EVIDENCE

PRELIMINARIES
LAWS GOVERNING CONTRACTS OF TRANSPORTATION
CONTRACT PRIMARY LAW SUPPLETORY LAW
LAND TRANSPORTATION
Common carriers New Civil Code Code of Commerce
Private carriers (commerce) Code of Commerce
Property New Civil Code (deposit) New Civil Code
Private carriers (non-commerce)
Passengers New Civil Code (contracts)
AIR TRANSPORTATION
Philippines as destination New Civil Code Code of Commerce
Philippines as one of the itineraries Treaties, international agreements, Montreal Convention New Civil Code
WATER TRANSPORTATION
Coastwise Code of Commerce
New Civil Code
Foreign port to Philippine port Code of Commerce
Philippine port to foreign port Law of the country of destination and COGSA

TRANSPORTATION
It is the movement of persons or things from one place to another, and is 2.1 Section 11, Article XII- National Economy and Patrimony provides
immaterial whether the carrying be over land, water or air. It includes waiting that the grant of any franchise or any form of authorization to operate a public
time, loading or unloading, stopping in transit, and all other accessorial utility is limited to Filipinos or Filipino corporations owned at least 60% by
services in connection with the loaded movement.1 Filipinos. The participation of foreigners in the equity and the governing body is
thus limited to 40% but it is required that all executive and managing officers
CONTRACT OF TRANSPORTATION must be Filipino. Note the ruling in the case of Gamboa v. Teves providing for
A contract of transportation is one whereby a certain person or association the determination of Filipino nationality.
of persons obligate themselves to transport persons, things, or news from one
to another for a fixed price.2
2.2 The Constitution does not prohibit the mere formation of a public
utility corporation without the required proportion of Filipino capital. What is
PARTIES TO A CONTRACT OF TRANSPORTATION
prohibited is the grant of a franchise or other form of authorization for the
1 SHIPPER operation of a public utility to a corporation already in existence but without the
one who agrees to deliver the things or news to be transported, or to present requisite proportion of Filipino capital.7
his own person or those of other or others in the case of transportation of
passengers 2.3 The Constitution does not require a franchise before one can own the
2 CARRIER facilities needed to operate a public utility as long as it does not operate them to
one who binds himself to transport persons, things, or news, as the case may serve the public. The ownership per se of the facilities of a public utility does not
be, or one employed in or engaged in the business of carrying goods for constitute the owner thereof as a public utility. It is the use thereof to serve the
others for hire public that will constitute it as a public utility.8
Carriers are persons or corporations who undertake to transport or convey
goods, property, or persons, from one place to another, gratuitously or for
hire, and are classified as private or special carriers, who transport or OWNERSHIP AND OPERATION
undertake to transport in a particular instance for hire or reward and common OPERATION OWNERSHIP
or public carriers. a relation in law by virtue of which a use as an incident of ownership is
3 CONSIGNEE thing pertaining to one person is limited by law when it is to be
party to whom the carrier is to deliver the things being transported, or to completely subject to his will in operated and used to serve the public
whom the carrier may lawfully make delivery in accordance with its contract everything not prohibited by law as a public utility10
of carriage or the concurrence with the rights of
The shipper and the consignee may be the same person. another9
The right to operate may exist independently and separately from ownership of the
facilities. A person can thus own the facility but not operate it as a utility or may operate
a public utility without owning the facilities, like in the lease of airplanes or vessels.
LAWS ON TRANSPORTATION THAT HAVE APPLICATION IN THE
PHILIPPINES
FORMATION OF PUBLIC UTILITY CORPORATION NOT
1. Whether transportation is by land, sea or air, the primary law are TANTAMOUNT TO OPERATION OF PUBLIC UTILITY
Articles 1732 to 1766 of the New Civil Code. The secondary laws, particularly The mere formation of a public utility corporation does not ipso facto
as to the rights and obligations of a common carrier are the Code of Commerce characterize it as one that is operating a public utility. The moment of
and/or special laws. determination of Filipino nationality is when it applies for a franchise to
operate a public utility.
1.1 The specific aspects that will be discussed are: (a) Public Utilities as
covered by the Public Service Act 3 (b) Common Carriers as covered by the Civil MANDATORY CONDITION FOR GRANT
Code4 (c) Commercial Contracts for Transportation Overland 5 (d) Maritime This grant is always subject to the condition that it may be amended, altered
Commerce6 or repealed when the common good so requires as Section 17, provides that in
times of national emergencies, when public interest requires and under
2. Both the primary and secondary laws however are subject to the reasonable terms, it may temporarily take over the operation of a privately
Constitution as the supreme law. owned public utility or business affected with public interest.

1
87 C.J.S. Transportation
2
Crisostomo v CA, G.R. No. 138334 (2003)
3
Commerce Act No. 146, as amended by the Warsaw Convention of 1929 as to carrier liability
4 7
Articles 1732-1766 People vs. Quasha, 93 Phil 333
5 8
Articles 349-379, Code of Commerce Iloilo Ice and Cold Storage vs. Public Service Board, 44 Phil 551
6 9
Articles 673-736, Article 580-584, Code of Commerce as superseded by RA 6106, Articles 806-845, Code of Tolentino II, Commentaries and Jurisprudence on the Civil Code of the Philippines
10
Commerce, Carriage of Goods by Sea Act, Commerce Act No. 65 Tatad vs. Garcia, 243 SCRA 436

1
 REMEDIAL LAW
2.7 Under Section 18,11 if in the interest of national welfare or defense,
upon payment of just compensation, there may be a transfer to public
ownership of utilities and other private enterprises.
2.8 Under Section 19,12 the state may regulate or prohibit monopolies
when the public interest requires and no combination in restraint of trade or
unfair competition shall be allowed.13
CONTRACT OF TRANSPORTATION
It is a contract whereby a person obligates himself to transport persons or
property from one place to another for a consideration.
shuttle bus and proceeded to the ramp of the aircraft and baggage already loaded
to the aircraft.
* Public Utility Bus or Jeepneys or Street Cars – once it stops it is in effect
making a continuous offer to riders; perfected when passenger is already
attempting to board the vehicle
* TRAINS – perfected when a person:
a. purchased a ticket/ possess sufficient fare with which to pay for his passage
b. presented himself at the proper place and in a proper manner to be transported
c. has a bona fide intention to use facilities of the carrier

CONTRACTS OF TRANSPORTATION 2.
CONTRACT PASSENGERS GOODS
To carry agreement to carry the Shipper – the person who delivers the goods to the carrier for transportation;
passenger at some future date pays the consideration or on whose behalf payment is made
consensual contract; perfected
by mere consent Consignee – person to whom the goods are to be delivered. May be the shipper
himself or a third person who is not actually a party to the contract
Of carriage
real contract; perfected by Perfection:
actual use > contract to carry goods – consensual
> contract of carriage - act of delivery of goods ( goods are unconditionally
placed in the possession and control of the carrier and upon their receipt by the
carrier for transportation)

1 CARRIAGE OF PASSENGERS
Parties: common carrier and passenger

2 CARRIAGE OF GOODS
Parties: shipper and carrier

1.

PASSENGER
A passenger is one who travels in a public conveyance by virtue of
contract, express or implied, with the carrier as to the payment of fare or that
which is accepted as an equivalent thereof.

Perfection:

2 types of contracts of carriage of PASSENGERS:

> () –

* AIRCRAFT – perfected even without issuance of ticket as long as there was

already meeting of minds with respect to the subject matter and consideration

>
–not until the facilities of the carrier are actually used can the carrier be said to
have assumed the obligation of the carrier;.

* AIRCRAFT – perfected if it was established that the passenger had checked in

at the departure counter, passed through customs and immigration, boarded the

11
Article XII, National Economy and Patrimony, 1987 Constitution
12
Article XII, National Economy and Patrimony, 1987 Constitution
13
NPC vs. Court of Appeals, GR No. 112702, September 26, 1977

2
 EVIDENCE
o Art. 1732 also carefully avoids making any distinction between a person or
CHAPTER I COMMON CARRIERS enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.17
COMMON CARRIERS
o Art. 1732 does not distinguish between a carrier offering its services to the
A common carrier is a person, corporation, firm or association engaged
general public and one who offers services or solicits its business only from a
in the business of carrying or transporting passengers or goods or both, by
narrow segment of the general population.18
land, water, or air, for compensation, offering its services to the public.14
One is a common carrier even if he has no fixed and publicly known route, maintains no o A person or entity is a common carrier and has the obligations of the common
terminals and issues no tickets. carrier under the Civil Code even if he did not secure a Certificate of Public
Convenience.19
PRIVATE CARRIER o The Civil Code makes no distinction as to the means of transporting, as long
A private carrier is one who, without being engaged in the business of as it is by land, water or air.20
carrying goods for hire as a public employment, undertakes to transport goods o The Civil Code does not provide that the transportation should be by motor
or passengers either gratuitously or for compensation. vehicle.21
A carrier which does not qualify under the requisites of a common carrier is deemed a o A person or entity may be a common carrier even if he has no fixed and
private carrier.15 publicly known route, maintains no terminals, and issues no tickets.22
o A person or entity need not be engaged in the business of public transportation
COMMON CARRIERS AND PRIVATE CARRIERS for the provisions of the Civil Code on common carriers to apply to them.23
COMMON CARRIER PRIVATE CARRIER o The carrier can also be a common carrier even if the operator does not own
As to clientele the vehicle or vessel that he or she operates.24
A person who offers his services to carry passengers or goods for a fee is a common carrier,
holds itself out to all persons who agrees in some special case with
regardless of whether he has a certificate of public convenience or not, whether it is his
choose to employ it as ready to some individual to carry for hire main business or is incidental to such business, whether it is scheduled or unscheduled
carry for hire service, and whether he offers his services to the general public or to a limited few.25
As to whether it may refuse to enter into a contract of carriage
bound to carry for all who offer not bound to carry for any reason, CERTIFICATE OF PUBLIC CONVENIENCE
such goods as he is accustomed to unless bound by a contract A common carrier is required to obtain a certificate of public
carry and tender reasonable convenience.26 However, the absence thereof does not mean that it is not a
compensation for carrying them common carrier nor is it required to incur liability as a common carrier.
As to required degree of diligence The liability arises upon acting as a common carrier.
extraordinary diligence ordinary diligence (diligence of a To exempt it from the liabilities because it has not obtained the necessary certificate of
good father of a family) public convenience is offensive to sound public policy; it would reward such carrier
As to presumption of negligence precisely for failing to comply with the applicable statutory requirements.27
presumed to have been at fault or no presumption of negligence
to have acted negligently if the CHARTER PARTY
goods are lost, destroyed or It is a contract by virtue of which the owner or agent of a vessel leases the
deteriorated or in case of death of or entire ship or some principal part thereof to another person for a specified
injuries to passengers period of time or use.
As to regulation It is a common carrier if the charter party is a contract for affreightment. However, it is
considered a private carrier if the contract is bareboat or demise charter.
subject to regulation not subject to regulation
As to exemption from liability for negligence of employees
cannot stipulate that it is exempt may validly enter into a stipulation
BAREBOAT OR DEMISE CHARTER
from liability for the negligence of exempting it from liability A bareboat or demise charter is one whereby the charterer becomes owner
its agents or employees pro hac vice of the vessel. He mans the vessel with his own people and
becomes, in effect, the owner of the vessel for the voyage or service
stipulated. The whole vessel is leased to the charterer transferring to him its
TESTS TO DETERMINE WHETHER ONE IS A COMMON CARRIER entire command and possession and consequent control over its navigation,
(1) It must be engaged in the business of carrying goods for others as a including the master and crew who are his servants.
public employment, and must hold itself out as ready to engage in the
transportation of goods or persons generally as a business and not as a
CHARTER BY AFFREIGHTMENT
casual occupation.
(2) It must undertake to carry goods of the kind to which its business is It is one whereby the owner of the vessel leases part or all of its space to
confined. haul goods for others. It is a contract for special service to be rendered by the
(3) It must undertake to carry by the method by which its business is owner of the vessel. Under such contract, the shipowner retains the possession,
conducted and over its established routes. command, and navigation of the ship, the charterer or freighter merely having
(4) The transportation must be for hire or compensation. use of the space in the vessel in return for his payment of the charter 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 PIPELINE OPERATOR
whether the undertaking is a part of the activity engaged in by the carrier that he has A pipeline operator who carries oil and other petroleum products through
held out to the general public as his business or occupation. The question must be pipes/pipelines is deemed a common carrier. The law does not distinguish as to
determined by the character of the business actually carried on by the carrier, not by
the means by which transportation is carried out, as long as it is by land,
any secret intention or mental reservation it may entertain or assert when charged with
the duties and obligations that the law imposes. water, or air. Neither does the law require that transportation be through a
The fact that one has a limited clientele does not exclude it from the definition of a motor vehicle.28
common carrier.

RULES AND PRINCIPLES GOVERNING COMMON CARRIERS

The concept of common carriers contemplated under Article 1732 of the Civil 17
Ibid.
Code and the fact that the said concept corresponds to the concept of “public 18
Ibid.
service” under the Public Service Act results in the application of the following 19
Ibid.
20
rules or principles: First Philippine Industrial Corporation v. CA, G.R. no. 125948, December 29, 1998
21
Ibid.
o Art. 1732 makes no distinction between one whose principal business 22
Asia Lighterage and Shipping, Inc. v. CA, G.R. No. 147246, August 19, 2003
activity is the carrying of persons or goods or both, and one who does such 23
Fabre, Jr. v. CA, G.R. No. 111127, July 26, 1996
carrying only as an ancillary activity.16 24
Cebu Salvage Corporation v. Philippine Home Assurance Corp., G.R. No. 150403, January 25, 2007
25
De Guzman v. CA, G.R. No. 47822, December 27, 1988
14 26
Article 1732, Civil Code Section 15, Public Service Act
15 27
National Steel Corporation v. CA, G.R. No. 112287, December 12, 1997 Loadstar Shipping Co. Inc., vs. CA, GR No. 131621, September 28, 1999
16 28
De Guzman v. CA, G.R. No. L-4782, December 22, 1988 First Phil. Industrial Corp. v. CA, G.R. No. 125948, December 29, 1998

3
 REMEDIAL LAW
CUSTOMS BROKER
A customs broker may be regarded as a common carrier. As long as a
person holds itself to the public for the purpose of transporting goods as a
business, it is already considered a common carrier regardless if it owns the
vehicle used or has to hire one.29
TRAVEL AGENCY
A travel agency is not a common carrier. It is not an entity engaged in the
business of transporting either passengers or goods and is therefore neither a
private nor a common carrier. Its covenant with its customers is simply to make
travel arrangements on their behalf.30
DILIGENCE REQUIRED OF COMMON CARRIERS
The diligence required of common carriers is EXTRAORDINARY
DILIGENCE. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence,
according to all the circumstances of each case, in the vigilance over the goods
and for the safety of the passengers transported by them.
EXTRAORDINARY DILIGENCE
It is that extreme measure of care and caution which persons of unusual
prudence and circumspection use for securing and preserving their own
property or rights. The law requires common carriers to render service with the
greatest skill and utmost foresight.31
DEFENSE OF DUE DILIGENCE IN THE SELECTION AND SUPERVISION
OF AN EMPLOYEE NOT AVAILABLE TO A COMMON CARRIER
The defense of due diligence in the selection and supervision of an
employee is not available to a common carrier because the degree of diligence
required of a common carrier is not the diligence of a good father of a family but
extraordinary diligence, i.e., diligence of the greatest skill and utmost
foresight.
LIABILITY FOR INJURIES TO PASSENGERS DESPITE ORDINARY
DILIGENCE AND CARE
Common carriers are liable to injuries to passengers even if the carriers
observed ordinary diligence and care because the obligation imposed upon them
by law is to exercise extraordinary diligence. Common carriers are bound to
carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons with a due regard for all
the circumstances.
EXERCISE OF EXTRAORDINARY DILIGENCE IN THE CARRIAGE OF
GOODS AND TRANSPORT OF PASSENGERS
CARRIAGE OF GOODS TRANSPORT OF PASSENGERS
As to commencement
from the time the goods are from the moment the person who
unconditionally placed in the purchased the ticket from the carrier
possession of and received by the presents himself at the proper
carrier for transportation place and in a proper manner to be
transported
As to duration
until the goods are delivered, until the passenger has been landed
actually or constructively, by the at the port of destination and has
carrier to the consignee or to the left the vessel owner’s dock or
person who has a right to receive premises
them, and even when they are
temporarily unloaded or stored in
transit, except when the shipper or
owner had made use of the right to
stoppage in transitu and even
during the time the goods are stored
in a warehouse of the carrier at
the place of destination until the
consignee has been advised of the
29
Schmitz Transport v. CA, G.R. No. 150255 (2005)
30
Crisostomo v. CA, G.R. No. 138334 (2003)
31
Loadmasters Services v. Glodel Brokerage, G.R. 179446, January 10, 2011
4
arrival of the goods and has been
given a reasonable opportunity
thereafter to remove them or
otherwise dispose of them
The requirement to observe extraordinary diligence begins with the actual delivery of the
goods for transportation, and not merely with the formal execution of a receipt or bill
of lading; the issuance of a bill of lading is not necessary to complete delivery and
acceptance by the carrier.32
REQUISITE FOR PERFECTION OF CONTRACT OF TRANSPORT OF
PASSENGERS
Such person must have a bona fide intention to use the facilities of the
carrier, possess sufficient fare with which to pay for his passage, and present
himself to the carrier for transportation in the place and manner provided. If he
does not do so, he will not be considered a passenger and the carrier does not
owe him extraordinary diligence.
EFFECT OF ISSUANCE OF TICKET
When an airline issues a ticket to a passenger, confirmed for a particular
flight on a certain date, a contract of carriage arises. The passenger has every
right to be transported on that flight and that date, and it becomes the airline’s
obligation to carry him and his luggage safely to the agreed destination without
delay. Further, the contract of carriage is perfected if it can be established that
the passenger has 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 has already been loaded in the aircraft to be flown
with the passenger to his destination.
Prior to perfection of the contract of carriage of passengers, there is a
contract to carry, an agreement to carry a passenger at some future date. This
contract is consensual and is therefore perfected by mere consent. In this
instance, an action for damages based on a breach of the contract to carry may be
sustained, even if no ticket is issued.
WHEN RESPONSIBILITY TO OBSERVE EXTRAORDINARY DILIGENCE
IN CARRIAGE OF GOODS TERMINATES
The extraordinary responsibility of common carriers lasts until the time
the goods are actually or constructively delivered by the carrier to the
consignee or the person who has the right to receive them.33
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.
Q: X, while driving his Toyota Altis, tried to cross the railway tract of PNR
along Blumentritt Avenida Ext., Manila. The train, as it approached Blumentritt
Avenida Ext., applied its horn as a warning to all the vehicles that might be
crossing the railway tract, but there was really nobody manning the crossing. X
was listening to his lpod Touch, hence, he did not hear the sound of the horn of
the train and so his car was hit by the train. As a result of the accident, X suffered
some injuries and his car was totally destroyed as a result of the impact. Is PNR
liable? (2012 Bar) A: NO. PNR is not liable because X should have known that
he was crossing a place designated as
crossing for train, and therefore should have been more careful.
CAUSES OF ACTION FOR FAILURE TO OBSERVE DILIGENCE
REQUIRED
PLAINTIFF against the against the
common negligent
carrier driver
Heir/s of the Breach of the Culpa criminal
deceased contract of
passengers or carriage (Culpa
the passenger Contractual)
himself for the
injuries
sustained by
him
32
Compania Maritima v. Insurance Co. of North America, G.R. No. L-18965, October 30, 1964
33
Westwind Shipping Corp v. UCPB General Insurance Co., G.R. No. 200289 November 25, 2013
 EVIDENCE
Shipper of the
goods damaged
Third person Tort (extra-
who suffered contractual
damages negligence)

PERSON WHO HAS CAUSE OF ACTION BASIS OF CAUSE OF ACTION

AGAINST THE COMMON CARRIER

Breach of the contract of carriage (Culpa Contractual)

CAUSE OF ACTION OF THE INJURED PASSENGER OR HIS HEIRS, IF
THE PASSENGER DIES: BASIS OF CAUSE OF ACTION

If the driver is convicted and it turns out that he is insolvent, the heirs/
passengers may run after the employer of the driver, pursuant to the employer’s
subsidiary liability under Article 103, in relation to Arts. 100 and 102, RPC.
Against the carrier and driver operating the other vehicle at fault
Tort
Against the common carrier at fault
Culpa Contractual;
Direct and primary
The liability of the common carrier and his driver as well as the operator of the
other vehicle and his driver is joint and several (J. Dimaampao, citing Tiu v.
Arriesgado, G.R. No. 138060, September 1, 2004).
Q: Fil-Asia Air Flight 9I6 was on a scheduled passenger flight from Manila
when it crashed as it landed at the Cagayan de Oro airport. The pilot
miscalculated the plane's approach and undershot the runway. Ten passengers
died at the crash scene.
One of them managed to leave the plane but was run over by an ambulance
coming to the rescue. Another was an airline employee who hitched a free ride to
Cagayan de Oro and who was not in the passenger manifest.
The Civil Aeronautics Authority investigation showed that the co-pilot who had
control of the plane's landing had less than the required flying and landing time
experience, and should not have been in control of the plane at the time. He was
allowed to fly as a co-pilot because of the scarcity of pilots - Philippine pilots
have been recruited by foreign airlines under vastly improved flying terms and
wages so that newer and less trained pilots are being locally deployed. The main
pilot, on the other hand, had a very high level of blood alcohol at the time of the
crash.
You are part of the team that the victims hired to handle the case for them as a
group. In your case conference, the following questions came up:
a. Explain the causes of action legally possible under the given facts against the
airline and the pilots; whom will you specifically implead in these causes of
action?
b. How will you handle the cases of the passenger run over by the ambulance and
the airline employee allowed to hitch a free ride to Cagayan de Oro? (2013 Bar)
A:
a. A complaint for breach of contract of carriage can be filed against Fil-Asia Air
for failure to exercise extraordinary diligence in transporting the passengers
safely from their point of embarkation to their destination (Art. 1755, NCC).
A complaint based on a quasi-delict can be filed against the pilots because of
their fault and negligence (Art. 2176, NCC). Fil-Asia Air can be included for
negligence in the selection and supervision of the pilots (Art. 2180, NCC).
A third cause of action may be a criminal prosecution for the reckless
imprudence resulting in homicide against two pilots. The airline will be
subsidiary liable for the civil liability, only after the pilots are convicted and
found to be insolvent.
b. It is the driver of the ambulance and his employer who should be held liable
for damages because a passenger was run over. This is in accordance with
Articles 2176 and 2180 of the Civil Code. There could also be a criminal
prosecution for reckless imprudence resulting in homicide against the ambulance
driver and his consequent civil liability.
Since the airline employee was being transported gratuitously, Fil-Asia Air was
not required to exercise extraordinary diligence for his safety and only ordinary
care (Lara v. Valencia, G.R. No. L-9907, June 30, 1958).

