed by way of damages.
Assuming, natamaan yung mukha ni Mr Sy, nangailangang magplastic surgery, would you be
able to claim for damages?Any medical expenses necessary to restore the damaged part of
body. But this does not include those that are not reasonably necessary to restore the part
damaged to its normal state. For aesthetics, no longer allowed.

Up to what extent can the relatives claim for the deaths of the passenger. Entitled up to the
amount spent during the wake and funeral. Only extends up to the burial/cremate.

Moral damages. It includes, mental anguish, physical suffering, serious anxiety, fright, social
humiliation, mental shock, wounded feelings. What is important is that, the injury should be the
proximate result of the defendant’s wrongful act.

Moral damages can be recovered when there is bad faith. There is bad faith when there is
deceit that a party committed. There is bad faith also when there is gross negligence. Failure to
exercise even the slightest care or diligence. There is a thoughtless disregard of consequences.

Requisites: 1) There mnust be an injury suffered; 2) There must be the culpable act or omission
that can factually establish the said negligence; 3) Wrongful act or omission which is the
proximate cause of injury or claimant.
Liquidated damages. Those agreed upon by the parties to a contract. This will be paid in case
there is a breach in the contract. Amount is not left in the discretion of courts. Except when the
stipulation is against the law, public policy, or unconscionable, or iniquitous. If the breach
committed is not the breach contemplated. The court can intervene. Example, stipulation is if
the common carrier deviates, he will be liable for 1m. But the breach committed is actually delay.
In this case, the common carrier will not be liable for the stipulated amount. The CC will be liable
based on the amount decided by the court. But if it is not contemplated, then the courts may
decide on the amount.

Exemplary or corrective damages. Exemplary damages, awarded to set example that such act
should not be tolerated. “Wag tularan”. Guidelines before the court can award exemplary
damages. Not available when there is no actual or compensatory damages. Dependent on
these damages.

If parties stipulate on renouncing exemplary damage in advance. That stipulation is null and
void.

Dec 3, 2021

How would you be able to fly over or land, in the territory of another? In order for an aircraft to
fly and land to the territory of another, there must be a bilateral treaty between the two
government that will define the air traffic rights of each other. There must be consent of a
particular sovereign so that another country can make use of its air space. This is the essence
of the Chicago convention. What do we call this agreement? Air service agreement, or bilateral
air negotiation.

DFA talks with the Air Negotiating Panel. The panelist is composed of government bodies,
including the DFA, the DOT, DOTr, CAB, and the domestic players such as the PAL, CebuPac.
They need to talk because the key is reciprocity, whatever Singapore asks from us, we can also
get from Singapore. Once they come up with resolution, they will then contact Singapore for the
bilateral air negotiations. The product is the treaty called the air service agreement. What is
included in the Air Service Agreement? Which airlines of Singapore can fly into the Ph. Which
airlines of the Ph can fly into Singapore. What routes can be serviced. How many times and
how many passengers can be carried. Most especially, what are the freedoms of the air that will
be granted.

There are 9 freedoms of the air that may be contained in the air service agreement. For the Ph,
we only use the five. The first freedom is the right of overflight. Country A will fly over the air
space of Country B. No going down, fly over only. The second freedom, is non-traffic rights. In
aviation when we say traffic, that means you take on and disembark passengers. Here, there is
no traffic. Walang babaan, walang sakayan, walang pagkuha ng customer. I will allow it only for
refuling purposes or maintenance but you cannot do business here. The third and fourth
freedom are the most common types of Air service agreements. The third freedom, for example,
the aircraft of Singapore will be allowed to go into the Ph to take down passengers. Conversely,
the fourth freedom will allow Singapore airlines to go back to its home country taking on
passengers from Ph back to Singapore. Here comes the complication, the 5th, 6th and 7th. In the
5th, kakaalow lang ng Pilipinas ng ASA. This is the concept, Singapore is going to the Ph, and
then going to another country, Thailand. With the permission of Thailand, Singapore airlines can
take passengers, drop them off to the Ph, and take also passengers in the Ph and have for its
final destination, Thailand. Philippines is not giving the 6th and 7th freedom. This is the scenario,
si Philippines, diyan mangagaling si Singapore airlines and hind isa sarili niyang home country.
It will originate from the Ph, and tsaka lang siya babalik ng Singapore at saka lang siya pupunta
ng Thailand. Sa 7th freedom, hindi siya at all pupunta at lalapag sa Singapore pero nagooperate
siya sa Ph and Thailand. 6th and 7th are not allowed in Ph. These are common in countries that
have Unions, example is European union, because for the economy, it works for all the
members. The two other last freedoms not allowed in Ph is cabotage. What is cabotage? It is
the transporation of goods and passengers in a country between 2 places of the same country
but the transportation operator is from another country. This is the 8th freedom. For example,
country A will be going to the Ph and then may dalawang place sa Ph, for example Boracay and
Batanes, the Singapore airline will go to Boracay and will go again to Batanes. This is not
allowed. In the 9th freedom, the service performed is entirely within the territory of the granting
state. The Singapore airlines operates only in the Ph. Walang uwian sa bansa nila, nagooperate
lang sa dalawang domestic points ng Ph. The Ph has a strong policy against cabotage rights.

For economic protection, national security, and public safety. More on convenience.

Why would we allow foreign players to profit for what should supposedly go to our local players.
Second is a threat to security. Any foreign body flying into our airspace on a regular basis
servicing our domestic points could pose a threat to our own security, privacy, national issue.
For convenience as well, there might be problem in easing through because of the barriers
involved. With respect to competition, it has advantages and disadvantages.

Obligations of carrier in air transportation. Air worthiness, there must be competent officers and
crew; adequate facilities; and the captain and crew are expected to exercise EOD in operating
the aircraft and providing convenience to the passengers. By definition, air worthiness it is in
such a condition that it will be able to withstand the rigors of the flight. What is included in air
worthiness or due diligence is not only for passengers but also for goods and baggage of
passengers. Any violation equals breach of contract.

What are the various kinds of breach that can be encountered in air transportation.
Jurisprudence provides, a benefit acquired by a passenger may still be considered breach when
consent to that benefit was not acquired by the common carrier. Another form of breach is delay
and diversion of flight. When the carrier fails to transport you on time, that is a breach. When the
carrier deviates, this is a breach unless the delay, diversion is for justifiable reasons. Such as
technical glitches or force majeur. There are situations when there is diversion to another
airport. There has to be an emergency landing because the pilot in his discretion cannot
continue the journey.

In terms of delays, cancelations and diversions, while they are deemed to be breach of contract,
these are already regulated by the laws. We have the Air passengers bill of rights. The air
passenger bill of rights tells us what we can do under cancelations, delays, and lost baggage.
When there is cancellation, the cancellation must be notified to you before the 24 hour period
prior to the Estimated Time of Departure. If the cancellation is less than 24 hours before the
ETD and the reason is attributable to carrier, you have the right to amenities. Included in this
amenity is pwede ka nilang ipahotel. Too late na when they cancelled. Also you have the right to
be reimbursed, rebooked or endorsed to another carrier. Cancellation due to force majeur, you
have a right to be reimbursed for the full value to the fair. This is one that is not attributable to
the carrier. But what about delay? There are two kinds of delay. First, terminal delay (andun ka
sa airport nagaantay ng flight) and another is Tarmac delay (nakasakay ka na sa aircraft at yung
aircraft andun lang nagaabang sa Tarmac). When there is terminal delay and delay is already 3
hours, you will be entitled to rebook or refund or to be endorsed. Apart from that, the amenities
included is that papakainin nila kayo.

Air passengers bill of rights also tells us your compensation rights for delayed, lost and
damaged baggage. The right to compensation in case of these damages and injuries, with
respect to international flights, the relevant convention will apply. That is why we need to know
the warsaw and montreal convention. The air passengers bill of rights is only important because
it is in respect of flights, to and from the Philippines. Only in the Ph scenario. For international, it
is warsaw or montreal convention. More importantly, let us talk about over booking.

Will overbooking constitute a breach of contract? Overbooking is an accepted airline business

practice. It is not prohibited. Airlines would profit in this business. The idea is that, you are
accepting passengers for pay beyond your capacity. Because there is an off chance that a
passenger will not arrive although he paid for his ticket.