5
 REMEDIAL LAW
CASES
The test to determine whether negligence attended the performance of an
obligation is: did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used
in the same situation? If not, then he is guilty of negligence.34

PRESUMPTION
When an injury is caused by the negligence of an employee there instantly
arises a presumption of the law that there was negligence on the part of the
employer either in the selection of his employee or in the supervision
over him after such selection.
DEFENSE
The presumption, however, may be rebutted by a clear showing on the part of
the employer that it had exercised the care and diligence of a good father of a
family in the selection and supervision of his employee. Hence, to escape
solidary liability for quasi-delict committed by an employee, the employer
must adduce sufficient proof that it exercised such degree of care.35

Contributory negligence may not be ascribed to the bus driver; it was evident
that he had taken the necessary precautions before passing over the railway track.
A railroad is not required to have a gate (crossing bar) or a flagman, or to
maintain signals at every intersection; only at such places reasonably
necessary; what is considered reasonably necessary will depend on the amount
of travel upon the road, the frequency with which trains pass over it and the
view which could be obtained of trains as they approach the crossing, and other
conditions.36

Contributory negligence
The omissions of care on the part of the van driver constituted negligence,
which, according to Layugan v. Intermediate Appellate Court, is "the omission to
do something which a reasonable man, guided by those considerations which
ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do.37

34
Crisostomo v. CA
35
Travel & Tours Advisers, Inc. v. Cruz
36
PNR v. Baliwag Transit, Inc.
37
Sps. Pereña v. Sps. Zarate

6
 EVIDENCE
LIABILITIES OF COMMON CARRIERS
OBLIGATION OF COMMON CARRIERS
The obligation of the common carrier consists in the transportation of
passengers or goods or both.
Regardless of whether the object are goods or passengers, a common
carrier must observe EXTRAORDINARY DILIGENCE. The failure to exercise
the required degree of diligence is a breach of the contract of carriage.
PRINCIPLES GOVERNING THE LIABILITY OF COMMON CARRIERS
 The liability of a carrier is contractual and arises upon breach of its
obligation. There is breach if it fails to exert extraordinary diligence
according to all circumstances of each case.
 A carrier is obliged to carry its passenger with the utmost diligence of a very
cautious person, having due regard for all the circumstances.
 A carrier is presumed to be at fault or to have acted negligently in case of
death of, or injury to, passengers, it being its duty to prove that it exercised
extraordinary diligence.
 The carrier is not an insurer against all risks of travel.
RATIONALE BEHIND VEHICLE REGISTRATION
The main purpose of vehicle registration is to identify the owner so that if an
accident happens, or if any damage or injury is caused by the vehicle in the
public highways,
REGISTERED OWNER RULE
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.38
PRESUMPTION OF NEGLIGENCE IN THE CARRIAGE OF GOODS
The common carrier must exercise vigilance in the care and custody of the
goods and is responsible for their loss, destruction, or deterioration. Unless the
exceptions apply, a common carrier is presumed to have been at fault or acted
negligently.
GR: There is a presumption of negligence if the goods are lost, destroyed, or
deteriorated.
XPNs:
(a) NATURAL disaster or calamity which is the proximate cause of the loss
such as flood, storm, earthquake, or lightning;
(b) Acts of public enemy in WAR, whether international or civil;
(c) Act of omission of the SHIPPER or PASSENGER;
(d) CHARACTER of the goods or DEFECTS in the packing or container;
(e) Order or act of competent public AUTHORITY; or
(f) Exercise of EXTRAORDINARY diligence.
General requisites for admissibility
NATURAL DISASTER OR CALAMITY
The following must be present: (a) such must be the proximate and only
cause; (b) due diligence was exercised to prevent or minimize the loss, before,
38
Filcar Transport v. Espinas
7
during and after its occurrence; and (c) the common carrier is not guilty of
delay in transporting the goods.
Fire is not a natural disaster or calamity unless cause by lightning or some other natural
disaster.
ACT OF PUBLIC ENEMY IN WAR
This presupposes the existence of an actual state of war and refers to
the government of a foreign nation at war with the country to which the
carrier belongs, or civil, when parties in rebellion occupy and hold in a hostile
manner a certain portion of the territory, when they have declared independence
and have in the field a regularly organized force in armed hostility.
REQUISITES
1 such must be the proximate and only cause
2 due diligence was exercised to prevent or minimize the loss, before,
during and after the act of the public enemy
Pirates on the high seas stand as an exception as they are considered as enemies of all
civilized nations, and their depredations on a common carrier will excuse him from liability.
ACT OR OMISSION OF THE SHIPPER OR OWNER OF THE GOODS
For it to apply, such must be the proximate and only cause. If the shipper or
owner merely contributed to the loss, destruction or deterioration, the
proximate cause being the negligence of the common carrier, it shall still be
liable for damages but it shall be equitably reduced. An example would be a
CHARACTER OF THE GOODS OR DEFECTS IN THE PACKAGING OR IN
THE CONTAINERS
REQUISITES
1 must be the proximate and only cause
2
For it to apply, such. The common carrier must have protested if visible
and still exercise due diligence to forestall or lessen the loss. If the carrier
accepts despite the condition, it is not relieved of liability for loss or injury.
2.5 Order or act of competent authority resulting in the seizure or
destruction. For it to apply, the public authority must have the power to issue the
order and that the same be lawful.
3. For passengers, a common carrier is bound to carry them safely as far
as human care and foresight can provide, using utmost diligence of a very
cautious person with due regard for all circumstances. In case of death or injury ,
common carriers are presumed to have been at fault or to have acted negligently,
unless they exercised extra-ordinary diligence.
The other known exception as to liability is when carriage is gratuitous
where the parties can stipulate against the presumption as liability for negligence
may be limited, but it should not include limitation of liability for willful acts or
gross negligence. If the fare is just reduced, it will not justify any limitation on
liability.
3.1 The common carrier is also liable if the death or injury arises from the
negligence or willful acts of its employees, although the employees may have
acted beyond the scope of their authority or in violation of orders. The liability
does not cease upon proof of the exercise of diligence of a good father of the
family in the selection and supervision of the employees. This liability extends
only to acts which the carrier could foresee or avoid through the exercise of the
degree of diligence required and neither can it be eliminated or limited by
stipulation, by the posting of notices, by statements on the ticket or otherwise.
However, in a like manner the passenger must observe the diligence of a good
father of a family to avoid injury to himself.
3.2 If the acts of the employee is not undertaken in the line of duty, the
carrier is not liable. However the rule on strangers or other passengers will apply
as the common carrier is liable for injuries suffered by a passenger on account of
the wilful acts of other passengers or strangers, if the common carrier’s
employees through the exercise of the diligence of a good father of a family, it
could have prevented or stopped the act or omission.
3.3 The contributory negligence of a passenger is not a defense that will
excuse a carrier from liability for damages on account of death or injury, if the
proximate cause thereof is the negligence of the common carrier, but the amount
 REMEDIAL LAW
shall be equitably be reduced. Hence, the only effect of such is to mitigate the
liability. Q: Peter hailed a taxicab owned and operated by Jimmy Cheng and driven by
Hermie Cortez. On the way to Malate, the taxicab collided with a passenger
jeepney, as a result of which Peter’s left leg was fractured. Peter sued Jimmy for
damages, based on contract of carriage, and Peter won. Jimmy wanted to
PRESUMPTION OF NEGLIGENCE IN THE TRANSPORTATION OF challenge the decision before the SC on the ground that the trial court erred in
PASSENGERS not making an express finding as to whether or not Jimmy was responsible for
GR: In case of death of or injuries to passengers, common carriers are the collision and, hence, civilly liable to Peter. He went to see you for advice.
presumed to have been at fault or to have acted negligently. What will you tell him? Explain (1990 Bar).
XPN: However, such presumption may be refuted by proving observance of A: I will advise Jimmy to desist from challenging the decision. The action of
extraordinary diligence. Peter being based on culpa contractual, the carrier’s negligence is presumed upon
the breach of contract. The burden of proof instead would lie on Jimmy to
establish that despite an exercise of utmost diligence, the collision could not have
been avoided.
PRESUMPTION OF NEGLIGENCE
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS PRESUMPTION OF NEGLIGENCE
proof of delivery of goods in good death or injury , the law imposes liability upon common carriers, as long as it shown that:
order to a carrier and arrival at the (Con-LoDID)
place of destination in bad order
While delay in the delivery of goods is a Mere failure to reach one’s destination,
breach of contract of carriage, it does not without injury or death, does not raise
raise the presumption of negligence the presumption of negligence because it
because the goods are not lost, does not involve safety of the passengers. REQUISITES FOR PRESUMPTION OF NEGLIGENCE TO APPLY
deteriorated, or destroyed. 1 There exists a contract between the passenger or the shipper and the
common carrier.
EFFECTS OF PRESUMPTION 2 The loss, deterioration, injury or death took place during the existence
The presumption of negligence makes out a prima facie case against the of the contract.41
carrier and makes it incumbent upon the carrier to prove that the loss, death, The court need not make an express finding of fault or negligence of common
or injury was due to some other circumstance inconsistent with its liability, or carriers.
that it observed extraordinary diligence.39
Common carriers are liable for injuries of passengers even if the carriers
observed ordinary diligence and care because the obligation imposed upon them EFFECT OF ACQUITTAL
by law is to exercise extraordinary diligence. Common carriers are bound to The acquittal of the employee of the common carrier in the criminal case is
carry the passengers safely as far as human care and foresight can provide, immaterial to the case for breach of contract.42
using the utmost diligence of very cautious persons with a due regard for all
the circumstances. CARRIER ACTING AS AGENT OF ANOTHER CARRIER
A carrier acting as an agent of another carrier is also liable for its own
1.1 While there is no expressed definition, it should mean greater than negligent acts or omission in the performance of its duties. The principal carrier
ordinary diligence as may be required by the nature of the obligation and the may also file a third-party complaint against the agent carrier for the purpose of
circumstances of persons, time and place. determining who was primarily at fault between them.43
1.2 The requirement is such because of the nature of the business and by
reason of public policy.

2. CLASSIFICATION OF TRANSPORT NETWORK VEHICLE SERVICES

2.1 If loss, destruction or deterioration of the goods occurs or death or
physical injuries is suffered by a passenger, a presumption of negligence arises.
2.2 If the damage does not fall within the instances stated, it does not
mean that there is no recovery against the common carrier. The grounds for
recovery will have to be proven as there is no presumption of negligence that
arises.
e.g., damages due to a delay in delivery
Are common carriers liable for injuries to passengers even if they have
observed ordinary diligence and care? Explain.
PROOF OF ACTUAL SHORTAGE
Though it is true that common carriers are presumed to have been at fault
or to have acted negligently if the goods transported by them are lost, destroyed,
or deteriorated, and that the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption, the plaintiff must
still prove that the subject shipment suffered actual shortage before the
burden is shifted to the defendant. This can only be done if the weight of the
shipment at the port of origin and its subsequent weight at the port of
arrival have been proven by a preponderance of evidence, and it can be seen
that the former weight is considerably greater than the latter weight, taking into
consideration the exceptions provided in Article 1734 of the Civil Code.40
39
Ynchausti Steamship v. Dexter and Unson, G.R. No. L-15652 (1920)
40
Asian Terminals, Inc. v. Simon Enterprises, Inc., G.R. No. 177116, February 27, 2013
AND TRANSPORT NETWORK COMPANIES
TRANSPORT NETWORK COMPANY
A transport network company (TNC) is an organization that utilizes a
mobile application to enable people to secure individual and carpooling
rides from drivers who use their own vehicles. They are also referred to as
ride-hailing companies.
A TNC was defined in Department of Transportation Order No. 2015-011 as an organization
whether a corporation, partnership, sole proprietor, that provides pre-arranged
transportation services for compensation using an internet-based technology
application or digital platform technology to connect passengers with drivers using
their personal vehicles.
TRANSPORTATION NETWORK VEHICLE SERVICE
A transportation network vehicle service (TNVS) refers to the driver and
his vehicle that is utilized to provide the individual or carpooling ride that is
arranged through the TNS.
Previously a TNVS was already considered a common carrier under Land
Transportation Franchising and Regulatory Board (LTFRB) Circular No. 2015-
018-A.
Under Department of Transportation Order No. 2018-013, effective June 11,
2018, a TNC and TNVS, are expressly considered as common carriers and
classified as public utilities.
41
Air France v. Gillego, G.R. No. 165266, December 15, 2010
42
Heirs of Marcial K. Ochoa v. G&S Transport Corp., G.R. Nos. 170071 and 170125, March 9, 2011
43
British Airways v. CA, G.R. No. 121824, January 29, 1998

8
 EVIDENCE
2. The principal consequence of the classification is to
require both to secure a certificate of public convenience from the LTFRB.
For this purpose, they must be considered under the law as a Filipino citizen.

Transport Network Company or TNC is defined as an organization whether a

corporation, partnership, or sole proprietor, that provides pre-arranged
transportation services for compensation using an internet-based technology
application or a digital platform technology to connect passengers with drivers
using their personal vehicles [DOTC D.O. No. 2015-011].

Transport Network Vehicle Service or TNVS refers to a TNC-accredited private

vehicle owner, which is a common carrier, using the internet-based technology
application or digital platform technology transporting passengers from one point
to another, for compensation. The TNVS cannot operate as a common carrier
outside of or independent from the use of the internet-based technology of the
TNC or TNCs to which they are accredited. [DOTr D.O. No. 2018-012] TNVs
and TNCs are expressly considered common carriers and are classified as public
utilities. They are subject to full regulation and supervision by the LTFRB,
including but not limited to: 1. application and approval/ denial of franchise, 2.
setting of fares, routes, operating conditions, and 3. imposition of fines,
suspension and cancellation of franchise. The LTFRB shall grant the TNCs and
their accredited TNVS a Certificate of Public Convenience (CPC) upon full
compliance of jurisdictional requirements, as may be determined by LTFRB. The
LTFRB shall also set the fare for the TNVS after public hearing or in
consultation with the TNCs and TNVS. [DOTr D.O. No. 2018-012] Previously,
the TNC may or may not have been granted a Certificate of Public Convenience
(CPC).  If it is a holder of a valid and current CPC, it is known as a common
carrier.  Otherwise, it is classified as a land transportation service contractor.
The Partners (owners of the vehicles used in transporting passengers) forming
part of the network of a TNC, may or may not be a common carrier, depending
on whether the Partner(s) itself/themselves are holders of a CPC.  A mere
Accreditation given by Land Transportation Franchising and Regulatory Board
(LTFRB) is not an equivalent to a CPC and will not make said holder a common
carrier.  If the Partner is a holder of a CPC, said Partner is a common carrier.
However, if the Partner is not a holder of a CPC, said Partner is merely a land
transportation service contractor [BIR RMC 70-2015]

9
 REMEDIAL LAW

CHAPTER II VIGILANCE OVER GOODS

LIABILITY OF COMMON CARRIER WITH RESPECT TO VIGILANCE
OVER GOODS
Common carriers are responsible for the loss, destruction, or
deterioration of the goods. In fact, they are liable even in those cases where
the cause of the loss or damage is unknown.
If the goods are lost, destroyed, or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently.

PRESUMPTION OF NEGLIGENCE
GENERAL RULE
The common carrier is PRESUMED to have been at fault or to have
acted negligently when the goods transported are lost, destroyed, or
deteriorated.44
EXCEPTIONS
Common carriers are not liable when such loss, destruction, or
deterioration is due to any of the following causes only:
C natural disaster or CALAMITY (flood, storm, earthquake,
lightning) which is the proximate cause of the loss
W act of the public enemy in WAR, whether international or civil
A ACT or omission of the shipper or owner of the goods
C CHARACTER of the goods or defects in the packing or container
O ORDER or act of competent public authority
X exercise of EXTRAORDINARY DILIGENCE
In all cases other than those enumerated above, there is presumption of negligence even
if there is an agreement limiting the liability of the common carrier in the vigilance over the
goods.

The carrier must have exercised due diligence to forestall or prevent the loss.
If the fact of improper packing is known to the carrier or its servants, or
apparent upon ordinary observation, but it accepts the goods notwithstanding
such condition, it is not relieved from responsibility for loss or injury
resulting therefrom.45

The authority must be with power to issue the order.

There must be an order or act of competent public authority through which the
goods are seized or destroyed.
If the officer acts without legal process, the common carrier will be held liable.46

44
Art. 1735, NCC
45
Southern Lines Inc., v. CA, GR No. L-16629, January 31, 1962
46
Ganzon v. CA, GR No. L-48757, May 30, 1988

10
 EVIDENCE
EXEMPTING CAUSES
NATURAL DISASTER OR CALAMITY
1 The natural disaster was the proximate and only cause.
2 The carrier exercised due diligence to prevent or minimize loss before,
during, and after the occurrence of the natural disaster.
3 The common carrier has not negligently incurred delay in transporting
the goods.
FIRE NOT A NATURAL DISASTER
Fire may not be considered a natural disaster or calamity because it arises
almost invariably from some act of man or by human means. It does not fall
within the category of an act of God unless caused by lightning or by other
natural disaster or calamity.47
ACT OF PUBLIC ENEMY
1 The act of the public enemy was committed either in an international or
civil war.
2 The act of the public enemy must have been the proximate and only
cause.
3 The carrier exercised due diligence to prevent or minimize loss before,
during, and after the act of the public enemy
NOT PUBLIC ENEMIES
Thieves, rioters, robbers, and insurrectionists, though at war with social
order, are not in a legal sense classed as public enemies, but are merely private
depredators for whose acts a carrier is answerable. Pirates on the high seas,
however, stand as an exception to this rule. They are considered the enemies of
all civilized nations, and indeed of the human race, and consequently their
depredations on a common carrier will excuse him from liability.
ACT OR OMISSION OF SHIPPER OR OWNER
The act or omission of the shipper must have been the proximate and only
cause of the loss, destruction, or deterioration of the goods. If the shipper or
owner merely contributed to the loss, destruction or deterioration of the goods,
the proximate cause being the negligence of the common carrier, the latter shall
be liable for the damages, which shall, however, be equitably reduced.
A shipper who delivers the goods to the carrier during a storm is not guilty of negligence so
as to excuse the carrier which consents to receive them from liability for loss sustained as a
result of the storm.
e.g., misdirection of the shipment by the shipper, or interference by the shipper with the
goods after acceptance
CHARACTER OF THE GOODS
Requisites
a. The loss, destruction, or deterioration of the goods is due to the character of
the goods or defects in the packing or in the containers [Art. 1734 (4), NCC]; and
b. The common carrier must exercise due diligence to forestall or lessen the loss
[Art. 1742, NCC].
If the fact of improper packing is known to the carrier or its servants or apparent
upon ordinary observation, but it accepts the goods notwithstanding such
condition, it is not relieved of liability for loss or injury resulting therefrom
[Southern Lines v. CA, G.R. No. L- 16629 (1962)].
ORDER OF COMPETENT AUTHORITY
Requisites
a. There must be an order or act of competent public authority through which the
goods are seized or destroyed [Art. 1734 (5),
NCC]; and
b. The said public authority must have had the power to issue the order [Art.
1743, NCC].
To be exempted from liability, the intervention of the competent public authority
must be of a character that would render impossible the fulfillment by the carrier
of the obligation [Ganzon v. CA, G.R. No. L-48757 (1988)].
Force majeure
47
Eastern Shipping Lines v. IAC
11
Force majeure – in general, has also been invoked as an exempting cause based
on Art. 1174, which states that no person shall be responsible for a fortuitous
event which could not be foreseen, or which, though foreseen, was inevitable.
A fortuitous event has the following characteristics:
a. The cause of the unforeseen and unexpected occurrence, or the failure of the
debtor to comply with his obligations, must be independent of human will;
b. It must be impossible to foresee the event which constitutes the caso fortuito,
or if it can be foreseen, it must be impossible to avoid;
c. The occurrence must be such as to render it impossible for the debtor to fulfill
his obligation in a normal manner; and d. The obligor must be free from any
participation in the aggravation of the injury resulting to the creditor.
A common carrier may not be absolved from liability in case of force majeure or
fortuitous event alone. The common carrier must still prove:
(i) That it was not negligent in causing the death or injury resulting from an
accident; [Yobido v. CA, G.R. No. 113003 (1997)]
(ii) That the loss or destruction of the merchandise was due to accident and force
majeure and not fraud, fault, or negligence on the part of the captain or owner of
the ship [Tan Chiong Sian v. Inchausti, G.R. No. L-6092 (1912)].
a. Requirement of Absence of Negligence
If the common carrier is found to have acted negligently, it is precluded from
invoking the exempting causes under Art. 1734, and will be liable for damages
suffered by the goods it carried if such damages arise from its negligence
[Agbayani].
The exempting circumstance should be the proximate and only cause of the loss,
destruction, or deterioration of the goods for the common carrier to be exempted
from liability on any of the ff. grounds:
1. Natural Disaster/Calamity
2. Act of Public Enemy
3. Character of the Goods [Art. 1739, 1742,
NCC]
When the common carrier’s negligence is the proximate cause of the loss,
destruction, or deterioration of the goods, the act or omission of the shipper will
only mitigate the carrier’s liability [Art. 1741, NCC].
b. Absence of Delay
In order to be free from responsibility on the ground of natural disaster/calamity,
the common carrier should not have negligently incurred in delay [Art. 1740,
NCC].
c. Due Diligence to prevent or lessen the loss
The common carrier should have exercised due diligence to prevent, forestall or
lessen the loss, destruction, or deterioration of the goods, in order to be exempted
from liability on any of the ff. grounds:
a. Natural Disaster/Calamity
b. Act of Public Enemy
c. Character of the Goods [Art. 1739,
1742, NCC]
Meeting a typhoon head-on falls short of due diligence required from a common
carrier [Asia Lighterage and Shipping Inc. v CA, G.R. No. 147246 (2000)].
REQUIREMENT OF ABSENCE OF NEGLIGENCE
REQUISITES OF A FORTUITOUS EVENT
Fortuitous events (flood, storm, earthquake, lightning, or other natural
disaster or calamity) if the following conditions are present:
1 The common carrier must be FREE from any participation in or
aggravation of the injury to the creditor.
2 The event must be such as to render it IMPOSSIBLE for the common
carrier to fulfill his obligation in a normal manner.
3 The event must be UNFORESEEN or UNAVOIDABLE.
4 The cause of the breach of obligation must be INDEPENDENT of the
will of the common carrier.48
48
Real v. Belo, G.R. No. 146224, January 26, 2007
 REMEDIAL LAW
NON-FORTUITOUS EVENTS
o Mechanical defects in the carrier are not considered a caso fortuito that
exempts the carrier from responsibility.49
o Tire blowout of a jeep is not a fortuitous event where there exists a specific
act of negligence by the carrier consisting of the fact that the jeepney was
overloaded and speeding at the time of the incident.50
o Defective brakes cannot be considered fortuitous in character.51
FIRE NOT CONSIDERED A NATURAL DISASTER
GR: Fire arises almost invariably from some act of man or by human
means. It does not fall within the category of an act of God.
XPN: if the fire is caused by lightning or by other natural disaster or
calamity52
If the goods have already been deposited in the warehouse of the Bureau of Customs and the
goods were then destroyed by fire, the carrier is not anymore liable.53
The common carrier is not liable for the value of the undelivered merchandise which was
lost because of an event that is beyond his control.
HIJACKING
Hijacking, not being included in the provisions of Article 1734, must be
dealt with under the provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate the carrier from
liability arising from hijacking, he must prove that the robbers or the hijackers
acted with grave or irresistible threat, violence, or force.59
ARMED ROBBERY
When an airline company was not authorized to search passengers for
firearms, the loss of the jewelry and cash of a passenger because of an armed
robbery committed by other passengers is a force majeure, for which the airline
company is not liable.60