We solve overbooking via auction system. Wherein, for example, you are all part of one flight.
Assuming that you are passengers waiting to board, there is now an announcement from the
airline ground attendant that the flight is already overbooked. Now, we would like to ask our
passengers who are willing, we would give free tickets to mactan cebu. So, the passengers sold
their tickets. But we need 10 to offload. Kulang padin. We need 5 more to volunteer. There is an
auction system that can resolve this particular issue.

Inspection of aircraft that is done for security reasons, this also heightened the security checks.

Dec 10, 2021

Maritime law. Dito tayo sa specifics ng maritime transportation.

What is maritime law? Anything that relates to the business and affairs of the sea, particularly
with the crew, to its navigation and to the conveyance of passengers and goods.

What governs maritime law? The laws governing maritime commerce is the Civil Code,
suppletory, we have code of commerce and other special laws such as COGZA, and other
special laws.

In understanding martime commerce, and before you get to appreciate the limited liability rule
which plays a major role in maritime law. Let us first understand its rela and hypothecary nature.
The real and hypothecary nature means that the liability of the carrier in connection with laws
related to maritime contracts is confined with the vessel. Essentially, thiswould also explain
limited liability rule.

What is real and what is hypothecary? Real means the extent of the liability, to what extent?
Only to the very res, or real property involved in endeavor. So that when there is such a thing as
limited liability rule, we will know later on that it is coextensive only to the value of the vessel, the
vessel being the res. This is the real nature. What about hypothecary? Hypothecary means to
pledge. What do we mean when we say there is hypothecary nature. In a way, you free yourself
from liability because you already pledge the ship in favor of any claiming parties.

What is the limited liability rule? It states that the liability of ship owner is co-extensive is with the
vessel. If there is no vessel, the shipowner has no liability. Civil liability of the ship owner shall
be understood to be limited to the value of vessel with all the apertinances and freitage earned
during the voyage.

Who claims the limited liability rule? Only the ship owners. The owner pro hac viche, owner for
the time being, the bareboat. The charterer becomes the owner becomes the owner for the time
being.

Situation: A vessel was chartered via a bareboat charter and the vessel met an accident,
leaving no traces of the vessel. Can the charterer be the owner prohac vice, invoke limited
liability rule against a ship owner. In this situation, the ship owner will claim against the
charterer, because during his possession, the vessel owned by the ship owner sank at sea.
Since the charterer is the owner pro hac vice, can the charterer say, ship owner, you have no
cause of action against me, because no vessel no liability, remember I am the owner for the
time being.

When you said a while ago that it is only the ship owner who can invoke the rule, it does not
apply to a charterer via a bare boat charter. Take note that while possession belongs to him and
even acts of administration, full dominion belongs only to the ship owner. Included in the full
dominion is the right to invoke the limited liability rule. It will not be allowed to a charterer who is
an owner for the time being only. Only the ship owner can invoke.

It is not all the time that the ship owner can invoke the limited liability rule. There are exceptions:
1) Workmen compensation claims. These are claims of the ship crew when something happens
to them during the performance of their tasks. Limited liability cannot be invoked because it is
unfair for the ship crew to be not given the proper compensation when something happens to
them. Limited liability rule is for contracts of carriage. There is no contract of carriage between
the crew and ship owner but rather employment contract. 2) When the injury or death of
passenger was caused by the negligence of the ship owner or the negligence of both the
captain and ship owner. Here, there is concurring negligence on both the captain and ship
owner. Ship owner cannot claim because he is responsible for the sea worhiness, that is part of
EOD, and when he has contribution to the vessel becoming unseaworthy, it is unfair if he is still
allowed to invoke the limited liability rule. 3) Liability of owner for repairs before the loss or total
destruction of the ship. Since the liability arose prior to voyage. There is also no contract of
carriage here but rather service contract since the common carrier already has liability to the
service man or repair man. 4) Limited liability rule does not apply in insurance claims. The ship
owner procured an insurance for his vessel, to answer for claims in the event of accident so that
when the insurer pays for the claimants, can the insurer go after the ship owner? The essence
of insurance will be for naught when the insurer can invoke the limited liability rule.