TYPHOON AS A FORTUITOUS EVENT SEARCHES AND SEIZURES

GR: If all the elements of a natural disaster or calamity concur and there
was no contributory negligence or delay, the occurrence of a typhoon is a
fortuitous event.
This holds true especially if the vessel was seaworthy at the time it undertook that fateful
voyage and it was confirmed with the Coast Guard that the weather condition would permit
safe travel of the vessel to its destination. 54
The loss of cargoes due to the sinking of a seaworthy tugboat which was suddenly tossed by
waves of extraordinary height is due to a force majeure.55
XPN: If a vessel sank due to a typhoon, and there was failure to ascertain the
direction of the storm and the weather condition of the path they would be
traversing, it constitutes lack of foresight and minimum vigilance over its
cargoes taking into account the surrounding circumstances of the case. Thus, the
common carrier will still be liable.56
Where a vessel encountered stormy weather and the coils of wire it was transporting became
rusty because rain entered the hatch of the vessel, the damage was not due to a fortuitous
event, because heavy rains are foreseeable and rain would not have entered the hatch if it
was closed properly.57
DEVIATION IN CASE OF FORTUITOUS EVENT
The strong typhoon is a fortuitous event over which neither the master
nor the owner has any control. Deviation is likewise proper in order to avoid a
peril.
Common carriers are responsible for the loss, destruction, deterioration of
the goods unless the same is due to any of the causes provided by law – which
includes, among others, is when there is flood, storm, earthquake, lightning, or
other natural disaster or calamities.
Moreover, even in cases where a natural disaster is the proximate and only
cause of the loss, a common carrier is still required to exercise due diligence to
prevent or minimize loss before, during and after the occurrence of the
natural disaster, for it to be exempt from liability under the law for the loss of
the goods. Such deviation is just proper in its exercise of extraordinary
diligence.58
ENGINE TROUBLE
The presumption of negligence in culpa contractual is not overcome by
invoking the defense that there has been engine trouble, for such defense
does not preclude its having been due to the fault of the common carrier.
The fact that an extensive repair work was necessary which, in fact, took 2 days
to complete, somehow justifies an impression that the engine trouble could have
been detected, if not already known, well before the actual breakdown.
COMMON CARRIER’S LIABILITY FOR THE ACTS OF STRANGERS OR
CRIMINALS
GR: A common carrier is liable even for acts of strangers like thieves or
robbers.
XPN: where such thieves or robbers acted with grave or irresistible threat,
violence or force
49
Sweet Lines, Inc. v. CA, G.R. No. L-46340, April 29, 1983
50
Travelers are often notified through airport public address systems, signs
and notices in their airline tickets that they are subject to search and, if any
prohibited materials or substances are found, such would be subject to seizure.
These announcements place passengers on notice that ordinary constitutional
protections against warrantless searches and seizures do not apply to
routine airport procedures.61
EXPLOSION
Damage to cargo from explosion of another cargo is not ordinarily
attributable to peril of the sea or accidents of navigation particularly where it
occurs after the vessel has ended its voyage and is finally moored to unload.
WORMS AND RATS
Whenever the ship is damaged by worms resulting in damage to the cargo,
the carrier cannot cite the same as an excuse. The same is true with respect to
damage of the cargo by rats whether the cargo was directly damaged by the rats
or by the water let in through holes gnawed by rats in the ship or her fixtures.
WATER DAMAGE
Damage by seawater is not a valid excuse where the water gains entrance
through a port that had been left open or insufficiently fastened on sailing.
BARRATRY
The ship owner cannot escape liability to third persons if the cause of
damage is barratry. It is an act committed by the master or crew of the ship for
some unlawful or fraudulent purpose, contrary to their duty to the owner.
ABSENCE OF DELAY
RULES REGARDING THE TIME OF DELIVERY OF GOODS AND DELAY
IF THERE IS AN AGREEMENT IF THERE IS NO AGREEMENT
AS TO TIME OF DELIVERY
Delivery must be within the time Delivery must be within a
stipulated in the contract or bill of reasonable time.62
lading.
DELAY IN THE DELIVERY OF GOODS
The carrier shall be liable for damages immediately and proximately
resulting from such neglect of duty. In the absence of a special contract, a
carrier is not an insurer against delay in the transportation of goods.
EFFECTS OF DELAY
(a) If the common carrier, without just cause, delays the transportation of
the goods or changes the stipulated or usual route, the contract limiting
the common carrier’s liability cannot be availed of in case of the loss,
destruction, or deterioration of the goods.63
An agreement limiting the common carrier’s liability for delay on account of
strikes or riots is valid.64

51
Juntilla v. Fontanar, GR No. L-45637, May 31, 1985 (b) Excusable delay in carriage merely suspends and generally does not
Vergara v. CA, G.R. No. 77679, September 30, 1987
52
terminate the contract of carriage.
Eastern Shipping Lines v. IAC, G.R. No. L-69044, May 29, 1987
53
Servando v. Philippine Steam Navigation, G.R. No. L-36481-2, October 23, 1982
54 59
PhilAm Gen. v. MGG Marine Services, Inc., G.R. No. 135645, March 8, 2002 Bascos v. CA, G.R. No. 101089, April 7, 1993
55 60
PhilAm Gen. v. PKS Shipping Company, G.R. 149038, April 9, 2003 Quisumbing v. CA, G.R. No L-50076, September 14, 1990
56 61
Arada v. CA, G.R. No. 98243, July 1, 1992 People v. Suzuki, G.R. No. 120670, October 23, 2003
57 62
Eastern Shipping Lines v. CA, G.R. No. 97412, July 12, 1994 Saludo, Jr. v. CA, G.R. No. 95536, March 23, 1992
58 63
The Philippine American General Insurance Co., Inc. v. MCG Marine Services, Inc. and Gaerland, G.R. No. Art. 1747, NCC
64
135645, March 28, 2005 Art. 1748, NCC

12
 EVIDENCE
(c) The carrier shall be made liable when the vessel or vehicle is
unreasonably delayed.
(d) The carrier remains duty-bound to exercise extraordinary diligence.
(e) Natural disaster shall not free the carrier from responsibility.
However, where the delay in the transportation of the remains of a deceased person was due
to the fault of the mortuary service, who erroneously switched the casket with that of
another deceased person, the airline company cannot be held liable for damages because
of the delay.
Although the delivery of the suitcase of a passenger was delayed by eleven days, an airline
company cannot be held liable for moral damages, exemplary damages, and attorney’s
fees, where the airline company was not guilty of bad faith and exerted efforts in tracing
the suitcase.65

DUE DILIGENCE TO PREVENT OR LESSEN THE LOSS

To free the common carrier from liability in case of flood, storm or other natural
disaster or an act of a public enemy
(1) The common carrier must exercise due diligence to prevent or minimize
loss before, during, and after the occurrence.
(2) The natural disaster or the act of the public enemy must be the proximate
and only cause of the loss.
If the common carrier negligently incurs delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.

LOSS DUE TO CHARACTER OF THE GOODS OR THE FAULTY NATURE

OF ITS CONTAINERS
If the loss, destruction, or deterioration of the goods was caused by the
character of the goods, or the faulty nature of the packing or the containers, the
common carrier must exercise due diligence to forestall or lessen the loss.
Where the fact of improper packing is known to the carrier or its
servants, or apparent upon ordinary observations, but the carrier accepts the
goods notwithstanding such conditions, it is not relieved of liability for loss
or injury resulting therefrom.66

65
Philippine Air Lines v. Miano, G.R. No. 106664, March 8, 1995
66
Southern Lines, Inc. v. CA, 4 SCRA 259

13
 REMEDIAL LAW
CONTRIBUTORY NEGLIGENCE
Contributory negligence is conduct on the part of the injured party,
contributing as a legal cause to the harm he has suffered, which falls below
the standard to which he is required to conform for his own protection.
CONTRIBUTORY NEGLIGENCE ON THE PART OF THE SHIPPER
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 for damages, which however,
shall be equitably reduced.67

EFFECT OF CONTRIBUTORY NEGLIGENCE

When the plaintiff's own negligence was the immediate and proximate
cause of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the
defendant's lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.

ELEMENTS OF CONTRIBUTORY NEGLIGENCE

1 The negligence of the common carrier was the proximate cause thereof.
2 The shipper or owner merely contributed to such loss, destruction, or
deterioration.

NOT APPLICABLE IN CRIMINAL CASES

The defense of contributory negligence does not apply in criminal cases
committed through reckless imprudence because one cannot allege the
negligence of another to evade the effects of his own negligence.

Q: Nelson owned and controlled the Sonnel Construction Company. Acting for
the company, Nelson contracted the construction of a building. Without first
installing a protective net atop the sidewalks adjoining the construction site, the
company proceeded with the construction work. One day, a heavy piece of
lumber fell from the building. It smashed a taxicab which at that time had gone
off-road and onto the sidewalk in order to avoid the traffic. The taxicab
passengers died as a result.
a. If you were the counsel for Sonnel Construction, how would you defend your
client? What would be your theory?
b. Could the heirs hold the taxicab owner and driver liable? Explain. (2008 Bar)
A:
a. I shall raise the affirmative defense of contributory negligence. The proximate
cause of death is the violation of the taxi driver of traffic rules and regulations
when it drove off-road to avoid heavy traffic. The lumber that fell from the
building was only the immediatecause ofdeath of the victims. Further, Sonnel
Construction, exercised due diligence in the selection and supervision of its
employees.
b. YES. Both taxicab owner and driver may be held liable based on breach of
contract of carriage and negligence in the selection and supervision of employees
for quasi-delict. The driver can be held criminally liable for reckless imprudence
resulting to homicide and for damages under quasi-delict as provided in Article
2180— an employer may be held solidarily liable for the negligent act of his
employee. Hence, in this case, the taxicab owner is exempted from liability while
the taxi cab driver is liable solely and personally for criminal prosecution.
Q: A and his classmates took a bus from UP to Quiapo. On the way, another
Quiapo-bound bus tries to overtake them. A and his classmates dared the bus
driver to run faster and race with the other bus. The driver takes their dare, to the
delight of A and his friends who cheered him. On rounding the curve, the bus
driver fails to slow down and the bus turns turtle, resulting in the death of A and
injuries to the other passengers.
The bus carried the following sign: “Do not talk to driver while bus is on motion,
otherwise the company will not assume liability for any accident.”
Explain briefly the extent of the liability, if any, of the bus company, giving the
legal provisions and principles involved. (1983 Bar)
A: The bus company is liable for damages to A’s heirs and to all the injured
passengers. Under the Civil Code, a common carrier is duty bound to exercise
extraordinary diligence in carrying its passengers through the negligence or
willful acts of its employees even if the latter have acted beyond the scope of
their authority or in violation of their orders. This liability cannot be eliminated
or limited by stipulation or by posting notices. Although it may be argued that A
was guilty of contributory negligence, such an argument loses its force in the
face of the driver’s recklessness in taking the dare. And even if such argument
would be accepted, at most it can only mitigate the amount of damages, since the
proximate cause of the accident was the driver’s willful and reckless act in
running a race with the other bus.
67
Art. 1741, NCC

14
 EVIDENCE
DURATION OF LIABILITY liability of the common carrier continues to be
operative even during the time the goods are
INSTANCES WHEN CARRIER HAS RESPONSIBILITY TO EXERCISE stored in a warehouse of the carrier at the place
of destination, until the consignee has:
EXTRAORDINARY DILIGENCE
1. Been advised of the arrival of the goods;
a. From the time the goods are and
unconditionally placed in the possession 2. Had reasonable opportunity thereafter to
of, and received by the carrier or its authorized agent, until the same are remove them or otherwise dispose of them.
delivered actually and constructively by the Delivery of the cargo to the customs authorities
carrier to the consignee or to the person is not delivery to the consignee or “to the
who has a right to receive them; person who has a right to receive them” as
b. When goods are temporarily unloaded or contemplated in Art. 1736 because in such
stored in transit, unless the shipper or case the goods are still in the hands of the
owner has made use of the right of government and the owner cannot exercise
stoppage in transitu [Art 1737, NCC]; dominion over them. However, the parties may
c. During storage in a warehouse of the agree to limit the liability of the carrier
carrier at the place of destination, until considering that the goods still have to go
consignee has been advised of the arrival through the inspection of the customs
of the goods and has had reasonable authorities before they are actually turned over
opportunity to remove or dispose them [Art to the consignee. It is unfair that the carrier be
1738, NCC]. made responsible for what may happen during
In dealing with the contract of common carriage the interregnum [Lu Do v. Binamira, G.R. No.
of passengers, for purpose of accuracy, there L-9840 (1957)].
are two (2) aspects of the same, namely: It is settled in maritime law jurisprudence that
(a) Contract ‘to carry (at some future time),’ cargoes while being unloaded generally remain
which contract is consensual and is under the custody of the carrier [Asian
necessarily perfected by mere consent; Terminals, Inc. v. Philam Insurance Co., G.R.
and No. 181163 (2013)].
(b) Contract ‘of carriage’ or ‘of common Temporary Unloading or Storage
carriage,’ which should be considered as a General rule: Extraordinary diligence over the
real contract for not until the carrier is goods remains even when the goods are
actually used can the carrier be said to temporarily unloaded or stored in transit.
have already assumed the obligation of a Exception: The duty to observe such diligence
carrier [Paras, Civil Code Annotated, 11th ceases when shipper or owner makes use of
Ed]. the right of stoppage in transitu [Art 1737,
Note: The distinction is important in NCC].
determining when the common carrier is Stoppage in transitu is the act by which the
required to exercise extraordinary unpaid vendor of goods stops their progress
responsibility. The birth of the contract is not and resumes possession of them
necessarily the birth of the duty to exercise constructively, while they are in the course of
extraordinary responsibility. transit from him to the purchaser and not yet
Delivery of Goods to Common actually delivered to the latter [Agbayani].
Carriers Basis: Under Art. 1530, when the buyer of the
Delivery means unconditionally placing the goods becomes insolvent, the unpaid seller
goods in the possession of the carrier and the who has parted with the possession of the
carrier receiving them for transportation [Art. goods, at any time while they are in transit, may
1736]. resume the possession of the goods as he
Unconditionally placing the goods in the would have had if he had never parted with the
possession of the carrier means the shipper possession.
cannot get them back from the common carrier When the right of stoppage in transitu is
at will. exercised, the common carrier holds the goods
in the capacity of an ordinary bailee or
Thus, the liability of the carrier as common warehouseman upon the theory that the
carrier and its duty of extraordinary diligence exercise of the right of stoppage in transitu
begins with the actual delivery of the goods, terminates the contract of carriage. Hence,
NOT: only ordinary diligence is required
 When the common carrier received the [Agbayani].
goods not for transportation but only for
safekeeping; or
 When a receipt or bill of lading is executed,
since the issuance of a bill of lading is not The extraordinary responsibility of the common carrier lasts from the time
necessary to complete delivery and
the goods are unconditionally PLACED in the possession of, and received by
acceptance [Compania Maritima v
Insurance Co., G.R. No. L-18965 (1964)]. the carrier for transportation until the same are DELIVERED, actually or
Actual or Constructive Delivery constructively, by the carrier to the consignee, or to the person who has a right
The extraordinary responsibility of the common to receive them.68
carrier ends when, subject to Art. 1738, the
goods are delivered actually or constructively WHEN CARRIER’S RESPONSIBILITY PERSISTS
by the carrier to: (a) when goods are temporarily unloaded or stored in TRANSIT
a. The consignee; or (b) during STORAGE in a warehouse of the carrier at the place of
b. The person who has a right to receive destination
them, such as agents, brokers, and the
like.
Art. 1738 provides that the extraordinary 68
Art. 1736, NCC

15
 REMEDIAL LAW
WHEN CARRIER’S RESPONSIBILITY TERMINATES
(a) when the goods are temporarily unloaded or stored in transit by reason
of the exercise of the shipper or owner of his right of STOPPAGE IN
TRANSITU
(b) when the consignee has been ADVISED of the arrival of the goods at the
place of destination and has had reasonable opportunity to remove
them or dispose of them from the warehouse of the carrier at the place of
destination
CONTRACT TO CARRY AND CONTRACT OF CARRIAGE
In dealing with the contract of common carriage of passengers, for purpose
of accuracy, there are two (2) aspects of the same, namely: (a) CONTRACT TO
CARRY (at some future time), which contract is consensual and is necessarily
perfected by mere consent; and (b) CONTRACT OF CARRIAGE or of common
carriage, which should be considered as a real contract for not until the carrier
is actually used can the carrier be said to have already assumed the obligation of
a carrier.
The distinction is important in determining when the common carrier is required to
exercise extraordinary responsibility. The birth of the contract is not necessarily the
birth of the duty to exercise extraordinary responsibility.
DELIVERY OF GOODS TO COMMON CARRIER
The goods are deemed delivered to the carrier when the goods are ready
for and have been placed in the exclusive possession, custody and control of
the carrier for the purpose of their immediate transportation and the carrier
has accepted them. When the carrier has thus accepted such delivery, the
liability of the carrier commences.69
ACTUAL OR CONSTRUCTIVE DELIVERY
PARTY TO WHOM DELIVERY SHOULD BE MADE
It must be delivered, actually or constructively, to the consignee or to the
person who has a right to receive them.70 Delivery of the cargo to the
customs authorities is not delivery to the consignee or to the person who has
a right to receive them because in such case, the goods are still in the hands of
the Government and the owner cannot exercise dominion over them.
However, the parties may agree to limit the liability of the carrier considering that the
goods still have to go through the inspection of the customs authorities before they are
actually turned over to the consignee. It is a situation where the carrier loses control of the
goods because of a customs regulation and it is unfair that it be made responsible for what
may happen during the interregnum. This stipulation is not contrary to morals or public
policy.71
o If the buyer, or his agent in that behalf, obtains delivery of the goods before their
arrival at the appointed destination;
o If, after the arrival of the goods at the appointed destination, the carrier or other bailee
acknowledges to the buyer or his agent that he holds the goods on his behalf and
continues in possession of them as bailee for the buyer or his agent; and it is immaterial
that further destination for the goods may have been indicated by the buyer;
o If the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
agent in that behalf.
HOW RIGHT OF STOPPAGE IN TRANSITU EXERCISED
(a) by obtaining actual possession of the goods; or
(b) by giving notice of his claim to the carrier or other bailee in whose
possession the goods are.
Notice may be given either to the person in actual possession of the goods or to
his principal. In the latter case, the notice, to be effectual, must be given at
such time and under such circumstances that the principal, by the exercise
of reasonable diligence, may prevent a delivery to the buyer.73
CARRIER’S RESPONSIBILITY IN CASE OF TEMPORARY UNLOADING
OR STORAGE
GR: The common carrier’s duty to observe extraordinary diligence in the
vigilance over the goods remains in full force and effect even when they are
temporarily unloaded or stored in transit.
XPN: when the shipper or owner has made use of the right of STOPPAGE IN
TRANSITU
The diligence required is merely ordinary diligence as the carrier no longer holds the
goods as such but in the capacity of an ordinary bailee or warehouseman because there is
a change of contract from a contract of carriage to a contract of deposit.
OBLIGATION OF COMMON CARRIER IN STOPPAGE IN TRANSITU
When notice of stoppage in transitu is given by the seller to the carrier, he
must redeliver the goods to, or according to the directions of, the seller. The
expenses of such delivery must be borne by the seller.74
If the seller instructs to deliver it somewhere else, a new contract of carriage is formed and
the carrier must be paid accordingly.

CONSTRUCTIVE DELIVERY
There is constructive delivery when delivery is effected not by actually
transferring the possession of thing to the vendee (in this case, the other party,
either the carrier or the consignee) but by legal formalities or by symbolic
tradition.