Situation is where the insurance is procured over the vessel by the ship owner and then
afterwards, the passengers or claimants are claiming against the insurer. In this case, the
insurer is duty bound to answer for the claims of these parties. He cannot say that no vessel no
liability. Subrogation has no effect here since it is his duty.

Does the limited liability rule apply to an action of the insurer in subrogation. Yes, limited liability
rule applies to paying insurer when it exercises its rights of subrogation against the ship owner.

Scenario 1, hindi pwedeng iinvoke ang limited liability rule kasi insurer ka. On the second
scenario, limited liability rule is allowed to be invoke when

What if this second scenario tells us that there is an insurance over the goods procured by the
shipper himself. What are its consequence? Kapag nagkaroon ng accident, the insurer of the
goods will now pay the shipper. What will happen? As a common consequence of insurance
contracts, the insurer will now be subrogated to the rights of the shipper as if he is the shipper
himself. In this situation since he is already subrogated to the rights of the shipper, what the
shipper would do is to claim against the common carrier. Take note the insurer is now claiming
from the common carrier because of the subrogation by virtue of the insurance over the goods
procured by the shipper. Can the common carrier now invoke the limited liability rule against that
insurer? Yes. Because it is like the insurer is the shipper himself because he is now acting in
subrogation. All claims now against the ship owner, the ship owner can invoke the limited
liability rule. What is the difference between the first and second scenario? In the first scenario,
we are claiming against the insurer so that the limited liability rule will not apply because the
insurer has to pay. In the second scenario, the insurer is claiming against the ship owner himself
so that the ship owner can now invoke the limited liability rule.

Limited liability rule may only be invoked by the ship owner.

In the second scenario, the insurance is over the goods.The shipper procured an insurance over
his own goods so that the vessel met an accident, there will be an insurance paid to him for the
damage to the goods. Now the accident happened, as the insurer of the goods, the insurer will
now pay the shipper. Now, the insurer has been subrogated to the rights of the shipper.

Abandonment. It is a requisite for the owner to invoke the limited liability rule. This applies in a
situation when there is a collision and partially, andyan parin yung vessel. If there is still partial
existence of vessel, the limited liability rule cannot be applied. This is another exception. So
that you need to abandon in order that there will be 0 liability. This is not absolute. Abandonment
will no longer be necessary when there is no more vessel to speak of. Kapag nagkaroon ng
collision, nagsink totally, no need to abandon.

The limited liability rule explains the extent of liability of ship owner, that his liability is based
upon his interest over the vessel. No vessel, no liability. Therefore it has to be totally lost so that
liability is extinguished. If part of the vessel still exists, he may only escape liability only through
abandonment. If there is no abandonment, limited liability rule cannot apply.

Lumubog ang barko, now there are claims. How do we enforce the claims? What is the
procedure followed? To invoke the limited liability rule, the ship owner must prove that it
exercised EOD in taking care of the goods or passengers.

It is normal that there are claimants after there is an accident because there are passengers
injured. When there are accidents, in this context, we talk about an accident where there is no
more vessel. Here, there is no more liability. Mam, paano po yung enforcement po nun? This is
akin to Corpo’s trust fund doctrine. This means that the asset of the corporation are working like
a trust fund which the creditors can look up to when the corporation becomes insolvent. IOW,
whatever is left of the assets, that will be reserved for the creditors. And, their claims will be
satisfied simultaneously, prorated according to their interests. When we are comparing this to
the sinking of the vessel, think of the sinking vessel as like an insolvent corporation, the
claimants now can go after the insurance proceeds of the vessel. They can also go after any
pending freitage. Whatever is left, we will put it in total and all the claimants will be given
prorated. That is how it will be answered. Hindi nangangahulugan na no vessel no liability ay
wala na talagang makukuha. They can all share in the insurance proceeds or any collectibles of
the ship owner in order to satisfy at least their claims in a prorated bases.

Protests are the written statements by the master of the vessel when the following happens: 1)
vessel makes an arrival under stress; 2) when vessel is ship wrecked; and 3) averages (when
the vessel has undergone through a hurricane and the captain believes that the cargo suffers a
damage); and 4) maritime collision.

Limited Liability Rule is very important.

CHAPTER 11

What are vessels? Vessels or water craft are any barge, passenger ship, tanker, container
ship… utilizing any source of locomotive power designed for being used as a means of
transportation operating as a common carrier.