MISDELIVERY BY A CARRIER WHO WAS CHOSEN BY THE BUYER

Misdelivery of the goods is attributable to the carrier and not to the
seller. And, since the carrier was chosen and authorized to make the delivery by
the buyer itself, the seller cannot be held responsible for such misdelivery.72

TEMPORARY UNLOADING OR STORAGE

RIGHT OF STOPPAGE IN TRANSITU
When the buyer of goods is or becomes insolvent, the unpaid seller who
has parted with the possession of the goods has the right of stopping them in
transitu, that is to say, he may resume possession of the goods at any time
while they 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.
Goods are in transit:
o From the time when they are delivered to a carrier by land, water, or air, or other bailee
for the purpose of transmission to the buyer, until the buyer, or his agent in that
behalf, takes delivery of them from such carrier or other bailee;
o If the goods are rejected by the buyer, and the carrier or other bailee continues in
possession of them, even if the seller has refused to receive them back.
Goods are no longer in transit:

69
Saludo, Jr. v. CA, G.R. No. 95536, March 23, 1992
70
Art.1736, NCC
71 73
Lu Do & Lu Ym Corp. vs. Binamira, G.R. No. L-9840, April 22, 1957 NCC, Art. 1532
72 74
Smith, Bell & Co. Phils. v. Gimenez, G.R. No. L-17617, June 29, 1963 Art. 1532, NCC

16
 EVIDENCE
STIPULATIONS LIMITING LIABILITY
A contract fixing the sum that may be recovered by the owner or shipper
for the loss, destruction, or deterioration of the goods is valid, if it is reasonable
and just under the circumstances, and has been fairly and freely agreed upon.75
VALID STIPULATIONS THAT A COMMON CARRIER OF GOODS MAY
INDICATE IN A CONTRACT IN ORDER TO ESCAPE LIABILITY
(a) a stipulation limiting the liability of the common carrier for the loss,
destruction, or deterioration of the goods to a degree less than
extraordinary diligence but not less than the diligence of a good father
of a family
The stipulation must be in writing, signed by the shipper or owner, supported by a
valuable consideration other than the service rendered by the common carrier, and
must be reasonable, just and not contrary to public policy.
(b) an agreement limiting the common carrier's liability for delay on account of
strikes or riots76
(c) a stipulation that the common carrier's liability is limited to the value of
the goods appearing in the bill of lading, unless the shipper or owner
declares a greater value77
(d) a contract fixing the sum that may be recovered by the owner or shipper
for the loss, destruction, or deterioration of the goods78
The stipulation must be just and reasonable under the circumstances and must be
fairly and freely agreed upon.
The agreement limiting liability may be annulled by the shipper or owner if the common
carrier refused to carry the goods, unless the former agreed to the stipulation.
The contract limiting the common carrier's liability cannot be availed of if the common
carrier, without just cause:
o delays the transportation of the goods; or
o changes the stipulated or usual route.79
Even if there is an agreement limiting the liability of the common carrier in the vigilance
over the goods, the common carrier is still disputably presumed to have been negligent in
case of its loss, destruction or deterioration.
ANNULMENT OF STIPULATION LIMITING THE COMMON CARRIER’S
LIABILITY BY THE SHIPPER OR OWNER
A stipulation limiting the common carrier’s liability may be annulled by the
shipper or owner if the common carrier refused to carry the goods unless the
shipper or owner agreed to such stipulation.80
(1) just and reasonable under the circumstances
(2) fairly and freely agreed upon.
The liability of a common carrier may, by contract, be limited to a fixed
amount, but the agreement must be in writing and signed by the shipper or
owner of the goods, besides the other requirements of the law.82
A stipulation limiting the carrier’s liability up to a certain amount regardless of the actual
value of such cargo, whether declared by its shipper or otherwise, is violative of the
requirement of Art. 1750 of the Civil Code, which provides that stipulations limiting liability
should be fairly and freely agreed upon. A stipulation that denies to the shipper the right to
declare the actual value of his cargoes and to recover, in case of loss or damage, on the basis
of such stipulation is invalid.
LIMITATION OF LIABILITY IN THE ABSENCE OF DECLARATION OF
GREATER VALUE
GR: The liability of the common carrier shall not EXCEED the stipulation in
a contract of carriage, even if the loss or damage results from the carrier's
negligence.83
XPN: The common carrier’s liability may be extended beyond the specified
amount mentioned if the shipper or owner of the goods DECLARES a greater
value and PAYS corresponding freight.84
The liability of an airline company for lost baggage is limited to the amount stated in the
ticket unless the passenger declared a higher valuation and paid additional fare.85
The shipper or owner of the goods is bound by the stipulation written in the ticket from
the moment he availed the services of the carrier because he consented to the terms and
conditions thereof.86
BASIS OF COMPUTING LIABILITY
But when the goods being shipped are packed in cartons placed in
containers supplied by the carrier and the number of cartons is disclosed in
the shipping documents, it is the number of cartons and not of the containers
that should be used in computing the liability of the carrier for the loss of the
goods, as it is the cartons that constitute the packages.87

VOID STIPULATIONS
The following or similar stipulations shall be considered unreasonable, unjust
and contrary to public policy:
o that the common carrier need not observe any DILIGENCE in the custody of
the goods
o that the goods are transported at the RISK of the owner or shipper
o that the common carrier’s liability for acts committed by THIEVES, or of
ROBBERS who do not act with grave or irresistible threat, violence or
force, is dispensed with or diminished
o that the common carrier shall exercise a degree of diligence LESS than that
of a good father of a family, or a man of ordinary prudence, in the vigilance
over the movables transported
o that the common carrier will not be LIABLE for any loss, destruction, or
deterioration of the goods
o that the common carrier shall not be responsible for the acts or omissions of
his or its EMPLOYEES
o that the common carrier is not responsible for the loss, destruction or
deterioration of goods on account of the DEFECTIVE condition of the car,
vehicle, ship, airplane or other equipment used in the contract of carriage81
o any similar stipulation that is unreasonable, unjust and contrary to public
policy

LIMITATION OF LIABILITY TO FIXED AMOUNT

A contract fixing the sum that may be recovered for the loss, destruction, and
deterioration of goods is binding provided that it is:

75
Art. 1750, NCC
76 82
Art. 1748, NCC Shewaran v. PAL, G.R. No. L-20099, July 7, 1966
77 83
Art. 1749, NCC Eastern and Australian Shipping Co. v. Great American Insurance Co., GR No. L-37604, October 23, 1981
78 84
Art. 1750, NCC Art. 1749, NCC
79 85
Art. 1747, NCC Pan American World Airways, Inc. v. IAC, G.R. No. 70462, August 11, 1988
80 86
Art. 1746, NCC Eastern and Australian Shipping Co., v. Great American Insurance Co., G.R. No. L-37604, October 23, 1981
81 87
Art. 1745, NCC Eastern Shipping Lines, Inc. s. IAC, G.R. No. L-71478, May 29, 1987

17
 REMEDIAL LAW
LIABILITY FOR BAGGAGE OF PASSENGERS

BAGGAGE
Baggage is any personal property carried by the passenger, either check-
in or hand-carry.
Baggage are things that a passenger will bring with him consistent with a
temporary absence from where he lives. Passenger’s baggage must have a
direct relationship with the passenger who is traveling.
A balikbayan box or suitcase is passenger’s baggage. However, 10,000 cans of corned beef
are not considered as passenger baggage. They are considered as goods, and are not part
of the contract of carriage of passenger. A separate contract of carriage or bill of lading
must be entered into in order to transport them.
In case of loss owing to the fault of the passenger, the carrier will not be liable.

TWO KINDS OF PASSENGER’S BAGGAGE

1 CARRY-ON LUGGAGE
passenger baggage in the custody of the passenger
2 CHECKED-IN LUGGAGE
passenger baggage not in the custody of the passenger
The liability is greater for baggage that is in the custody of the carrier, or checked-in
baggage, as compared to those in the possession of the passenger.

CHECKED-IN BAGGAGE
If the baggage is in the custody of the common carrier, the latter is
obliged to observe extraordinary diligence and the presumption of negligence
applies in case of loss.

BAGGAGE IN POSSESSION OF PASSENGERS

If the baggage is in the custody of the passenger, the carrier is liable as a
depositary provided that (1) notice was given to him or his employees and (2)
the passenger took the necessary precautions which the carrier had advised
relative to the care and vigilance of the baggage. The baggage in transit is
deemed a necessary deposit. The diligence required of the carrier is merely
ordinary diligence.

LOSS OR INJURY TO THE BAGGAGE OF PASSENGERS IN THEIR

PERSONAL CUSTODY OR IN THAT OF THEIR EMPLOYEES
WHEN CARRIER LIABLE WHEN CARRIER NOT LIABLE
The carrier is liable if the loss or The carrier is not liable if loss or
injury is caused by: injury is caused by:
 his servants  force majeure
 his employees  theft or robbery with the use of
 strangers arms or irresistible force
 a thief or robber done without  acts of the passenger, his family,
the use of arms or irresistible servants, or visitors
force  the character of the baggage
The fact that passengers are constrained to rely on the vigilance of the common carrier shall
be considered in determining the degree of care required of him.
The common carrier cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the passenger.
Any stipulation whereby the responsibility of the common carrier is suppressed or
diminished shall be void.

18
 EVIDENCE
CHAPTER III SAFETY OF PASSENGERS
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 (Art. 1755, NCC).
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.
Article 1760. The common carrier's responsibility prescribed in the preceding
article cannot be eliminated or limited by stipulation, by the posting of notices,
by statements on the tickets or otherwise.
WHO ARE NOT CONSIDERED PASSENGERS
1. one who has boarded the WRONG vehicle, has been properly informed of
such fact, and on alighting, is injured by the carrier
2. invited guests and ACCOMMODATION passengers.
3. one who attempts to board a Moving vehicle, although he has a ticket, unless
the attempt be with the knowledge and consent of the carrier
4. One who remains on a carrier for an Unreasonable length of time after he has
been afforded every safe opportunity to alight.
The carrier is thus NOT obliged to exercise extraordinary diligence but only
ordinary diligence in these instances.
Assumption of risk on the part of passengers
Passengers must take such risks incident to the mode of travel. The passenger
must observe the diligence of a good father of a family to avoid injury to himself
(Art. 1761, NCC).
Carriers are not insurers of any and all risks to passengers and goods. It merely
undertakes to perform certain duties to the public as the law imposes, and holds
itself liable for any breach thereof (Pilapil v. CA, G.R. No. 52159, Dec. 22,
1989).
Q: Wisconsin Transportation Co., Inc. (WTC) owned and operated an inter-
island de luxe bus service plying the Manila-Batangas-Mindoro route. Three
friends, namely: Aurelio, Jerome and Florencio rode on the same WTC bus from
Manila bound for Mindoro. Aurelio purchased a ticket for himself. Jerome, being
a boyhood friend of the bus driver, was allowed a free ride by agreeing to sit
during the trip on a stool placed in the aisle. Florencio, already penniless after
spending all of his money on beer the night before, just stole a ride in the bus by
hiding in the on-board toilet of the bus.
During the trip, the bus collided with another bus coming from the opposite
direction. The three friends all suffered serious physical injuries.
What are WTC's liabilities, if any, in favor of Aurelio, Jerome and Florencio?
Explain your answer. (2017 Bar)
A: As a common carrier, WTC is liable to Aurelio for breach of contract of
carriage, the latter being a passenger who purchased a ticket for himself. WTC is
also liable to Jerome for breach of contract of carriage because he was a
passenger although he was being transported gratuitously. However, WTC has
no liability in favor of Florencio for breach of contract of carriage. A stowaway
like Florencio, who secures passage by fraud, is not a passenger.
NOTE: As accommodation passengers or invited guests, defendant as owner and
driver of the pick-up owes to them merely the duty to exercise reasonable care so
that they may be transported safely to their destination. The rule is established by
the weight of authority that the owner or operator of an automobile owes the duty
to an invited guest to exercise reasonable care in its operation, and not
unreasonably to expose him to danger and injury by increasing the hazard of
travel (Articles 1755 and 1756, NCC, Lara v. Valencia, G.R. No. L-9907, June
30, 1958).
19
VOID STIPULATIONS
STIPULATIONS LIMITING THE LIABILITY OF COMMON CARRIER IN
CASE OF INJURY OR DEATH
GR: The responsibility of a common carrier for the safety of passengers
cannot be dispensed with or lessened by stipulation, by posting of notices, by
statements on tickets, or otherwise.88
XPN: When a passenger is carried gratuitously, a stipulation limiting the
common carrier’s liability for negligence is valid.
The passenger must be carried gratuitously. If it is only a reduction of fare, then any
limitation of the common carrier’s liability is not justified.
XPN to the XPN: Notwithstanding the exception, common carriers will be liable
nevertheless for willful acts or gross negligence.
DURATION OF LIABILITY
Observance of extraordinary diligence in transportation of passengers
commences from the moment the person who purchases the ticket from the
carrier presents himself at the proper place and in a proper manner to be
transported, and continues until the passenger has been landed at the port of
destination and has left the vessel owner’s dock or premises.
WAITING FOR CARRIER OR BOARDING OF CARRIER
A proper person whom the carrier would be bound to accept who enters
upon the carrier’s premises such as a station, ticket office, or waiting room, with
the intention of becoming a passenger, will ordinarily be viewed as assuming
the status of a passenger.89
TRAINS
The carrier is supposed to exercise extraordinary diligence although the
passenger is still waiting for a coach on the platform of the train station.90
However, there is no obligation on the part of a street railway company to
stop its cars to let on intending passengers at points other than those
appointed for stoppage.91
Q: City Railways, Inc. (CRI) provides train service, for a fee, to commuters from
Manila to Calamba, Laguna. Commuters are required to purchase tickets and
then proceed to designated loading and unloading facilities to board the train.
Ricardo Santos purchased the ticket for Calamba and entered the station. While
waiting, he had an altercation with the security guard of CRI leading to a
fistfight. Ricardo Santos fell on the railway just as a train was entering the
station. Ricardo Santos was run over by the train. He died. CRI contented that
the mishap occurred before Ricardo Santos boarded the train and that it was not
guilty of negligence. Decide. (2008 Bar)
A: The contention of CRI must fail. The duty of a common carrier to provide
safety to its passengers is not only during the course of the trip but for so long as
the passengers are within its premises and where they ought to be in pursuance to
the contract of carriage. Furthermore, the common carrier will still be liable even
though its employees acted beyond the scope of their work (LRTA vs. Navidad,
G.R. No. 145804 February 6, 2003).
Q: P, a sales girl in a flower shop at the Ayala Station of the MRT bought two
(2) tokens or tickets, one for her ride to work and another for her ride home. She
got to her flower shop where she usually worked. While P was attending to her
duties at the flower shop, two (2) crews of the MRT got into a fight near the
flower shop, causing injuries to P in the process. Can P sue the MRT for
contractual breach as she was within the MRT premises where she would shortly
take her ride home? (2011 Bar)
A: NO, P had no intention to board an MRT train coach when the incident
occurred.
Carriage by sea
The duty of the carrier commences as soon as a person with bona fide intention
of taking passage places himself in the care of the carrier or its employees and is
accepted as passenger (Aquino and Hernando, 2016, citing 80 C.J.S. 1085).
Land transportation
The act of the driver in stopping their conveyances is a continuous offer to riders
(continuing offer rule). The passenger is deemed to be accepting the offer if he is
88
Art. 1757, NCC
89
LRTA v. Navidad, G.R. No. 145804, February 6, 2003
90
LRTA v. Navidad, G.R. No. 145804, February 6, 2003
91
De Prado v. Manila Electric Co., G.R. No. 29462, March 7, 1929
 REMEDIAL LAW
already attempting to board the conveyances and the contract of carriage is
perfected from that point.
It is the duty of common carriers of passengers, including common carriers by
railroad train, streetcar, or motorbus, to stop their conveyances a reasonable
length of time in order to afford passengers an opportunity to board and enter,
and they are liable for injuries suffered by boarding passengers resulting from the
sudden starting up or jerking of their conveyances while they are doing so
(Dangwa vs. CA, G.R. No. 95582, October 7, 1991).
Q: A bus of GL Transit on its way to Davao stopped to enable a passenger to
alight. At that moment, Santiago who had been waiting for a ride, boarded the
bus. However, the bus driver failed to notice Santiago who was still standing on
the bus platform, and stepped on the accelerator. Because of the sudden motion,
Santiago slipped and fell down suffering serious injuries. Is GL Transit liable?
(1996 Bar)
A: YES. Santiago may hold GL Transit liable for breach of contract of carriage.
It was the duty of the driver, when he stopped the bus, to do no act that would
have the effect of increasing the peril to a passenger such as Santiago while he
was attempting to board the same. When a bus is not in motion there is no
necessity for a person who wants to ride the same to signal his intention to board.
A public utility bus, once it stops, is in effect making continuous offer to bus
riders. It is the duty of common carriers of passengers to stop heir conveyances
while they are doing so. Santiago, by stepping and standing on the platform of
the bus is already considered as a passenger and is entitled to all the rights and
protection pertaining to a contract of carriage (Dangwa Trans. Co. v. CA, G.R.
No. 95582, October 7, 1991).
When a Public Utility Vehicle is not in motion, it is not necessary for a person
who wants to ride the same to signal his intention to board
When the bus is not in motion, there is no necessity for a person who wants to
ride the same to signal his intention to board. A public utility bus, once it stops,
is in effect making a continuous offer to bus riders. Hence, it becomes the duty
of the driver and the conductor, every time the bus stops, to do no act that would
have the effect of increasing the peril to a passenger while he was attempting to
board the same. The premature acceleration of the bus in this case was a breach
of such duty.
A person, by stepping and standing on the platform of the bus, is already
considered a passenger and is entitled all the rights and protection pertaining to
such a contractual relation. Hence, it has been held that the duty which the carrier
owes to its patrons extends to persons boarding cars as well as to those alighting
therefrom (Dangwa Trans. Co. v. CA, supra).
ARRIVAL AT DESTINATION
Liability for death or injury to passengers upon arrival at destination
Once created, the relationship will not ordinarily terminate until the passenger
has, after reaching his destination, safely alighted from the carrier's conveyance
or had a reasonable opportunity to leave the carrier's premises. All persons who
remain on the premises a reasonable time after leaving the conveyance are to be
deemed passengers, and what is a reasonable time or a reasonable delay within
this rule is to be determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare for his departure (La
Mallorca v. CA, G.R. No. L-21486, May 14, 1966).
Carrier-passenger relationship continues until the passenger has been landed at
the port of destination and has left the vessel-owner’s premises. The victim’s
presence in a vessel after one (1) hour from his disembarkation is not enough in
order to absolve the carrier from liability in his death (Aboitiz Shipping
Corporation v. CA, G.R. No. 84458, November 6, 1989).
Q: Robert De Alban and his family rode a bus owned by Joeben Bus Company.
Upon reaching their desired destination, they alighted from the bus but Robert
returned to get their baggage. However, his youngest daughter followed him
without his knowledge. When he stepped into the bus again, the bus accelerated
that resulting to Robert’s daughter death. The bus ran over her. Is the bus
company liable?
A: YES. The relation of carrier and passenger does not cease at the moment the
passenger alights from the carrier’s vehicle at a place selected by the carrier at
the point of destination, but continues until the passenger has had a reasonable
time or reasonable opportunity to leave the current premises (La Mallorca v. CA,
GR L-20761, July 27 1966).
LIABILITY FOR ACTS OF OTHERS EMPLOYEES
Common carriers are liable for the acts of their employees
Common carriers are liable for the death of or injuries to passengers through the
negligence or willful 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. The 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 (NCC, Art. 1759).
20
NOTE: By express provision of Article 1759, it is no defense that the employee
acted beyond the scope of his authority because the riding public is not expected
to inquire from time to time before they board the carrier whether or not the
driver or any other employee is authorized to drive the vehicle or that said driver
is acting within the scope of his authority and observing the existing rules and
regulations required of him by management (Aquino and Hernando, 2016).
Q:At around 8:45 in the morning, A, after having alighted from a passenger bus
in front of Robinsons Galleria along the north-bound lane of EDSA, was hit and
run over by a bus driven by B, who was then employed by C Transport
Company. A was immediately rushed to the hospital where she was pronounced
dead on arrival. By reason of the quasi-delict, who should be held liable for the
death of A? B, the bus driver, C Transport Company, or both?
A: Both B and C Transport Company should be held solidarily liable as joint
tortfeasors. Under Article 2180 of the New Civil Code, employers are liable for
the damages caused by their employees acting within the scope of their assigned
tasks. Once negligence on the part of the employee is established, a presumption
instantly arises that the employer was remiss in the selection and/or supervision
of the negligent employee. It is incumbent upon the employer to rebut this
presumption by presenting adequate and convincing proof that it exercised the
care and diligence of a good father of a family in the selection and supervision of
its employees. Failing to do this, a common carrier cannot avoid liability for the
quasi-delict committed by its negligent employee. The responsibility of two or
more persons who are liable for a quasi-delict is solidary (R Transport
Corporation vs. Luisito G. Yu, G.R. No. 174161, February 18, 2015).
NOTE: The carrier, unlike in suits for quasi-delict, may not escape liability by
proving that it has exercised due diligence in the selection and supervision of its
employees (Art. 1759, NCC; see Cangco vs. Manila Railroad Co., supra; Prado
vs. Manila Electric Co., 51 Phil., 900)
Liability of the common carrier as regard the acts of employees may not be
limited by stipulation
The common carrier’s responsibility cannot be eliminated or limited by
stipulation, by the posting of notices, by statements on the tickets or otherwise
(Art. 1760, NCC).
Rationale: The basis of the carrier's liability for assaults on passengers
committed by its drivers rests on the principle that it is the carrier's implied duty
to transport the passengers safely. As between the carrier and the passenger, the
former must bear the risk of wrongful acts or negligence of the carrier's
employees against passengers, since it, and not the passengers, has power to
select and remove them(Maranan vs. Perez, GR No. L-22272, June 26, 1967).
Q: The AAA Bus Company picks up passengers along EDSA. X, the conductor,
while on board the bus, drew his gun and randomly shot the passengers inside.
As a result, Y, a passenger, was shot and died instantly. Is AAA Bus Company
liable? (2012 Bar) A: YES. The bus company is liable because common carriers
are liable for the negligence or willful act of its employees even though they
acted beyond the scope of their responsibility. NOTE: Willful acts of the
employees include theft. It should be pointed out that the Code of Commerce
expressly provides that the captain shall be civilly liable to the naviero and the
latter to third persons for all thefts committed by the crew, reserving the right of
action against the guilty party (Aquino and Hernando, 2016). OTHER
PASSESNGERS AND STRANGERS
The registered owner of the vehicle may be held liable for damages suffered by a
third person in the course of the operation of the vehicle
The registered owner of a public service vehicle is responsible for damages that
may arise from consequences incident to its operation or that may be caused to
any of the passengers therein (Gelisan vs. Alday, G.R. No. L-30212, September
30, 1987).
Extent of liability of common carriers for acts of co-passengers or strangers
(1997, 2005 Bar)
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
carrier’s employees through the exercise of the diligence of a good father of a
family would have prevented or stopped the act or omission (Art. 1763, NCC).
Q: P rode a Sentinel Liner bus going to Baguio from Manila. At a stop-over in
Tarlac, the bus driver, the conductor, and the passengers disembarked for lunch.
P decided, however, to remain in the bus, the door of which was not locked. At
this point, V, a vendor, sneaked into the bus and offered P some refreshments.
When P rudely declined, V attacked him, resulting in P suffering from bruises
and contusions. Does he have cause to sue Sentinel Liner? (2011 Bar)
A: YES, since the carrier's crew did nothing to protect a passenger who remained
in the bus during the stop-over.
Transportation Laws
140
UNIVERSITYOFSANTOTOMAS
 EVIDENCE
2019GOLDENNOTES
Q: In a jeepney, Angela, a passenger, was injured because of the flammable
material brought by Antonette, another passenger. Antonette denied her baggage
to be inspected invoking her right to privacy.
a. Should the jeepney operator be held liable for damages?
b. If it were an airline company involved, would your answer be the same? (1992
Bar)
A:
a. NO. The operator is not liable for damages. In overland transportation, the
common carrier is not bound nor empowered to make an examination on the
contents of packages or bags, particularly those hand carried by passengers
(Nocum vs. Laguna Tayabas Bus Company, G.R. No. L-23733, October 31,
1969).
b. NO. The common carrier should be made liable. In case of air carriers, it is
unlawful to carry flammable materials in passenger aircrafts, and airline
companies may open and investigate suspicious packages and cargoes pursuant
to Republic Act No. 6235.
Q: Marites, a paying bus passenger, was hit above her left eye by a stone hurled
at the bus by an unidentified bystander as the bus was speeding through the
National Highway. The bus owner’s personnel lost no time in bringing Marites
to the provincial hospital where she was confined and treated. Marites wants to
sue the bus company for damages and seeks your advice whether she can legally
hold the bus company liable. What will you advise her? (1994 Bar)
A: I will advise Marites that she cannot legally hold the bus company liable if the
stone throwing was entirely unforeseeable and the carrier exercised utmost
diligence. However, I will also inform her that the burden is on the carrier to
prove such exercise of due diligence. If she decides to file a case in court, all that
she will prove is that she was a passenger and she was inhured while on board
the bus.
Q: A was seated at the first row behind the driver and slept during the ride. When
the bus reached the Philippine Carabao Center in Muñoz, Nueva Ecija, the bus
driver, B, stopped the bus and alighted to check the tires. At this point, a man
who was seated at the fourth row of the bus stood up, shot A at his head and then
left with a companion. The bus conductor, C, notified B of the incident and
thereafter, brought A to the hospital but the latter was pronounced dead on
arrival. Can the common carrier, B, and C be held liable for the death of A?
A: NO. It is imperative for a party claiming against a common carrier to show
that the injury or death of the passenger/s arose from the negligence of the
common carrier and/or its employees in providing safe transport to its
passengers.In this case, A’s death was neither caused by any defect in the means
of transport or in the method of transporting, or the negligent or willful acts of
the bus driver or conductor.Instead, the case involves the death of A wholly
caused by the surreptitious act of a co-passenger, who after committing such
crime, hurriedly alighted from the vehicle (G.V. Florida Transport, Inc. vs. Heirs
of Romeo Battung, Jr., represented by Romeo Battung, Sr.; G.R. No. 208802;
October 14, 2015).
EXTENT OF LIABILITY FOR DAMAGES
Kinds of damages that may be recovered in case of death of a passenger (DeLo-
MEAtIH)
1. An indemnity for the death of the victim
2. An indemnity for loss of earning capacity of the deceased
3. Moral damages
4. Exemplary damages
NOTE: Carrier is not liable for exemplary damages where there is no proof that
it acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.
5. Attorney's fees and expenses of litigation
6. Interest in proper cases (Briñas v. People, G.R. No. L-30309, Nov. 25, 1983)
7. Hospital and funeral expenses
NOTE: In case of death, the plaintiff is entitled to the amount he spent during the
wake and funeral of the deceased. However, it has been ruled that expenses after
the burial are not compensable (Victory Liner, Inc. v. Heirs of Andres Malecdan,
G.R. No. 154278).
Damages in Personal Injury Cases
Personal injury and even death entitles claimant to all medical expenses as well
as other reasonable expenses that he incurred to treat his or his relative’s injuries.
Medical expenses may even include the amount spent for plastic surgery of the
plaintiff or any procedure to restore the part of the body that was affected (Sps.
Ong v. CA, G.R. No. 117103, January 21, 1999).
Loss of earning capacity
Mercantile Law
141
UNIVERSITYOFSANTOTOMAS
F A C U L T Y O F C I V I L LAW
The formula for the computation of unearned income is:
21
1. Net Earning Capacity = Life Expectancy x (Gross annual income - Reasonable
and necessary living expenses).
2. Life expectancy is determined in accordance with the formula: 2/3 x (80 – age
of deceased at the time of death). (Heirs of Ochoa vs. VS.G & S Transport
Corporation, G.R. No. 170071, March 09, 2011)
When there is no showing that the living expenses constituted the smaller
percentage of the gross income, the Court fixes the living expenses at half of the
gross income.
Moral damages
GR: Moral damages are not recoverable for breach of contract of carriage,
because such contract cannot be considered included in the “analogous cases”
used in Article 2219 of the NCC. Also, Art. 2176 of the NCC, which is the
provision on quasi-delict, expressly excludes the cases where there is a “pre-
existing contractual relation between the parties” from recovering damages
(Versoza v. Baytan, et al., G.R. L-14092, April 29, 1960).
XPNs: (DeFraG)
1. Where the mishap results in the Death of the passenger (Art. 1764, NCC); or
2. Where it is proved that the common carrier was guilty of Fraud or bad faith,
even if death does not result (Art. 2220, NCC).
3. Where the negligence of the carrier is so Gross and reckless as to virtually
amount to bad faith (PAL vs. CA et al., GR NO. 123238, Sept. 22, 2008)
Although the relation of passenger and carrier is "contractual both in origin and
nature" nevertheless, “the act that breaks the contract may be also a tort" when
said act is done with gross negligence or with bad faith (Air France v.
Carrascoso, G.R. No. L-21438, September 28, 1966).
NOTE: The current jurisprudential award for the loss of life of a passenger is
P100,0000 pesos by way of moral damages (Victory Liner vs. Gammad; supra;
Heirs of Ochoa vs. VS.G & S Transport Corp., supra).
Q: Judith and Joyce were on board a passenger bus operated by Eduardo. The
bus was driven at a fast speed by the driver, Rolando, when it crashed into a
truck parked on the shoulder of the Kennon Road. As a result, Judith and Joyce
suffered injuries. Eduardo and Rolando paid for their medical and hospitalization
expenses. Nonetheless, Judith and Joyce filed a complaint against Eduardo and
Rolando for breach of contract of carriage caused by Rolando’s reckless and
negligent driving. As relief, they prayed for moral and exemplary damages.
Eduardo and Rolando refused to pay moral damages on the ground that there was
neither proof nor allegation that they acted fraudulently or in bad faith. Are
Eduardo and Rolando liable for moral damages?
A: NO. In an action for breach of contract, moral damages may be recovered
only when a) death of a passenger results; or b) the carrier was guilty of fraud
and bad faith even if death does not result. In the case, Judith and Joyce impute
negligence when the bus collided with another vehicle. While they propounded
on negligence, they did not discuss or impute fraud or bad faith, or such gross
negligence which would amount to bad faith. There being neither allegation nor
proof that respondents acted in fraud or in bad faith in performing their duties
arising from their contract of carriage, they are not liable for moral damages.
Since moral damages cannot be awarded, it follows that the award of exemplary
damages is also not available, since this kind of damages may only be awarded
in addition to moral, temperate, liquidated, or compensatory damages (Darnes v.
Quiñones, G.R. No. 206468, August 2, 2017, Del Castillo, J.).
Defenses available to a Common Carrer (FECoLD)
1. Exercise of extraordinary due diligence
2. Fortuitous event
3. Contributory negligence of passengers – it does not bar recovery of damages
for death or injury if the proximate cause is the negligence of the common carrier
but the amount of damages shall be equitably reduced (NCC, Art. 1762).
4. Doctrine of Last Clear Chance
5. Due Diligence in the selection and supervision of employees.
The diligence of the passenger may be considered in determining liability in case
of injury
The passenger must observe the diligence of a good father of a family or
ordinary diligence to avoid injury to himself (NCC, Art. 1761). This means that
if the proximate cause of the passenger’s injury is his negligence, the common
carrier is not liable.
DOCTRINE OF LAST CLEAR CHANCE
Transportation Laws
142
UNIVERSITYOFSANTOTOMAS
2019GOLDENNOTES
The doctrine of last clear chance provides that where both parties are negligent
but the negligent act of one is appreciably later in point of time than that of the
other, or where it is impossible to determine whose fault or negligence brought
about the occurrence of the incident, the one who had the last clear opportunity
to avoid the impending harm but failed to do so, is chargeable with the
consequences arising therefrom. Stated differently, the rule is that the antecedent
 REMEDIAL LAW
negligence of a person does not preclude recovery of damages caused by the
supervening negligence of the latter, who had the last fair chance to prevent the
impending harm by the exercise of due diligence.
Q: B Traversing EDSA swerved then collision took place with B barely
encroaching on C’s lane. Prior to and at the time of collision, C did not take any
defensive maneuver to prevent the accident and minimize the impending damage
to life and property, which resulted in the collision in the middle of the highway,
where a vehicle would normally be traversing. Is C liable for his lack of care in
driving?
A: Yes. The collision was certainly foreseen and avoidable but C took no
measures to avoid it. Rather than exhibit concern for the welfare of his
passengers and the driver of the oncoming vehicle, who might have fallen asleep
or suddenly fallen ill at the wheel, C coldly and uncaringly stood his ground
closed his eyes, and left everything to fate, without due regard for the
consequences. Such a suicidal mindset cannot be tolerated, for the grave danger
it poses to the public and passengers availing of petitioners' services. Where both
parties are negligent but the negligent act of one is appreciably later in point of
time than that of the other, or where it is impossible to determine whose fault or
negligence brought about the occurrence of the incident, the one who had the last
clear opportunity to avoid the impending harm but failed to do so, is chargeable
with the consequences arising therefrom. In this case C, clearly had the Last
Clear Chance, thus he is should be the one liable for having failed to avert the
clearly imminent danger. (Greenstar v Universal Robina G.R. No. 205090,
October 17, 2016)
The doctrine of “last clear chance” cannot apply if the: (iCOIN)
a. Negligence of the plaintiff is concurrent with that of the defendant (in pari
delicto);
b. Party charged is required to act instantaneously; c. Injury cannot be avoided
despite the application at all times of all the means to avoid the injury (after the
peril is or should have been discovered), at least in all instances where the
previous negligence of the party charged cannot be said to have contributed to
the injury at all. (O'Mally vs. Eagan, 77 ALR 582)
It goes without saying that the plaintiff himself was not free from fault, for he
was guilty of antecedent negligence in planting himself in the wrong side of the
road. But as we have already stated, the defendant was also negligent; and in
such case the problem always is to discover which agent is immediately and
directly responsible. It will be noted that the negligent acts of the two parties
were not contemporaneous, since the negligence of the defendant succeeded the
negligence of the plaintiff by an appreciable interval. Under these circumstances,
the law is that a person who has the last clear chance to avoid the impending
harm and fails to do so is chargeable with the consequences, without reference to
the prior negligence of the other party. (Picart vs. Smith, 37 Phil., 809)
The last clear chance doctrine of the common law was imported into our
jurisdiction by Picart vs. Smith but it is a matter for debate whether, or to what
extent, it has found its way into the Civil Code of the Philippines. The historical
function of that doctrine in the common law was to mitigate the harshness of
another common law doctrine or rule—that of contributory negligence. The
common law rule of contributory negligence prevented any recovery at all by a
plaintiff who was also negligent, even if the plaintiff’s negligence was relatively
minor as compared with the wrongful act or omission of the defendant. The
common law notion of last clear chance permitted courts to grant recovery to a
plaintiff who had also been negligent provided that the defendant had the last
clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult
to see what role, if any, the common law last clear chance doctrine has to play in
a jurisdiction where the common law concept of contributory negligence as an
absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in
Article 2179 of the Civil Code of the Philippines. (PHOENIX
CONSTRUCTION, INC. and CARBONEL Mar 10, 1987)