It does not contemplate all floating structures. Those operated by AFP and by foreign
government for military purposes. Boats and small vessels are not considered as common
carriers for purposes of discussing maritime transportation. Only sea going vessels are
pertained to. Boats and small boats are not included.

When it is only for the purpose of transporting passengers from ship to shore, they are not
considered as common carriers because they are subject to other provisions and they are not to
be covered.

Are vessels to be considered real or personal property? Aquino, it is personal property because
under article 416 of NCC, they can be easily moved or transported from one place to another
without impairment.

Docks and structures are still real property under article 415 because they are permanent
docks. Even those floating but are still, they are real properties.

For purposes of the discussion, take the vessel as a personal property. However, the modes of
acquisition is like that of real property. How is a vessel acquired? It can be acquired either by
occupation, intellectual property, succession, donation, sale, and prescription, and by any
means recognized by law. Among the enumeration given is intellectual creation. But we cannot
acquire vessels by intellectual creation. Please do not use “any means recognized by law”.
Identify each one other than intellectual creation.
By the time we acquire, we transfer ownership to which proper regulatory body should we go to,
the MARINA. MARINA means Maritime Industry Authority. A boat, technical or economic, goes
with MARINA. Ph Coast Guard is not the main agency concerned with the technical or
economic boats. There is only one regulatory body for sea.

When it comes to ship’s “Manifest”. What is it? It is a declaration of the entire cargo to furnish
the customs officer with the least of checks from revenue officers of what goods are being
brought to the country on the vessel. What is the difference between a bill of lading and
manifest. While a bill of lading is like a contract between the shipper and carrier, it can never
replace a manifest. The manifest has a different purpose. It is an official document that must be
executed prior to voyage to reflect the entire cargo of the ship unlike the bill of lading which is
issued also prior to voyage however it reflects only the specific cargo of the shipper. The
manifest is being executed and submitted to the proper regulatory body, while the bill of lading is
issued to the shipper. Magkaiba ang purpose nila, one is that it is a receipt, contract, and
document of title, while the manifest is an official document. Another purpose of manifest is for
the passengers, so that if there is an accident, there is an official list that can be used as
reference in order to determine the passengers being carried, and or the goods being carrier.

Several rules regarding “Manifest”: 1) That the total passengers on the board shall not exceed
the total number of passengers for each trip; 2) All passengers shall be duly manifested as
reflected in the passenger’s manifest; 3) it shall be prepared and available before the ship
leaves the port; and 4) For children over the age of 3 years and above, provided that they
should always with their parents.

Manifest should be executed prior to voyage. Not during, not after. What is Cabotage? It is the
engagement of either the airline or the shipping for the provision of service from one place to
another within the same country by a foreign vessel. It is the same concept with aviation. There
is a difference between aviation and maritime. It is allowed in maritime but not in aviation. What
is the purpose of cabotage? Why is cabotage allowed in maritime commerce? Under RA 10668,
it is to stimulate economic activity and to make the shipping cost affordable as well as to align
the support to the plan ASEAN market integration. Who benefits from this law? Those availing
of the services, the end users, consumers, the micro, small and medium enterprises. It will help
stimulate the economy in what way? For the advantage of micro, small and medium enterprises
and ultimately, will benefit the consumers. Why is it allowed in maritme? The benefactors of
cabotage in maritime commerce are the MSMEs, so we are talking about small time merchants.
They have lower working capital. Assuming there is a foreign vessel coming from Malaysia who
transports goods to Cebu. However, it will pass through some of our islands, one of which is
Davao, so that if you will co-load your goods, if you are a small time merchant from Davao, and
makikicoload ka sa carrier papuntang Cebu,masmaliit yung babayaran niya if mageroplano siya
from Davao to Cebu. An MSME is not expected to use airfreight because it is expensive. It is
more economical for the MSME to use co-loading via the cabotage rights given to a foreign
vessel. There is also the reason of space. If we transport via plane, we also consider the
volume and the weight it self. Masmaliit ang eroplano. Masmaliit ang sinisiksikan mo because
your are buying the space. Also, at the end of the day, the one who benefits is the end
consumer.