2. Duration of liability
a. Waiting for carrier or boarding of carrier
b. Arrival at destination
3. Liability for acts of others
a. Employees
b. Other passengers and strangers
4. Liability for delay in commencement of voyage
5. Liability for defects in equipment and facilities
6. Extent of liability for damages

22
 EVIDENCE

CHAPTER IV BILL OF LADING NOT ESSENTIAL TO A CONTRACT OF TRANSPORTATION

But the execution of a bill of lading is not essential to a contract of
1. Three-fold character transportation. The making of such is not obligatory. The fact that a bill of
2. Delivery of goods lading is not issued does not preclude the existence of a contract of
a. Period for delivery transportation.
b. Delivery without surrender of bill of lading
c. Refusal of consignee to take delivery In the absence of a bill of lading, the respective claims of the parties shall
3. Period for filing claims be decided by the legal proofs that each one may submit in support of his
4. Period for filing actions claims. However: (a) if the value is P300 or less, testimonial evidence is
5. Effects of stipulations allowed and (b) if the value exceeds P300, testimonial evidence is not
sufficient and there should be proof through other writings.
The Electronic Commerce Act allows data messages or electronic documents to be used
in lieu of transport writing or paper documents.
BILL OF LADING
It is a written acknowledgment of receipt of goods and agreement to DISTINGUISHED FROM TICKET
transport and to deliver them to a specific place and to a named person or to
A ticket ordinarily refers to passengers but when it refers to a thing, it
his order. It covers all methods of transportation.
covers baggage. A bill of lading always refers to goods that are denominated
usually as cargo.
OVERLAND TRANSPORTATION
Overland transportation is the transport on land and on small bodies of COMMON KINDS OF BILLS OF LADING
water, waterways, both natural and artificial, including transport on rivers
which are not very large. A CLEAN BILL OF LADING does not contain any notation indicating
If it involves transport on sea, it will be referred to as maritime admiralty. defect in the goods. A FOUL BILL OF LADING contains a notation
indicating a defect in the goods.
GOVERNING LAWS
Commercial contracts involving common carriers shall be governed An ON-BOARD BILL OF LADING states that the goods have been
primarily by the Civil Code and supplemented by the Code of Commerce. received on board the vessel which is to carry the goods and is issued when
Commercial contracts involving private carriers shall be governed goods have been placed aboard a ship with every reasonable expectation that
primarily by the Code of Commerce and supplemented by the Civil Code the shipment is as good as on its way.
provisions.
A RECEIVED FOR SHIPMENT BILL OF LADING states that the goods
WHEN CONTRACT OF TRANSPORTATION COMMERCIAL have been received for shipment with or without specifying the vessel by which
A contract of transportation by land or waterways of any kind shall be the goods are to be shipped and are issued whenever conditions are not normal
considered commercial: and that there is insufficiency of shipping space.
(a) when it involves merchandise or any object of commerce
(b) when the carrier is a merchant or is customarily or habitually engaged A CUSTODY BILL OF LADING is one where the goods are already
in transportation for the public or is a common carrier, no matter what received by the carrier but the vessel indicated therein has not yet arrived in
its object may be port. In a PORT BILL OF LADING, the vessel indicated in the bill of lading
The transportation of persons or news will be deemed commercial only if it is undertaken
under (b). transporting the goods is already in port.
A contract of air transportation may be regarded as commercial because it is analogous
to land and water transportation. A THROUGH BILL OF LADING is one issued by a carrier who is obliged
to use the facilities of other carriers as well as his own facilities for the
NATURE OF A BILL OF LADING purpose of transporting the goods from the city of the seller to the city of the
The nature of a Bill of Lading is as follows: (1) is a contract in itself and buyer, which bill of lading is honored by the second and other interested
the parties are bound by its terms, (b) it is a receipt, and (c) it is a symbol of carriers who do not issue their own lading.
the goods covered by it. The bill of lading is the law between the parties and is
legal evidence of the contract. As such, it is an actionable document.
THREE-FOLD CHARACTER
As a receipt, the issuance of a bill of lading carries the presumption that
the goods were delivered to the carrier issuing the bill, for immediate
shipment and it is prima facie evidence of the receipt of the goods by the
AS A RECEIPT AS A CONTRACT AS A DOCUMENT
carrier. Since it is a prima facie evidence of receipt, the carrier may be allowed OF TITLE
to present proof that he received the cargo on a date different from the date recites the date and names the contracting regulates the relations
of the bill of lading. place of shipment, parties, which include between a carrier and
describes the goods as the consignee, fixes the a holder of the same
As a symbol of the goods, it is considered a document of title to the to quantity, weight, route, destination, and In the absence of a bill of
goods. A document of title is any document used in the ordinary course of dimensions, freight rate or charges, lading, their respective
identification marks and stipulates the rights claims may be
business in the sale or transfer of goods, as proof of the possession or control determined by legal
of goods, or authorizing the possessor of the document to transfer or receive, and condition, quality, and obligations proofs that each of the
either by endorsement or delivery, goods represented by such document. and value assumed by the contracting parties may
parties92 present in conformity with
FORM NOT MATERIAL law.
The form of the bill of lading is not material. If it contains an
acknowledgement by the carrier of the receipt of goods for transportation, it is in BILL OF LADING AS DOCUMENT OF TITLE
legal effect, a bill of lading. A bill of lading is a document of title under the Civil Code. It can be a negotiable
document of title.
The bill of lading constitutes the legal evidence of the contract of NEGOTIABILITY
transportation as all disputes between the parties regarding the execution and It is negotiable if it is deliverable to the bearer, or to the order of any person
performance of the contract shall be decided by its contents. The law admits no named in such document.
exception other than falsity and material error in its drafting.
92
Phoenix Assurance Co., Ltd. vs. United States Lines, G.R. No. L-24033, Feb. 22, 1968

23
 REMEDIAL LAW
The document remains to be negotiable even if the words “not negotiable” or “non- Q: X is a trader of school supplies in Calapan, Oriental Mindoro. To bring the
negotiable” are placed thereon. school supplies to Calapan, it has to be transported by a vessel. Because there
HOW NEGOTIATED were so many passengers, the two (2) boxes of school supplies were loaded but
BEARER by delivery the shipping company was not able to issue the Bill of Lading. So, on board, the
DOCUMENT Ship Captain issued instead a "shipping receipt" to X indicating the 2 boxes of
school supplies being part of the cargo of the vessel. Is there a contract of
ORDER DOCUMENT through indorsement
carriage?
EFFECTS OF NEGOTIATION A:
has the effect of manual delivery so as to constitute the transferee the owner Q: A bill of lading indicated that the contract of carriage was under a "said to
of the goods weigh" clause. What are the responsibilities of the shipper and the carrier?
A: This means that the shipper was solely responsible for the loading of the
container while the carrier was oblivious to the contents of the shipment.
The nature of a Bill of Lading is as follows: The arrastre operator was, like any ordinary depositary, duty-bound to take good
(a) is a CONTRACT in itself and the parties are bound by its terms care of the goods received from the vessel and to turn the same over to the party
(b) it is a RECEIPT entitled to their possession, subject to such qualifications as may have validly
been imposed in the contract between the parties. The arrastre operator was not
(c) it is a SYMBOL of the goods covered by it required to verify the contents of the container received and to compare
them with those declared by the shipper because, as earlier stated, the cargo
The bill of lading is the law between the parties and is legal evidence of the was at the shipper’s load and count.94
contract. As such it is an actionable document.

As a receipt means that the issuance of a bill of lading carries the presumption GR: The bill of lading constitutes the
that the goods were delivered to the carrier issuing the bill, for immediate legal evidence of the contract of transportation, and all disputes between the
shipment and it is nowhere questioned that a bill of lading is prima facie parties regarding the execution and performance of the contract shall be decided
evidence of the receipt of the goods by the carrier. Since it is a prima facie by the contents of the bill of lading issued by the carrier. It is covered by the
evidence of receipt, the carrier may be allowed to present proof that he Parol Evidence Rule in which the terms of the contract are rendered conclusive
received the cargo on a date different from the date of the bill of lading. upon the parties. Evidence aliunde is not admissible to vary or contradict a
complete and enforceable agreement embodied therein [Magellan Mfg.
Since it also is a symbol of the goods, it is considered a document of title to the Marketing Corp. v. CA, G.R. No. 95529 (1991)]. The value of the goods stated
goods. A document of title is any document used in the ordinary course of in the bill of lading is conclusive between the parties, and the shipper is not
business in the sale or transfer of goods allowed to prove a higher value [Art. 372, COC]. It is only when the carrier’s
 as proof of the possession or control of goods, or fault is so gross as to amount to actual fraud that the actual amount of the losses
 authorizing the possessor of the document to transfer or receive, either by and damages suffered may be proved by the shipper against the carrier.
endorsement or delivery, goods represented by such document Exception: The contents of the bill of lading
are not controlling when there is falsity and
It is possible to have a contract of carriage even without a bill of lading. The material error in its drafting [Art. 353, COC].
shipping receipt would be sufficient. A bill of lading is not indispensable. For A bill of lading is not, however, indispensable
as long as there is a meeting of the minds of the parties, a contract of carriage for the creation of a contract of carriage
exists even in the absence of a bill of lading (Compania Maritima vs. Insurance [Compania Maritima v Insurance Co., G.R. No.
Co. of NA, G.R. No. L-18965, October 30, 1964). L-18965 (1964)].
In the absence of a bill of lading, disputes shall
be determined by the legal proofs which the
parties may present in support of their
respective claims, according

DELIVERY OF GOODS
LEGAL EVIDENCE
PERIOD OF DELIVERY
PARTIES TO A BILL OF LADING
1. Shipper
2. Carrier
NOTE: A consignee, although not a signatory to the contract of carriage between
the shipper and the carrier, becomes a party to the contract by reason of either:
a) The relationship of agency between the consignee and the shipper/ consignor;
b) The unequivocal acceptance of the bill of lading delivered to the consignee, PERIOD FIXED NO PERIOD FIXED
with full knowledge of its contents; or It must be made within such time; The carrier is obliged forward them
c) Availment of the stipulation pour autrui, i.e., when the consignee, a third otherwise, the carrier shall pay the with the first shipment of the same
person, demands before the carrier the fulfillment of the stipulation made by the indemnity stipulated in the bill of or similar merchandise he may
consignor/shipper in the consignee’s favor, specifically the delivery of the lading, neither the shipper nor the make to the point where he must
goods/cargoes shipped.93 consignee being entitled to anything deliver them; otherwise, the
else damages occasioned by the delay
TWO TYPES OF BILL OF LADING shall be suffered by him
(a) NEGOTIABLE – If issued to the bearer or to the order of any person
named in such bill.
(b) NON-NEGOTIABLE – If issued to a specific person named in such bill. DETERMINATION OF INDEMNITY IF THE SAME IS NOT STIPULATED
If no indemnity has been stipulated and the delay exceeds the time fixed in the
bill of lading, the carrier shall be liable for the damages which the delay may
have caused.
93 94
MOF Company, Inc., v. Shin Yang Brokerage Corporation, G.R. No. 172822, December 18, 2009 Asian Terminals Inc. v. Simon Enterprises, Inc., G.R. No. 177116, February 27, 2013

24
 EVIDENCE
c when the goods are DAMAGED and such damage renders the goods
DELIVERY WITHOUT SURRENDER OF BILL OF LADING useless for the particular purpose for which there are to be used
GENERAL RULE d when there is DELAY on account of the fault of the carrier
Upon delivery of the goods, the consignee must surrender the bill of
lading to the carrier and their respective obligations are considered REMEDY OF SHIPPER
cancelled. In all cases, the shipper may exercise the RIGHT OF ABANDONMENT
by notifying the carrier. Ownership over damaged goods passes to the carrier
EXCEPTIONS and the carrier must pay the shipper the market value of the goods at point of
The goods may be released without the surrender of the bill of lading: destination.
a if surrender of the original bill of lading is IMPOSSIBLE (i.e., the bill
of lading gets lost or for other cause)
b if the seller INSTRUCTED the shipping company to deliver the cargoes
to the buyer without requiring the presentation of the bill of lading
In either case, the consignee must issue a receipt to the carrier upon release of
the goods. Such receipt shall produce the same effect as the surrender of the
bill of lading.

GR:

The surrender of the bill of lading is necessary upon delivery of the goods. If the
carrier fails to require such surrender and the bill od lading is non-negotiable, an
action against the carrier does not lie. If the bill of lading is negotiable, an action
by the shipper may lie against the carrier.
1. If– Action
2. If negotiable –
XPN: Surrender of the bill of lading is not necessary:
1.;
The shipping company is shall not be liable for releasing the cargoes to the buyer
(Macam vs. CA, G.R. No. 125524, August 25, 1999)
2..
Acknowledgment of the delivery by signing the delivery receipt suffices to
discharge the common carrier of its contractual obligation (National Trucking
and Forwarding Corporation vs. Lorenzo Shipping Corporation, G.R. No.
153563, February 27, 2005).

RONDEZ

1.1 The periods prescribed shall commence to run only from the time
the consignee is in actual possession.

1.2 The 24-hour rule is counted from the receipt of goods except if: (a)
the defect is due to the packing of the goods or may be seen from outside the
goods, or (b) owner/shipper never received the goods as there can be no
question as to the right to bring a claim.

1.3 The 24-hour rule of notice is not a prescriptive period, it is merely a

condition precedent before a complaint may be filed. Remember that failure
to comply with a condition precedent is a ground for dismissal, except when
there is fraud. The prescriptive period for an action based on written
contracts is 10 years

1.4 After the periods mentioned have elapsed or after the

transportation charges have been paid, no claim whatsoever shall be
admitted against the carrier with regard to the condition in which the goods
transported were delivered.

1.5 The periods may be the subject of a stipulation extending them.

REFUSAL OF CONSIGNEE TO TAKE DELIVERY

GROUNDS FOR THE REFUSAL OF A CONSIGNEE TO TAKE DELIVERY
OF THE GOODS UNDER THE CODE OF COMMERCE
a when only a PART of the goods transported are delivered and the
consignee is able to prove that he cannot make use of the part without
the others
b when the cargo consists of LIQUIDS and they have leaked out on
account of inherent defect of cargo, only one-fourth (¼) of their
contents remaining in the containers,

25
 REMEDIAL LAW
PERIOD FOR FILING CLAIMS Hong Kong, and second, in Manila. While travelling from Tokyo to Hong Kong,
the goods were damaged. What law will govern? (2013 Bar)
If the damage is APPARENT Immediately after delivery A: D. Philippine Law
If the damage is NOT APPARENT within 24 hours from delivery
Q: Assuming Philippine law to be applicable and Juan fails to file a claim with
the carrier, may he still commence an action to recover damages with the court?
(2013 Bar)
Claim for damages under Art. 366 of Code of Commerce A: B. Yes, provided he files the complaint within 10 years from delivery.
It applies in case of domestic transportation (inter-island) where there is damage
to the goods transported. COMMENCEMENT OF ACTION IF DELIVERY WAS MADE TO
The filing of claim is a condition precedent for recovery of damages.
Requisites: ARRASTRE OPERATOR
Commencement of action should be computed from the time of delivery to the
1. CONSIGNMENT of goods through a common carrier, by a consignor in one
arrastre operator. To use as basis for computing the one-year period, the
place to a consignee in another place; and
delivery to the consignee would be unrealistic and might generate confusion
2. The DELIVERY of the merchandise by the carrier to the consignee at the place between the loss or damage sustained by the goods while in the carrier’s custody
of destination.95 and those occurring while in the arrastre operator’s possession.
A claim against the arrastre operator must be filed within fifteen days from the
EFFECT OF PAYING THE TRANSPORTATION CHARGES IN THE FILING delivery of goods.98
OF AN ACTION ON ACCOUNT OF DAMAGES TO GOODS The filing of a provisional claim is substantial compliance with the provision in
If paid BEFORE checking the goods The right to file a claim is not the management contract of the arrastre operator that a formal claim for the loss
waived. of goods must be filed within thirty days from the filing of the entry.99
If paid AFTER the goods were The right to file a claim is already
checked waived.96

1.–
2.–

DOCTRINE OF COMBINED OR CONNECTING SERVICES

The carrier which delivered the goods to the consignee shall assume the
obligations, rights and actions of those who preceded him in the conveyance
of the goods.
The shipper or consignee should proceed against the one who executed the
contract or against the others who received the goods without reservation. But
even if there is reservation, they are not exempted from liabilities that they may
have incurred by reason of their own acts (CC, Art. 373).
The carrier may then file a third-party complaint against the one who is really
responsible. The carrier is an indispensable party. But the shipper or consignee
may sue all of them as alternative defendants.

PERIOD FOR FILING ACTIONS

1. For coastwise or carriage within the Philippines, within 6 years if no bill of
lading has been issued or within 10 years if a bill of has been issued.
2. For international carriage from foreign port to the Philippines, within 1
year from delivery of goods or the date when the goods have been delivered.
NOTE: The one-year period of prescription is not applicable to misdelivery or
conversion of goods.

The compliance with a requirement in the bill of lading that the consignee must
file a claim for loss or damage to the goods shipped within thirty days from
delivery is a condition precedent to the accrual of a right of action against
the carrier.97

Q: Akiro of Tokyo, Japan sent various goods to his friend Juan in Cebu City,
Philippines, through one of the vessels of Worth Well Shippers, Inc., an
American corporation. En route to Cebu City, the vessel had two stops, first in

95 98
New Zealand Ins. Co., Ltd. v. Choa Joy, G.R. No. L-7311, Sept. 30, 1955 International Container Terminal Services, Inc. v. Prudential Guarantee and Assurance Company, Inc. G.R.
96
Southern Lines, Inc. v. CA, G.R. No. L-16629, Jan. 31, 1962 No. L-134514, December 8, 1999
97 99
Philippine American General Insurance Co. v. Sweet Lines, Inc., G.R. No. 87434, August 5, 1992 Metro Port Service Inc. v. IAC, G.R. No. 66253, August 31, 1992

26
 EVIDENCE

CHAPTER V MARITIME COMMERCE

VESSEL
Vessels are those engaged in navigation, whether coastwise or on the high
seas destined for the services of the industry or maritime commerce.

The word ‘vessel’ used in the Code of Commerce was not intended to include
all ships, craft, or floating structures of every kind without limitation.100

Vessels are considered personal or movable property but they partake to a

certain extent, of the nature and conditions of real property, on account of
their value and importance in the world of commerce.

AGENTS OF MARITIME COMMERCE

(1) Ship-owners and ship agents
(2) Captains and masters of the vessel
(3) Officers and Crews of the vessel
(4) Supercargoes

SHIPOWNER
He has possession, management, and control over the vessel, and the
consequent right to direct her navigation. While in his possession, the
shipowner also receives freight earned and paid.

SHIP AGENT
He is entrusted with provisioning and of representing the vessel in the
port in which it may be found. His liability to passengers and cargo owners for
loss or injury is the same as the shipowner. He is solidarily liable with the
shipowner for loss or damage subject to his right to claim reimbursement
from the shipowner.

SUPERCARGO
He discharges administrative duties assigned to him by the ship agent or
the shippers, keeping an account and record of transactions as required in the
accounting book of the captain.

100
Lopez v. Duruelo, G.R. No. L-29166 (1928)

27
 REMEDIAL LAW
CHARTER PARTIES BAREBOAT DISTINGUISHED FROM CONTRACT OF AFFREIGHTMENT
BAREBOAT OR DEMISE CONTRACT OF
CHARTER PARTY CHARTER AFFREIGHTMENT
It is a contract by virtue of which the owner or agent of a vessel leases the charterer becomes liable to others for owner remains liable as carrier and
entire ship or some principal part thereof to another person for a specified any breach caused by its negligence must answer for any breach of duty
period of time or use in consideration of the payment of freight. charterer regarded as owner pro hac charterer not regarded as owner
vice for the voyage
CLASSES OF CHARTER PARTY owner relinquishes possession, owner retains possession, command,
(1) Bareboat or demise command, and navigation to and navigation of the ship
(2) Contract of affreightment charterer
a. Time charter In a bareboat or demise charter, the common carrier is converted to private
b. Voyage or trip charter carrier.
Both time and voyage charters are said to be contracts of affreightment, where a common
Although a charter party may transform a common carrier into a private one, the
or public carrier is not converted into a private carrier.
same, however, is not true in a contract of affreightment on account of the
distinctions between a contract of affreightment and a demise or bareboat charter
PERSONS WHO MAKE A CHARTER [Puromines Inc. v. CA, G.R. No. 91228 (1993)].
a. Owner or owners of the vessel, either in whole or in part, who have legal
control and possession of the vessel;
b. A charterer may subcharter the entire vessel to a third person unless prohibited
CONTRACT OF AFFREIGHTMENT
in original charter [Art 679, COC];
It is one whereby the owner of the vessel leases part or all of its space to
c. A ship agent if authorized by the owner/s or given such power in the certificate
haul goods for others. It is a contract for special service to be rendered by the
of appointment [Art 598, COC]; or
owner of the vessel. Under such contract, the shipowner retains the possession,
d. Captain in the absence of the ship agent or
command, and navigation of the ship, the charterer or freighter merely having
use of the space in the vessel in return for his payment of the charter hire.
REQUISITES FOR A VALID CHARTER PARTY
a. Consent of the contracting parties
b. Existing vessel which should be placed at the disposition of the shipper
c. Freight
TIME CHARTER
d. Compliance with the formal requisites under Article 652 of the Code of
It is a contract for the use of a vessel for a specified period of time or for
Commerce which include the requirement that the charter party must be in (a)
the duration of one or more specified voyages. The owner of a time-chartered
writing, (b) drawn in duplicate, and (c) signed by the parties.
vessel retains possession and control through the master and crew, who
remain his employees.
Note:
The time charterer acquires the right to:
Contract of affreightment – one in which the
 Utilize the carrying capacity and facilities of the vessel; and
owner of the vessel leases part or all of its
 Designate her destinations during the term of the charter [Litonjua Shipping
space to haul goods for others.
Co., Inc. v. National Seamen Board, G.R. No. L- 51910(1989)].
It is a contract for special service, wherein the
general owner retains the possession,
command and navigation of the ship VOYAGE OR TRIP CHARTER
The charterer or freighter merely has use of the In a voyage charter, the vessel is leased for a single or particular voyage.
space in the vessel in return for his payment of The vessel is chartered for a carriage of goods from one or more ports of loading
the charter hire. to one or more ports of unloading.
The rights, responsibilities of ownership rest on The master and crew remain the employ of the owner of the vessel.102
the owner, and the charterer is usually free The owner who retains possession of the ship remains liable as carrier and must
from liability to third persons in respect of the answer for loss or non-delivery of the goods received for transportation. 103
ship [Puromines Inc. v. CA, G.R. No. 91228
(1993)]. Te master and crew remain under the employ of the owner.

BAREBOAT OR DEMISE CHARTER

BAREBOAT OR DEMISE CHARTER
A bareboat or demise charter is one whereby the charterer becomes owner
pro hac vice of the vessel. He mans the vessel with his own people and
becomes, in effect, the owner of the vessel for the voyage or service
stipulated. The whole vessel is leased to the charterer transferring to him its
entire command and possession and consequent control over its navigation,
including the master and crew who are his servants.
BAREBOAT OR DEMISE CHARTER
The ship owner gives possession of the entire vessel to the charterer. In turn, the
OWNER PRO HAC VICE charterer supplies, equips, and mans the vessel. The charterer is the owner pro
The charterer, by virtue of a demise charter, is considered the owner pro hac vice (2004 Bar).
hac vice. He mans and equips the vessel and assumes all responsibility for As owner pro hac vice of the vessel, the charterer assumes the rights and
navigation, management and operation. He thus acts as the owner of the liabilities of the owner to third parties who deal with the vessel, it is the
vessel in all important aspects during the duration of the charter.101 The charterer and its agent who are liable for the wages of seamen hired by the
master and crew of the vessel thereby become the charterer’s “servants”. master of the vessel, as the master of the vessel is acting in behalf of the
The owner relinquishes, completely and exclusively, the possession, command and
navigation of the vessel.
charterer.104
Anything short of such a complete transfer is a contract of affreightment or not a charter The charterer is considered the owner of the vessel for the voyage or service
party at all. stipulated. The charterer, not the owner of the vessel, is liable for vessel’s
expenses, including seaman’s wages.

102
Litonjua Shipping Co., Inc. v. National Seamen Board
103
Cebu Salvage Corp. v. Philippine Home Assurance Corp.
101 104
Puromines Inc. v. CA Litonjua Shipping Co., Inc. v. National Seamen Board, G.R. No. L-51910, August 10, 1989

28
 EVIDENCE
a. Bareboat/demise charter
b. Time charter
c. Voyage/trip charter The captain shall be liable to the agent, and the latter to third persons for:
 all DAMAGES suffered by the vessel and his cargo by reason of want of skill
or negligence on his part
 all THEFTS committed by the crew, reserving his right of action against the
guilty parties
LIABILITY OF SHIPOWNERS AND SHIPPING AGENTS  all losses, fines, and confiscations imposed on account of VIOLATION of the
laws and regulations of customs, police, health, and navigation
 all losses and damages caused by MUTINIES on board the vessel, or by
Shipowners are allowed to limit their liability for any loss or damage to the value reason of faults committed by the crew in the service and defense of the
of their investment or amount of interest in the vessel. same, if he does not prove that he made full use of his authority to prevent or
avoid them
This is called the real and hypothecary nature of maritime law, otherwise known  those arising by reason of an undue use of powers and non-fulfillment of
as the no vessel no liability doctrine the obligations which are his
 those arising by reason of his going out of his COURSE or taking a course
which he should not have taken without sufficient cause, in the opinion of
CIVIL LIABILITY OF THE SHIP AGENT AND SHIPOWNER the officers of the vessel at a meeting with the shippers or supercargoes who
(1) all CONTRACTS of the captain, whether authorized or unauthorized, to may be on board
repair, equip, and provision the vessel  those arising by reason of his voluntarily entering a PORT other than that of
(2) LOSS and DAMAGE to the goods loaded on the vessel without prejudice his destination
to the shipowner or ship agent freeing themselves from liability by  those arising by reason of NON-OBSERVANCE of the provisions contained
abandoning the vessel to the creditors in the regulations on situation of lights and maneuvers for the purpose of
preventing collisions

THREE (3) DISTINCT ROLES OF A CAPTAIN

LIMITED LIABILITY RULE
(1) GENERAL AGENT of the ship owner
GENERAL RULE
(2) COMMANDER and TECHNICAL DIRECTOR of the vessel
The liability of the shipowner or ship agent arising from the operation of
the vessel (i.e., transportation of goods and passengers) is confined to the (3) REPRESENTATIVE of the country under whose flag he navigates105
vessel, its equipment, and freight or insurance, if any, so that if the
shipowner or agent abandoned the ship, equipment, and freight, his GROUNDS FOR DISCHARGE OF A CAPTAIN
liability is EXTINGUISHED. (a) Robbery or theft
(b) Insubordination in serious matters
EXCEPTIONS (c) Habitual drunkenness
F when the shipowner is at FAULT (d) Damage caused to the vessel or its cargo through malice or manifest or
The doctrine is premised on the condition that the injury or death of the proven negligence
passenger occurred by reason of the fault of the captain only.
R liabilities for REPAIRS and for provisioning the vessel contracted
before the loss of the vessel
Total destruction of the vessel does not affect the liability of the owner for B. EXCEPTIONS TO LIMITED LIABILITY
repairs on the vessel completed before its loss as owners of a vessel are liable
for necessary repairs and it shall remain unaffected by the loss of the thing.
A when the vessel was not ABANDONED
N when the injury or death of the passenger is due to the NEGLIGENCE
of the shipowner and the captain
The doctrine is premised on the condition that the injury or death of the
passenger was caused by the negligence of the captain only.
C claims of the CREW under the Workmen’s Compensation Act
Such compensation has nothing to do with maritime commerce, it is an item in
the cost of production which must be included in the budget of any well-
managed industry.
I when the vessel is INSURED
The liability of the shipowner or ship agent is limited to the extent of the
insurance proceeds.
XPN to XPN: If it is a claim of an insurer in subrogation, it is avoided.
S when the vessel was not SEAWORTHY
When the vessel is a private carrier or the voyage is not maritime in character

WHO MAY AVAIL

The only person who could avail of the limited liability rule is the
shipowner. He is the very person whom the rule has conceived to protect and the
charterer cannot invoke this as a defense.

LIABILITY FOR ACTS OF THE CAPTAIN

The owners of a vessel shall be civilly liable in the proportion of their
contribution to the common fund, for the results of the acts of the captain.
Each part owner may exempt himself from this liability by the abandonment
before a notary of the part of the vessel belonging to him.
105
Inter-Orient Marine Enterprises v. NLRC, G.R. No. 115286 (1994)

29
 REMEDIAL LAW
ACCIDENTS AND DAMAGES IN MARITIME COMMERCE (2) There must be a DELIBERATION.
(3) The captain must make a RESOLUTION.
(4) The resolution shall be ENTERED in the log book, with the reasons and
AVERAGE motives and the votes for and against the resolution.
Averages pertain to expenses and damages: (5) The MINUTES of the meeting shall be signed by the parties and
D There must be a common DANGER to the ship and cargo after it has delivered to the maritime judicial authority of the first port of arrival
been loaded. within 24 hours from arrival.
(6) There must be RATIFICATION by the captain under oath.
a. Expense
a. Extraordinary or accidental;
b. Incurred during the voyage; and
c. Incurred in order to preserve the vessel, the cargo, or both.
GENERAL AVERAGES PARTICULAR AVERAGES
b. Damages or Deterioration – to constitute both the ship and cargo are subject no such common danger to both the
an average, it must: to the same danger which is real vessel and the cargo
a. Have been suffered by the vessel from the time the vessel put to sea from and known
the port of departure until it casts anchor in the port of destination; and part of the vessel or of the cargo or expenses and damage caused to the
b. Have been suffered by the merchandise from the time they are loaded in the both is sacrificed deliberately vessel or to her cargo are neither
port of shipment until they are unloaded in the port of consignment [Art. deliberately made nor subject to
806, COC]. any legal step or authority
from the expenses or damage caused expenses or damages suffered have
TWO KINDS OF AVERAGES follows the successful saving of the not inured to such common benefit
vessel and her cargo
1. Particular or simple average; and
2. Gross or general average. All the persons having an interest The owner of the things which gave
in the vessel and cargo saved shall rise to the expenses or suffered the
contribute to indemnify the damages shall bear the same.
expenses or damages caused.
GENERAL AVERAGE Common danger means both the ship and the cargo, after it has been loaded, are subject to
(a) must be deliberately incurred the same danger.
(b) must be intended to save vessel and cargo  Whether during the voyage, or in the port
(c) must be caused by a real and known risk to which the shipper and the of loading or unloading;
carrier were exposed  Whether the danger arises from the
(d) success in saving the vessel and the remaining cargo accidents of the sea, dispositions of the
authority, or faults of men;
If notwithstanding the jettison of merchandise, breakage of masts, ropes,  Provided that the circumstances producing
and equipment, the vessel shall be lost running the same risk, no contribution the peril may rationally be said to be certain
whatsoever by jettison of gross average shall be proper. The owners of the and imminent;
goods saved shall not be liable for indemnification of those jettisoned, lost or  Excludes measures undertaken against a
damaged. distant peril [Magsaysay, Inc. v. Agan, G.R.
No. L-6393 (1955)].

PARTICULAR AVERAGE
Particular or simple averages shall include all damages and expenses caused to
the vessel or cargo that did not inure to the common benefit and profit of all
persons interested in the vessel and her cargo.
The owner of the goods which gave rise to the expense or suffered the damage
shall bear this average [Art. 810, COC].
GENERAL AVERAGE
General or gross averages shall include all the damages and expenses which are
deliberately caused in order to save the vessel, her cargo, or both at the
same time, from a real and known risk [Art. 811, COC].
The gross or general average shall be borne by those who benefited from the
sacrifice. These include the ship owner and the owners of the cargoes that were
saved. Contribution may also be imposed on the insurers of the vessel or cargoes
that were saved, as well as lenders on bottomry or respondentia.
REQUISITES FOR GENERAL AVERAGE
D There must be a common DANGER to the ship and cargo after it has
been loaded.
D A portion of the vessel or some of the cargoes or both are
DELIBERATELY sacrificed for the common safety.
S The vessel or cargo is SUCCESSFULLY saved.
F The expenses or damages should have been incurred or inflicted after
taking the FORMALITIES provided under Articles 813 and 814 of
the Code of Commerce.
FORMALITIES FOR INCURRING GROSS AVERAGE
(1) There must be an ASSEMBLY called by the captain of the sailing mate
and other officers, including those with interests in the cargo.
Note: When a vessel is stranded unintentionally, the damages incurred cannot
constitute general averages.
CASES OF GENERAL AVERAGE
 The goods or cash invested in the redemption of the vessel or cargo captured
by enemies, privateers, or pirates, and the provisions, wages, and expenses of
the vessel detained during the time the arrangement or redemption is taking
place.
 The goods jettisoned to lighten the vessel, whether they belong to the vessel,
to the cargo, or to the crew, and the damage suffered through said act by the
goods kept.
 The cables and masts which are cut or rendered useless, the anchors and the
chains which are abandoned in order to save the cargo, the vessel, or both.
 The expenses of removing or transferring a portion of the cargo in order to
lighten the vessel and place her in condition to enter a port or roadstead, and
the damage resulting therefrom to the goods removed or transferred.
 The damage suffered by the goods of the cargo through the opening made in
the vessel in order to drain her and prevent her sinking.
 The expenses caused through floating a vessel intentionally stranded for the
purpose of saving her.
 The damage caused to the vessel which is necessary to break open, scuttle, or
smash in order to save the cargo.
 The expenses of curing and maintaining the members of the crew who may
have been wounded or crippled in defending or saving the vessel.
 The wages of any member of the crew detained as hostage by enemies,
privateers, or pirates, and the necessary expenses which he may incur in his
imprisonment, until he is returned to the vessel or to his domicile, should he
prefer it.
 The wages and victuals of the crew of a vessel chartered by the month during
the time it should be embargoed or detained by force majeure or by order of

30
 EVIDENCE
the Government, or in order to repair the damage caused for the common
good.
 The loss suffered in the value of the goods sold at arrivals under stress in
order to repair the vessel because of gross average.
 The expenses of the liquidation of the average.
 If in lightening a vessel on account of a storm, in order to facilitate her entry
into a port or roadstead, part of her cargo should be transferred to lighters or
barges and be lost, the owner of said part shall be entitled to indemnity, as if
the loss has originated from a gross average.
 If, as a necessary measure to extinguish a fire in a port; roadstead; creek, or
bay, it should be decided to sink any vessel, this loss shall be considered gross
average, to which the vessels saved shall contribute.
JETTISON
The act of throwing overboard part of a vessel’s cargo or hull in hopes of saving
a ship from sinking. The captain shall direct the jettison, and shall order the
goods cast overboard in the following order:
1 GOODS ON DECK
beginning with those which embarrass the maneuver or damage the
vessel, preferring, if possible, the HEAVIEST ones with the LEAST utility
and value
2 GOODS BELOW THE UPPER DECK
3 vessel means it has the greater ability to avoid collisions [A. Urrutia & Co. v.
1. -;
2. - always beginning with those of the greatest weight and smallest value to the
amount and number absolutely indispensable [Art. 815, COC].
REQUIRED PROOF
To include the goods jettisoned in the general or gross average, the existence of
the cargo or goods must be proved:
1. For cargo – by means of bill of lading;
2. For good belonging to the vessel – by means of the inventory prepared prior
to departure [Art. 816, COC].
JASON CLAUSE
Jason clause is a provision in the contract of carriage that requires the cargo
owners to contribute in the general average, though the event which gave rise to
the sacrifice or expenditure may have been due to the fault of one of the parties
to the adventure [Rule D, York Antwerp Rules]. Note: This shall not prejudice
any remedies or defenses which may be open against or to that party in respect of
such fault.
PROCEDURE FOR RECOVERY
1. Assembly and deliberation with the sailing mate and other officers
2. Resolution of the captain adopted
3. Hearing of the persons interested. In case an interested person should not be
heard, he shall not contribute to the gross average
4. Resolution to be entered in the log book, stating the motives and reasons
therefore as well as the votes and reason for disagreement
5. Minutes to be signed by all the persons present or in urgent cases, the captain
6. Captain shall deliver one copy of the minutes to the maritime judicial authority
of the first port he may make within 24 hours
7. Captain shall ratify the minutes under oath
a. General average
COLLISIONS AND ALLISIONS
Collision refers to the contact of two moving vessels. Allision refers to the
contact between one moving vessel and a stationary vessel.
31
If a vessel should collide with another through the fault, negligence, or lack of
skill of the captain, sailing mate, or any other member of the complement, the
owner of the vessel at fault shall indemnify the losses and damages suffered,
after an expert appraisal.
If both vessels may be blamed for the collision, each one shall be liable for his
own damages, and both shall be jointly responsible for the losses and damages
suffered by their cargoes.
The provisions of the foregoing article are applicable to the case in which it can
not be decided which of the two vessels was the cause of the collision.
If a vessel should collide with another by reason of an accident or through force
majeure, each vessel and her cargo shall be liable for their own damage.
If a vessel should be forced to collide with another one by a third vessel, the
owner of the third vessel shall indemnify for the losses and damages caused, the
captain thereof being civilly liable to said owner.
COLLISION BETWEEN A STEAM AND A SAIL VESSEL
General Rule: When meeting a sailing vessel, whether close hauled or with the
wind free, the sail vessel has a right to keep her course, and it is the duty of the
steamer to adopt precautions as will avoid the sail vessel. In a collision
between a steam vessel and a sail vessel, the presumption is against the steam
vessel.
The steam vessel must show that she took the proper measures to avoid a
collision. Ratio: The steamer’s greater facility of maneuvering over a sail
Baco River Plantation Co, G.R. No. L- 7675. [1913)].
COLLISION BETWEEN TWO POWER-DRIVEN VESSELS
General Rule: When two power-driven vessels are meeting head on, or nearly
head on, so as to involve risk of collision, each shall alter her course to
starboard (right side). Ratio: So that each may pass on the port (left) side of the
other [Smith Bell and Co. v. CA, G.R. No. L-56294 (1991)].
LIABILITY IN COLLISION CASES
Liability in collision cases is negligence-based. Courts are called upon to
determine the negligence of the persons involved in order to impose liability.
The person who caused the injury is both civilly and criminally liable [Aquino].
Nevertheless, the rules that apply to quasidelict cannot be applied to collision
cases. The doctrine of last clear chance and the rules on contributory negligence
cannot be applied in collision cases. This is in accordance with Art. 827 of the
Code of Commerce. Thus, if both vessels were negligently operated, each must
suffer its own damage even if the other has the last clear chance of avoiding the
injury [C.B. Williams v. Yangco, G.R. No. L-8325 (1914)]. Similarly, proof that
the plaintiff was negligent will bar recovery from the defendant in collision cases
even if the plaintiff’s negligence can be classified as merely contributory
[Gorgonio De Sarasola v. Yu Biao Sontua, G.R. No. L-22630 (1925)].
U.P. LAW BOC TRANSPORTATION LAW COMMERCIAL LAW
Page 85 of 450
CLASSES OF COLLISION
1 FORTUITOUS
When collision is due to a fortuitous event or force majeure, each vessel
and its cargo shall bear its own damages.
When, by reason of force majeure, a vessel properly anchored and
moored collides with another, the injury occasioned shall be looked upon
as particular average to the vessel run into.
2 CULPABLE
When only one vessel is at fault, the owner of the vessel at fault shall
indemnify the losses and damages suffered, after an expert appraisal.
When both vessels are at fault, each shall suffer its own damages, and
both shall be solidarily responsible for the losses and damages
occasioned to their cargoes. The ship owners cannot successfully
maintain an action against the other for the loss or injury to his vessel.
The common carrier operating the vessel is precluded from interposing the defense of
due diligence in the selection and supervision of its employees in an action against it by
a shipper of the other colliding vessel.
When a third vessel is at fault, the owner of the third vessel shall
indemnify the losses and damages caused, the captain thereof being civilly
 REMEDIAL LAW
liable to said owner. (3) After receiving the goods into his charge the carrier, or the master or agent of
3 INSCRUTABLE FAULT the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading
If it cannot be decided which of the two vessels was the cause of the showing among other things —
collision, each shall bear his own damage and both shall be jointly
responsible for the losses and damages suffered by their cargoes. (a) The leading marks necessary for identification of the goods as the same are
furnished in writing by the shipper before the loading of such goods starts,
provided such marks are stamped or otherwise shown clearly upon the goods if
THREE ZONES OF TIME IN COLLISION OF VESSELS uncovered, or on the cases or coverings in which such goods are contained, in
1 FIRST ZONE such a manner as should ordinarily remain legible until the end of the voyage.
covers the journey of the vessel until the moment when the risk of collision
begins (b) Either the number of packages or pieces, or the quantity or weight, as the
2 SECOND ZONE case may be, as furnished in writing by the shipper.
the moment when the risk of collision begins up to the moment that it
becomes a practical certainty (c) The apparent order and condition of the goods: Provided, That no carrier,
During this zone, vessels must strictly abide with nautical rules, unless a master, or agent of the carrier, shall be bound to state or show in the bill of
deviation therefrom is imperative to avoid imminent danger. lading any marks, number, quantity, or weight which he has reasonable ground
3 THIRD ZONE for suspecting not accurately to represent the goods actually received, or which
he has had no reasonable means of checking.
the period when collision is certain and the time of impact
The error in this zone would no longer be legally consequential. (4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier
of the goods as therein described in accordance with paragraphs (3) (a), (b), and
(c) of this section: Provided, That nothing in this Act shall be construed as
repealing or limiting the application of any part of the Act, as amended, entitled
"An Act relating to bills of lading in interstate and foreign commerce," approved
August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the
CARRIAGE OF GOODS BY SEA ACT "Pomerene Bills of Lading Act."

A. APPLICATION
GR: COGSA only applies in terms of loss or damage of goods
transported to and from Philippine ports in foreign trade.
XPN: It may also apply to domestic trade when there is a
paramount clause in the contract.
The COGSA applies up to the final port of destination even if the transshipment was made
on an inter-island vessel.106
Duration of applicability
From the time the goods have been discharged from the ship and given to
the custody of the arrastre operator is not covered by COGSA
PARAMOUNT CLAUSE
It is a stipulation or clause either on the bill of lading or charter party
stipulating the laws that the parties agreed to be followed in the event of
breach.
(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at
the time of shipment of the marks, number, quantity, and weight, as furnished by
him; and the shipper shall indemnify the carrier against all loss damages, and
expenses arising or resulting from inaccuracies in such particulars. The right of
the carrier to such indemnity shall in no way limit his responsibility and liability
under the contract of carriage or to any person other than the shipper.
(6) Unless notice of loss or damage and the general nature of such loss or
damage be given in writing to the carrier or his agent at the port of discharge
before or at the time of the removal of the goods into the custody of the person
entitled to delivery thereof under the contract of carriage, such removal shall be
prima facie evidence of the delivery by the carrier of the goods as described in
the bill of lading. If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage maybe endorsed upon the receipt for the goods
given by the person taking delivery thereof.

CASES COVERED BY THE COGSA
It applies only in case of non-delivery or damage, and not to
misdelivery or conversion of goods.107 Also, the deterioration of goods due to
delay in their transportation is not covered by Sec. 6 of COGSA.108
OBLIGATIONS OF THE CARRIER
The carrier shall be bound, before and at the beginning of the voyage, to
exercise due diligence to:
1 make the ship seaworthy
2 properly man, equip, and supply the ship
3 make the holds, refrigerating and cooling chambers, and all other
parts of the ship in which goods are carried, fit and safe for their
reception carriage and preservation
The notice in writing need not be given if the state of the goods has at the time of
their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in
respect of loss or damage unless suit is brought within one year after delivery of
the goods or the date when the goods should have been delivered: Provided, That
if a notice of loss or damage, either apparent or concealed, is not given as
provided for in this section, that fact shall not affect or prejudice the right of the
shipper to bring suit within one year after the delivery of the goods or the date
when the goods should have been delivered
In the case of any actual or apprehended loss or damage the carrier and the
receiver shall give all reasonable facilities to each other for inspecting and
tallying the goods.

(a); (7) After the goods are loaded the bill of lading to be issued by the carrier,
master, or agent of the carrier to the shipper shall, if the shipper so demands, be a
(b); "shipped" bill of lading Provided, That if the shipper shall have previously taken
up any document of title to such goods, he shall surrender the same as against the
(c). issue of the "shipped" bill of lading, but at the option of the carrier such
document of title may be noted at the port of shipment by the carrier, master, or
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care agent with name or name the names of the ship or ships upon which the goods
for, and discharge the goods carried. have been shipped and the date or dates of shipment, and when so noted the same
shall for the purpose of this section be deemed to constitute a "shipped" bill of
lading.

106
(8) Any clause, covenant, or agreement in a contract of carriage relieving the
Sea Land Service Inc. vs. IAC, G.R. No. 75118, August 31, 1987
107
carrier or the ship from liability for loss or damage to or in connection with the
Ang v. American Steamship Agencies, Inc., G.R. No. L-22491, Jan. 27, 1967
108
Mitsui O.S.K. Lines Ltd. v. CA, G.R. No. 119571, March 11, 1998 goods, arising from negligence, fault, or failure in the duties and obligations

32
 EVIDENCE
provided in this section, or lessening such liability otherwise than as provided in
this Act, shall be null and void and of no effect. A benefit of insurance in favor
of the carrier, or similar clause, shall be deemed to be a clause relieving the
carrier from liability.

B. NOTICE OF LOSS OR DAMAGE

NOTICE OF CLAIM
Notice of claim and the general nature of the loss or damage must be given
in writing to the carrier or his agent at the port of discharge before or at the
time of the removal of the goods.
If damage is not patent or cannot be ascertained from the package, the
shipper should file the claim with the carrier within three days from delivery.
Failure to file a notice of claim within three (3) days will not bar recovery if it is
nonetheless filed within one year. This one-year prescriptive period also applies to the
shipper, the consignee, the insurer of the goods or any legal holder of the bill of lading.
Inasmuch as the neither the Civil Code nor the Code of Commerce states a specific
prescriptive period on the matter, the COGSA may be applied.

C. PERIOD OF PRESCRIPTION
The suit must be brought within one year after delivery of the goods or
the date when the goods should have been delivered; otherwise, the carrier
and the ship shall be discharged from all liability in respect of loss or damage.
The absence of a notice shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should have
been delivered.
COGSA, as a special law, prevails over the general provisions of the Civil Code on
prescription of actions.

D. LIMITATION OF LIABILITY
The limit is set at a maximum of $500 per package or customary freight
unit. This is deemed incorporated in the bill of lading even if not mentioned
therein.109
The declaration made by the shipper stating an amount bigger than $500
per package will make the carrier liable for such bigger amount, but only if
the amount so declared is the real value of goods.
The Civil Code does not limit the liability of the common carrier to a fixed amount per
package. Thus, the COGSA supplements the Civil Code by establishing a statutory
provision limiting the carrier’s liability in the absence of a shipper’s declaration of a
higher value in the bill of lading.110

109
Eastern Shipping Lines v. IAC
110
Belgian Overseas Chartering and Shipping v. Philippine First Insurance Company

33
 REMEDIAL LAW
CHAPTER VI PUBLIC SERVICE ACT PUBLIC SERVICE AND PUBLIC UTILITY
PUBLIC SERVICE PUBLIC UTILITY
PURPOSE OF THE LAW every person who owns, operates, a business or service engaged in
The primary purpose of the law is to secure adequate, sustained service manages or controls, for hire or regularly supplying in the public
for the public at least cost, and to protect and conserve investments which compensation, and done for general with some commodity or service of
have already been made for that purpose. business purposes, any common public consequence such as
Hence, interested or qualified parties intending to operate as a public utility carrier railroad, street railway, electricity, gas, water, transportation,
or provide public service: (a) must apply for, and obtain, a license or permit traction railway, subway motor telephone or telegraph service
from the Public Service Commission, and comply with certain defined terms vehicle, either for freight or
and conditions, and (b) upon grant of the license, the operator must conform to, passenger, or both with or without
and comply with, all reasonable rules and regulations of the Public Service fixed route and whatever may be its
Commission. classification, freight or carrier
The law was enacted not only to protect the public against unreasonable service of any class, express service,
charges and poor, inefficient service, but also to prevent ruinous steamboat, or steamship line,
competition. pontines, ferries, and water craft
engaged in the transportation of
PUBLIC SERVICE COMMISSION passengers or freight or both,
The object and purpose of such a commission is to look out for, and shipyard, marine railway, marine
protect the interests of the public and to provide it with safe and suitable repair shop, wharf or dock, ice plant,
means of travel over the highways. ice refrigeration plant, canal,
irrigation system gas, electric light,
heat and power, water supply and
REGULATORY AGENCIES REPLACING THE PUBLIC SERVICE
power, petroleum, sewerage system,
COMMISSION wire or wireless communication
The Public Service Commission has been replaced by the following systems, broadcasting stations and
regulatory agencies: other similar public services
(a) Land Transportation Franchising Regulatory Board (LTFRB) for land provides a service or facility
transportation needed for present day living
(b) Maritime Industry Authority (MARINA) for water transportation which cannot be denied to anyone
(c) Civil Aeronautics Board (CAB) for air transportation who is willing to pay for it
(d) Energy Regulatory Board (ERB) for electric or power companies requires only a certificate of public requires a franchise, aside from a
(e) National Water Resources Council (NWRC) for water resources convenience certificate of public necessity and
(f) National Telecommunications Commission (NTC) for communication convenience
utilities and services, radio communications systems, wire or wireless
telephone and telegraph systems, radio and television broadcasting systems
and other similar public utilities
2.5 However, laws may provide that an activity is not a public utility. An
example is Section 29 of the Electric Power Reform Act of 2001 (EPIRA) which
states “any law to the contrary notwithstanding, supply of electricity to the
contestable market shall not be considered a public utility operation.” This means
PUBLIC UTILITY that independent power producers/power generators are not considered
public utilities that may be subject to regulatory policy.
A public utility is a business or service engaged in regularly supplying the
public with some commodity or service of public consequence. The term
implies public use and service.
e.g., electricity, gas, water, transportation, telephone or telegraph service
They are enterprises which specially cater to the needs of the public and
are conducive to their comfort and convenience. NECESSITY FOR CERTIFICATE OF PUBLIC CONVENIENCE
The business and operations of a public utility are imbued with public
No public service as herein defined shall operate in the Philippines without
interest. A public utility is engaged in public service, providing basic
having first secured from the Commission a certificate, which shall be known as
commodities and services indispensable to the interest of the general public.
Certificate of Public Convenience (CPC) or as Certificate of Public Convenience
For this reason, it submits to regulation of government authorities and
and Necessity (CPCN) [Section 15, Public Service Act].
surrenders certain business prerogatives, including the amount of rates that
may be charged by it. It is the imperative duty of the State to interpose its
protective power whenever too much profits become the priority of public REQUISITES BEFORE A CERTIFICATE OF PUBLIC CONVENIENCE
utilities. (CPC) MAY BE GRANTED
When, therefore, one devotes his property to a use in which the public 1 The applicant must be a CITIZEN of the Philippines, or a corporation,
has an interest, he, in effect, grants to the public an interest in that use and partnership, association or joint stock company constituted and
must submit to the control by the public for the common good, to the extent organized under the laws of the Philippines, at least 60% of the
of the interest he has thus created. stock or paid-up capital of which belong entirely to citizens of the
Philippines.
2 The applicant must prove that the operation of the public service
proposed and the authorization to do business will PROMOTE
PUBLIC INTEREST in a proper and suitable manner.
3 The applicant must be FINANCIALLY CAPABLE of undertaking the
proposed service and meeting the responsibilities incident to its
operations.111

CITIZENSHIP
A franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted only to:

111
Vda. De Lat v. Public Service Commission

34
 EVIDENCE
(1) citizens of the Philippines What is a just and reasonable rate is a question of fact calling for the
(2) corporations or associations organized under the laws of the Philippines at exercise of discretion, good sense, and a fair, enlightened and independent
least 60% of whose capital is owned by such citizens112 judgment. The requirement of reasonableness comprehends such rates which
must not be so low as to be confiscatory, or too high as to be oppressive.118
PROMOTION OF PUBLIC INTERESTS
Property becomes clothed with a public interest when used in a manner to RATE OF RETURN
make it of public consequence and affect the community at large. FACTORS IN DETERMINING THE JUST AND REASONABLE RATES TO
When one devotes his property to a use in which the public has an interest, BE CHARGED BY A PUBLIC UTILITY
he, in effect, grants to the public an interest in that use, and must submit to (1) rate of return
be controlled by the public for the common good, to the extent of the interest (2) rate base
he has thus created.113 (3) the return itself or the computed revenue to be earned by the public utility
based on the rate of return and rate base
FINANCIAL CAPABILITY The rate of return is a judgment percentage which, if multiplied with the rate base,
One of the primary factors considered in the granting of a certificate of provides a fair return on the public utility for the use of its property for service to the
public convenience for the business of public transportation is the financial public.
capacity of the holder of the license, so that liabilities arising from accidents The rate of return of a public utility is not prescribed by statute but by administrative and
judicial pronouncements.
may be duly compensated.114
The Supreme Court has consistently adopted a 12% rate of return for public utilities.119

PRIOR OPERATOR RULE EXCLUSION OF INCOME TAX AS EXPENSE

GENERAL RULE Income derived from any public utility or from the exercise of any essential
The first licensee should have more or less of a vested and preferential government function accruing to the Philippine government or to any political
right over a person who seeks to acquire another and a later license over subdivision is excluded from gross income.
the same route, so long as the first licensee:
1 keeps and performs the terms and conditions of its license
2 complies with reasonable rules and regulations and meets the
reasonable demands of the public
Without such preferential right, the first licensee would not have protection on his
investment, and would be subject to ruinous competition and thus defeat the very UNLAWFUL ARRANGEMENTS
purpose and intent for which the Public Service Commission was created.
EXCEPTIONS BOUNDARY SYSTEM
1 where public interest and convenience would be better served by the It is a scheme by an owner/operator engaged in transporting passengers
new operator as a common carrier to primarily govern the compensation of the driver. The
2 where the old operator failed to make an offer to meet the increase in latter’s daily earnings are remitted to the owner/operator less the excess of
traffic the boundary which represents the driver’s compensation. Under this system,
3 where the CPC granted to the new operator is a maiden franchise the owner/operator exercises control and supervision over the driver.
4 when the application of the rule would be conducive to monopoly115
RELATIONSHIP BETWEEN THE DRIVER AND THE
RUINOUS COMPETITION OWNER/OPERATOR
There is ruinous competition if: The relationship between them is that of employer-employee. The driver
(a) The operator would be deprived of their profits on the capital invested is considered the employee of the operator for the purpose of the latter’s
in its business. liability to passengers.
Whatever the driver earns from passenger fares in excess of the boundary fee is his
(b) The business would not have sufficient gains to pay a fair rate of
income.120
interest on its capital investments.
LIABILITY UNDER THE BOUNDARY SYSTEM
REQUIRED PROOF
The registered owner/operator is liable for injuries or damages
For the opposition based on ruinous competition to prosper, it must be
committed against passengers arising from the negligent operation of
shown that the opponent would be deprived of their profits on the capital
vehicles operating under the boundary system. This is without prejudice to
invested in its business.
the right of the operator to seek recourse against the tortfeasor-driver.
The mere possibility of reduction in the earnings of a business is not
sufficient to prove ruinous competition.116
KABIT SYSTEM
It is an arrangement whereby a person who has been granted a
certificate of public convenience (CPC) allows other persons who own motor
vehicles to operate them under his license, sometimes for a fee or percentage
FIXING OF RATE of his earnings. The kabit system is contrary to public policy and therefore
void. Thus, for the safety of passengers and the public, the registered owner of
RATIONALE FOR CONTROL BY THE GOVERNMENT the vehicle is not allowed to prove that another person has become the owner
The investor agrees, by embarking capital in a utility, that its charges to so that he may be thereby relieved of responsibility.121
the public shall be reasonable. His company is the substitute for the State in However, one who has availed of the kabit system is not precluded from filing for
the performance of the public service, thus becoming a public servant. The damages against another who caused the injury, as the policy against the kabit system
will not be defeated by giving such person standing to sue.
compensation which the Constitution guarantees an opportunity to earn is the
reasonable cost of conducting the business.117
RATIONALE FOR PROHIBITION
STANDARD FOR FIXING OF RATES  It is an abuse of the CPC, a special privilege conferred by the government.
One of the primary factors considered in the granting of a CPC for the business of public
In the fixing of rates, the only standard which the legislature is required to transportation is the financial capacity of the holder of the license, so that liabilities
prescribe for the guidance of the administrative authority is that the rate be arising from accidents may be duly compensated. The kabit system renders illusory
reasonable and just. such purpose and, worse, may still be availed of by the grantee to escape civil liability
caused by a negligent use of a vehicle owned by another and operated under his
license.122
112
Section 11, Article XII, 1987 Constitution
113 118
North Negros Sugar Co. v. Hidalgo Republic of the Philippines v. Manila Electric Company
114 119
Dizon v. Octavio Republic of the Philippines v. Manila Electric Company
115 120
Mandbusco Inc. v. Francisco Paguio Transport Corp. v. National Labor Relations Commission
116 121
Vda. De Lat v. Public Service Commission Lim v. CA
117 122
Republic of the Philippines v. Manila Electric Company Dizon v. Octavio

35
 REMEDIAL LAW
 It is one of the root causes of the prevalence of graft and corruption in the
government transportation offices.
 It is contrary to public policy, and is therefore void and inexistent.123

EFFECT OF THE KABIT SYSTEM

 Although not outrightly penalized as a criminal offense, the kabit system is
invariably recognized as being contrary to public policy and, therefore, void
and inexistent.
 It is a fundamental principle that the court will not aid either party to
enforce an illegal contract, but will leave both where it finds them.
 Courts will not grant affirmative relief to parties in cases where they set up
a kabit system. They are in pari delicto and the court will simply leave them
where it found them.124
 The operator of record is considered the operator of the vehicle in
contemplation of law as regards the public and third persons, even if the
vehicle involved in the accident had been sold to another.

APPROVAL OF SALE, ENCUMBRANCE OR LEASE OF PROPERTY

APPROVAL OF THE PSC

Before the sale, encumbrance, or lease of public utility property or assets,
the Public Service Act requires the approval of the PSC.
There should be a public hearing, with notice to all interested parties before
the approval is granted;
The PSC must first determine if there are good and reasonable grounds
justifying the transfer or lease of the property covered by the franchise, or if
the sale or lease is detrimental to public interest.
A franchise is personal in nature. Any transfer or lease thereof should be notified to the PSC
so that the latter may take proper safeguards to protect the interest of the public.

EFFECT OF TRANSFER OR LEASE WITHOUT PRIOR APPROVAL

(3) The transfer is not binding against the Public Service Commission.
(4) The grantee continues to be responsible under the franchise in relation
to the Commission and to the public.125

123
Teja Marketing v. IAC
124
Lita Enterprises, Inc. v. IAC
125
Montoya v. Ignacio

36
 EVIDENCE
CHAPTER VII THE MONTREAL CONVENTION
The Montreal Convention establishes airline liability in the case of death or
injury to passengers, as well as in cases of delay, damage or loss of baggage and
cargo. It unifies all of the different international treaty regimes covering airline
liability that had developed haphazardly since 1929. MC99 is designed to be a
single, universal treaty to govern airline liability around the world.
MONTREAL CONVENTION
With the Montreal Convention, airline liability caps have been substantially
increased such that a passenger is entitled to claim damages up to $170,000
even without proof of negligence or fault by the airline. Furthermore, in excess
of this amount, the burden of proof is on the shoulders of the carrier to show that
it was not negligent.
1. Passenger death or bodily injury – no financial limits, however, the carrier
shall not be liable for damages exceeding 100,000
Special Drawing Rights (Approximately EUR 123,000) if it proves that it was
not negligent or at fault or such damages is solely attributable to the negligence
or fault of third parties. The air carrier may make an advance payment to meet
the immediate economic needs of the person entitled to claim compensation.
2. Destruction, loss of, or damage or delay to baggage – 1,000 Special Drawing
Rights (approximately EUR 1,230) per passenger.
3. Damage caused by delay in the carriage by air of passengers– 4,150 Special
Drawing Rights. (approximately EUR 5,100)
APPLICABILITY
The Montreal Convention applies to all international carriage of persons,
baggage or cargo performed by aircraft for reward. It applies equally to
gratuitous carriage by aircraft performed by an air transport undertaking.
INTERNATIONAL CARRIAGE
Any carriage in which, according to the agreement between the parties, the
place of departure and the place of destination, whether or not there be a break in
the carriage or a transshipment, are situated either:
within the territories of two States Parties
within the territory of a single State Party
if there is an agreed stopping place within the territory of another State, even if
that State is not a State Party.
Carriage between two points within the territory of a single State Party without
an agreed stopping
place within the territory of another State is not international carriage for the
purposes of this
Convention.
2 goods.126
3. Carriage to be performed by several successive carriers is deemed, for the
purposes of this
Convention, to be one undivided carriage if it has been regarded by the parties as
a single operation,
whether it had been agreed upon under the form of a single contract or of a series
of contracts, and
it does not lose its international character merely because one contract or a series
of contracts is to
be performed entirely within the territory of the same State.
4. This Convention applies also to carriage as set out in Chapter V, subject to the
terms
contained therein.
37
1. Within the territories of two High Contracting Parties; or
2. Within the territory of a single High Contracting Party, if there is an agreed
stopping place within a territory subject to the sovereignty, suzerainty, mandate
or authority of another Power, even though that Power is not a party to the
Convention (WC, Art. 1[2]).
High Contracting Parties are the signatories to the Warsaw Convention and
those which subsequently adhered to it (Mapa vs. CA, G.R. No. 122308, July 8,
1997).
Q: How should carriage performed by several successive air carriers be treated
under Warsaw Convention?
A: A carriage to be performed by several successive air carriers is deemed, for
the purposes of Warsaw Convention to be one undivided carriage, if it has been
regarded by the parties as a single operation, whether it had been agreed upon
under the form of a single contract or of a series of contracts (WC, Art. 1 [3]).
Such carriage does not lose its international character merely because one
contract or a series of contracts is to be performed entirely within a territory
subject to the sovereignty, suzerainty, mandate or authority of same High
Contracting Party (Ibid).
Documents of carriage issued under the Warsaw Convention
The following are the documents of carriage:
1. Passenger Ticket
2. Luggage Ticket
3. Air Consignment note
Function of the air consignment note
It is prima facie evidence of:
1. The conclusion of the contract
2. Receipt of the goods
3. Conditions of carriage (WC, Art. 11 [1])
RIGHT TO DISPOSE BY CONSIGNOR
The consignor may exercise its right to dispose of the goods by:
1. withdrawing them at the aerodrome of departure or destination
2. stopping them in the course of the journey on any landing
3. calling for them to be delivered at the place of destination or in the course of
the journey to a person other than the consignee named in the air consignment
note
4. requiring them to be returned to the aerodrome of departure (WC, Art. 12).
In the exercise of this right, the carrier or other consignors must not be
prejudiced. For the carrier to obey the orders for disposition, the carrier must
require the production of the part of the air consignment note delivered to the
consignor (Ibid).
Right to dispose ceases as soon as the consignee, on arrival of the goods at the
place of destination, require the carrier to hand over to him the air consignment
note and to deliver the goods to him, on payment of charge due and on
complying with the conditions of carriage set out in the air consignment note
(WC, Art. 13).
Where the supervisor of the consignee signed the delivery receipt for the goods
shipped, the consignee cannot sue the shipping company for non-delivery of the
LIABILITIES UNDER THE WARSAW CONVENTION
The carrier is liable under the following instances:
(a) Damage sustained in the event of the death or wounding of a passenger
taking place on board the aircraft or in the course of any of the operations
of embarking or disembarking;
(b) Loss or damage to any check baggage or goods sustained during the
transport by air;
(c) Delay in the transport by air of passengers, baggage or goods.
The list is not exclusive.
VENUE IN THE FILING OF AN ACTION FOR VIOLATION OF A
CONTRACT OF INTERNATIONAL CARRIAGE
An action for damage must be brought at the option of the plaintiff, in the
territory of one of the High Contracting Parties, either before the court:
(a) of the DOMICILE of the carrier
(b) of his PRINCIPAL PLACE OF BUSINESS
(c) where the ticket was PURCHASED
(d) at the place of DESTINATION
126
Republic v. Lorenzo Shipping Corporation, G.R. No. 153563, February 7, 2005
 REMEDIAL LAW
A passenger of an airline is bound by the terms of a passenger ticket declaring that the
The carrier is liable for damage sustained in the event of the destruction or loss limitations of liability set forth in the Warsaw Convention in case of loss, damage or
of, or damage destruction to a registered luggage of the passenger. The Warsaw Convention governs the
availment of the liability limitations where the baggage checked is combined with or
to, cargo upon condition only that the event which caused the damage so incorporated in the passenger ticket.
sustained took place during
the carriage by air.
LIABILITY FOR CHECKED BAGGAGE
2. However, the carrier is not liable if and to the extent it proves that the
GR: 250 francs per kilogram.
destruction, or loss of,
XPN: when the passenger or consignor has made, at the time when the package
or damage to, the cargo resulted from one or more of the following:
(a) inherent defect, quality or vice of that cargo; was handed over to the carrier, a SPECIAL DECLARATION of interest in
(b) defective packing of that cargo performed by a person other than the carrier delivery at destination and has paid a supplementary sum if the case so requires
or its
servants or agents; LIABILITY FOR HAND-CARRIED BAGGAGE
(c) an act of war or an armed conflict; Five thousand (5,000) francs per passenger
7 5,000 francs per passenger (Ibid.).
(d) an act of public authority carried out in connection with the entry, exit or NOTE: The above figures have been amended by the Guatemala Protocol, viz:
transit of the cargo. 1. Carriage of persons – One hundred thousand dollars ($100, 000)
2. Checked-in articles – One thousand dollars ($1,000)
3. Hand-carried baggage - One thousand dollars ($1,000)
According to Dean Eduardo Abella, the Guatemala Protocol has not yet been
ratified, so either of the two currencies is still correct.

LIMITATION OF LIABILITY As regards hand-carried baggage, the liability

of the carrier is limited to “332 Special
Drawing Rights per passenger” [Art. 22(3)
WC, as amended by Additional Protocol No. 2
(1975)].

The Guatemala Protocol of 1971 increased the

Any provision tending to relieve the carrier of
limit for passengers to $100,000 and for
liability or to fix a lower limit than that which is
baggage to $1,000. However, the Supreme
laid down shall be null and void, but the nullity
Court noted in Santos III v. Northwest Orient
of any such provision does not involve the
Airlines [G.R. No. 101538(1992)], that the
nullity of the whole contract [Art. 23, WC].
Guatemala Protocol is still ineffective
Availing of Provisions Excluding/Limiting
[Sundiang and Aquino].
Liability
The carrier shall not be entitled to avail himself
of the provisions which exclude or limit his
liability, if:
(1) The damage is caused by his willful
misconduct or by such default on his part, CASES WHEN WARSAW CONVENTION DEEMED A LIMIT OF
as is considered to be equivalent to willful LIABILITY
misconduct; or The Warsaw Convention should be deemed a limit of liability only in those cases
(2) The damage is caused as aforesaid by any where:
agent of the carrier acting within the scope (1) where the cause of death or injury to person, or destruction, loss or damage to
of his employment [Art. 25, WC]. property or delay in its transport is not attributable to or attended by:
Sec. 22(2), WC does not operate as an a. Any willful misconduct, bad faith, recklessness; or
exclusive enumeration of the instances of an b. Otherwise improper conduct on the part of any official or employee for which
airline’s liability, or as an absolute limit of the the carrier is responsible;
extent of that liability. The Convention’s and
provisions do not regulate or exclude the (2) There is otherwise no special or extraordinary form of resulting injury.127
following areas:
(1) Liability for other breaches of the contract Note: The Montreal Convention 1999 changed the limits of liability in relation to
by the carrier; delay, baggage and cargo as follows:
(2) Misconduct of its officers and employees; 1. In the case of damage caused by delay as specified in Article 19 in the carriage
and of persons, the liability of the carrier for each passenger is limited to 4,150
(3) For some particular or exceptional type of Special Drawing Rights;
damage (i.e. moral, nominal, temperate or 2. In the carriage of baggage, the liability of the carrier in the case of destruction,
exemplary damages) [Alitalia v. IAC, G.R. loss, damage or delay is limited to 1,000 Special Drawing Rights for each
No. 71929 (1990)]. passenger x x x;
3. In the carriage of cargo, the liability of the carrier in the case of destruction,
RIGHT TO DAMAGES loss, damage or delay is limited to a sum of 17 Special Drawing Rights per
The right to damages under the WC is extinguished after two years from kilogramme
the date of arrival at the destination or from the date on which the aircraft x x x [Art. 22, Montreal Convention].
ought to have arrived, or from the date on which the carriage stopped. The
method of calculating the period of limitation shall be determined by the law of
the Court seized of the case. DEFENSES AGAINST LIMIT OF LIABILITY
The limit of liability is not applicable in case of:
LIABILITY TO PASSENGERS 1. WILLFUL MISCONDUCT;
GR: The carrier shall be liable for 250,000 francs for each passenger. 2. GROSS NEGLIGENCE;
XPN: By special contract, the carrier and the passenger may agree to a higher 3. Absence of BAGGAGE CHECK;
limit.
127
Alitalia v. IAC, G.R. No. 71929 (1990)

38
 EVIDENCE
4. If there was WAIVER on the part of the carrier; and
5. If the carrier is ESTOPPED from invoking the provision on limit of liability
Carrier is not entitled to the foregoing limit if the damage is caused by willful
misconduct or default on its part (WC, Art. 25). Where the loss of the baggage of
a passenger was due to the fault or recklessness of an airline company, the
limitation on the liability of airline companies under the Warsaw Convention is
not applicable (Alitalia v. IAC, G.R. No. 71929, December 4, 1990).
Stipulation relieving the carrier from or limiting its liability is not valid
Any provision tending to relieve the carrier of liability or to fix a lower limit than
that which is laid down in this Convention shall be null and void but the nullity
of such provision does not involve the nullity of the whole contract (WC, Art.
23).
intention to violate the law, or were in persistent disregard of one's rights. It must
be evidenced by a flagrantly or shamefully wrong or improper conduct.132
The act of the carrier in guessing which luggage contained the firearm constitutes
willful misconduct. The guessing of which luggage contained the firearms
amounted to willful misconduct under Section 25(1) of the Warsaw
Convention.133
The allegation of willful misconduct resulting in a tort is insufficient to exclude
the case from the realm of Warsaw Convention. A cause of action based on tort
did not bring the case outside the sphere of the Warsaw Convention. 134
There is no willful misconduct if the airplane was lost without a trace. In such case, no
willful misconduct can be proved because if the airplane is lost without a trace, there is no
proof of the act or omission or the proximate cause of the accident.

NOTICE OF CLAIM WHEN COMMON CARRIER NOT ENTITLED TO LIMITATION OF

Under the Warsaw Convention, complaint must be filed within the following LIABILITY
period: (a) Willful misconduct
(a) THREE DAYS from receipt of baggage (b) Default amounting to willful misconduct
(b) SEVEN DAYS from receipt of goods (c) Accepting passengers without ticket
(c) FOURTEEN DAYS, in case of delay, counted from the time the baggage (d) Accepting goods without airway bill or baggage without baggage check
was placed at the disposal of the passenger
EFFECT OF RECEIPT WITHOUT COMPLAINT
PRESCRIPTIVE PERIOD Receipt by the person entitled to the delivery of baggage or cargo without
Claim for damages must be brought within two years reckoned [a] from complaint is prima facie evidence that the same has been delivered in good
the date of arrival at the destination; or [b] from the date on which the condition and in accordance with the document of carriage.
aircraft ought to have arrived; or [c] from the date on which the carriage
stopped, otherwise, right to damages shall be extinguished. ILLUSTRATIONS OF WILLFUL MISCONDUCT THAT WOULD HOLD AN
A claim covered by the Warsaw Convention can no longer be recovered under local law, AIRLINE LIABLE FOR COMPENSATORY, MORAL, AND EXEMPLARY
if the statute of limitations of two years has already lapsed.128
Despite the express mandate that an action for damages should be filed DAMAGES AND ATTORNEY’S FEES
within two years from the arrival at the place of destination, such rule shall not (a) Flight attendant rudely placed a passenger with first class ticket in the
be applied where delaying tactics were employed by airline itself in a case economy section of the airplane.135
where a passenger wishes to settle his complaint out-of-court but the airline gave (b) Flight attendant ousted an Asian passenger from the plane and
him the runaround, answering the passenger’s letters but not giving in to his substituted a Caucasian passenger on his seat. 136
demands, hence, giving the passenger no time to institute the complaint within (c) Airline personnel subjected a passenger to rude and barbaric
the reglementary period.129 treatment, calling him a monkey.137
(d) Spouses and child, all with confirmed and reconfirmed reservations, were
However, the action filed by a passenger of an airline company for loss of his placed on wait-list, with only one making it on the scheduled flight and
luggage is not barred by the two-year prescriptive period under the Warsaw the two others were compelled to buy again tickets from a different
Convention, where the passenger immediately made a demand upon the airline.138
airline company and the action was delayed because of the evasion of the (e) Loss of baggage due to carrier’s negligence and tainted with bad faith
airline company.130 by faking a retrieval receipt to bail itself out of having to pay the
passenger.139
Where an airline company failed to deliver the baggage of a passenger on time, a (f) Passengers were upgraded from business class to first class without
passenger may maintain an action for damages under the Civil Code even if he their consent and would not be allowed to board unless they give in to
did not file a claim with the airline company within fourteen days as required by the upgrade.140
the Warsaw Convention, for he may still sue under the Civil Code.131

WILLFUL MISCONDUCT
A carrier is not entitled to the limitation of liability if the damage is
caused by willful misconduct or default on its part.
The definition of "willful misconduct" depends in some measure on which court is deciding
the issue.
Some common factors that courts will consider are:
o Knowledge that an action will probably result in injury or damage
o Reckless disregard of the consequences of an action, or
o Deliberately failing to discharge a duty related to safety.

EFFECT OF FAILURE TO DELIVER LUGGAGE AT DESIGNATED TIME

AND PLACE
The failure of the carrier to deliver the passenger’s luggage at the
designated time and place does not ipso facto constitute willful misconduct. 132
There must be a showing that the acts complained of were impelled by an Luna v. CA, GR No. 100374-75, November 27, 1992
133
Northwest Airlines v. CA, GR No. 120334, January 20, 1998
134
Lhuiller v. British Airways, GR No. 171092, March 15, 2010
135
Northwest Airlines, Inc. v. Cuenca, 14 SCRA 1063
136
Air France v. Carrascoso, 18 SCRA 155
128
PAL v. Savillo, G.R. No. 149547, July 4, 2008
137
Zulueta v. Pan-Am, 43 SCRA 397
129
United Airlines vs. Uy, G.R. No. 127768, Nov. 19, 1999
138
Zalamea v. Court of Appeals, 228 SCRA 23
130
United Air Lines, Inc. v. CA, G.R. No. 124110, April 20, 2001
139
PAL v. Court of Appeals, 207 SCRA 100
131
Luna v. CA, G.R. No. 100374-75, November 27, 1992 140
Cathay Pacific Airways, Ltd v. Vasquez, 399 SCRA 207

39