Transpo Reviewer

TRANSPORTATION LAWS 2021 | FRANCISCO
● Governing Laws on Transportation Law
1.1. Applicable Laws
1.2. Conflicts Rule (Article 1753, Civil Code)
1.3 Eastern Shipping Lines vs. Intermediate Appellate Court. G.R. No. L-69044. May 29, 1987
As the cargoes in question were transported from Japan to the Philippines, the liability of
petitioner carrier is governed primarily by the civil code.. However, in all matters not regulated
by said code, the rights and obligation of common carrier shall be governed by the Code of
Commerce and by special laws. Thus the Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code.
1.4. National Development Co. vs. Court of Appeals. G.R. No. L-49407. August 19, 1988
The law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration pursuant to Art. 1753 of the
Civil code. It is immaterial that the collision actually occurred in foreign waters, such as Ise Bay,
Japan.
● Article 1732, Civil Code; Broad Concept
Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for compensation,
offering their services to the public.
2.1. De Guzman vs. Court of Appeals. (G.R. No. L-47822. December 22, 1988)
One is a common carrier even if he did not secure a Certificate of Public convenience. Art. 1732
makes no distinction between one whose principal business activity is the carrying of persons,
or goods or both and one who does such carrying only as an ancillary activity or as a mere
sideline.
2.2. Cruz vs. Sun Holidays Inc. (G.R. No. 186312. June 29, 2010)
Its ferry services are so intertwined with its main business as to be properly considered ancillary
thereto. The constancy of respondent’s ferry services in its resort operations is underscored by
its having its own Coco Beach boats. And the tour packages it offers, which include the ferry
services, may be availed of by anyone who can afford to pay the same. These services are thus
available to the public. That respondent does not charge a separate fee or fare for its ferry
services is of no moment. It would be imprudent to suppose that it provides said services at a
loss. The Court is aware of the practice of beach resort operators offering tour packages to
factor the transportation fee in arriving at the tour package price. That guests who opt not to
avail of respondent’s ferry services pay the same amount is likewise inconsequential. These
guests may only be deemed to have overpaid.
2.3. First Phil. Industrial Corp vs. Court of Appeals. (G.R. No. 125948. December 29, 1998)
It makes no distinction as to the means of transporting, as long as it is by land, water or air. It

does not provide that the transportation should be by motor vehicle.
2.4. Calvo vs. UCPB General Insurance Co., Inc. (G.R. No. 148496. March 19, 2002)
Under Article 1735 of the Civil Code, if the goods are proved to have been lost, destroyed, or
deteriorated, common carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they have observed the extraordinary diligence required by law. The
burden of the plaintiff is to prove merely that the goods he transported have been lost,
destroyed or deteriorated. Thereafter, the burden is shifted to the carrier to prove that he has
exercised the extraordinary diligence required by law. Thus, it has been held that the mere
proof of delivery of goods in good order to a carrier, and of their arrival at the place of
destination in bad order, make out a prima facie case against the carrier, so that if no
explanation is given as to how the injury occurred, the carrier must be held responsible.
2.5. Asia Lighterage and Shipping, Inc. vs. CA (G.R. No. 147246. August 19, 2003)
One is a common carrier even if he has no fixed and publicly known route, maintains no
terminals and issues no tickets. The test to determine a common carrier is "whether the given
undertaking is a part of the business engaged in by the carrier which he has held out to the
general public as his occupation rather than the quantity or extent of the business transacted."
In the case at bar, the petitioner admitted that it is engaged in the business of shipping and
lighterage, offering its barges to the public, despite its limited clientele for carrying or
transporting goods by water for compensation.
2.6. Asian Terminals, Inc. vs. Daehan Fire and Marine Insurance Co., Ltd. (G.R. No. 171194
February 4, 2010)
An Arrastre Operator should OBSERVE THE SAME DEGREE OF DILIGENCE as that required of
COMMON CARRIERS and warehouseman. Being a custodian of goods an arrastre must take care
of goods and turn them over to the party entitled into possession
● Sps. Pereña vs. Sps. Zarate. (G.R. No. 157917. August 29, 2012)
The true test for a common carrier is not the quantity or extent of the business but
whether the undertaking is a part of the activity engaged in by the carrier that he has
held out to the general public as his business or occupation. Applying these
consideration, there is no question that the Perenas as the operators of a school bus
service were:
a. Engaged in transporting passengers generally as a business not just as casual
occupation
b. Undertaking to carry passengers over established roads by the method by which
the business was conducted
c. Transporting students for a fee
3. Contract of Carriage or Transportation
- There is a contract of transportation when a person obligates himself to transport

persons or property from one place to another for a consideration.
3.1 Parties to a Contract of Transportation
3.1.1 Carriage of Passengers - an agreement to carry the passnegers at some future date. It is
consensual and perfected by mere consent.
3.1.2 Carriage of Goods - a consensual contract to carry goods whereby the carrier agrees to
accept and trasport at some future date.
4. Characteristics; Test;
4.1. Test for Determining whether a Party is a Common Carrier
1. Two Pronged test

a. The undertaking is a part o the activity engaged in by the carrier
b. He has held out to the general public as his business or occupation
2. Four-Fold test
a. He must be engaged in the business of carrying goods for others as a public

employment, and must hold himself out as ready to engage in the transportation
of goods for persons generally as a business and not as a casual occupation
b. He must undertake to carry goods of the kind to which his business is confined
c. He must undertake to carry by the method by which his business is conducted
over his established roads
d. The transportation must be for hire.
4.2. Fisher vs. Yangco Steamship Co. (G.R. No. 8095. November 5, 1914 & March 31, 1915)
When one devotes his property to a use in which the public has an interest, he in effect, grants
to the public an interest in that use and must submit to be controlled by the public for the
common good to the extent of the interest he has thus created. He may withdraw his grant by
discontinuing the use, but so long as he maintains the use, he must submit to control.
The traffic in dynamite gun powder and other explosive is vitally essential to the material and
general welfare of the inhabitants of this islands. If dynamite, gun powder and other explosives
are to continue in general use throughout the Philippines they must be transported by water
from port to port in the various islands. We are satisfied therefore that the refusal by a
particular vessel, as engaged as a common carrier of merchandise, to accept any or all of these
explosives for carriage would constitute a violation of the prohibitions against discriminations
penalized under the statute, unless it can be shown by affirmative evidence that there is so real
and substantial a danger of disaster necessarily involved in the carriage of any or all of these
articles of merchandise as to render such refusal a due or a necessary or a reasonable exercise
of prudence and discretion on the part of the shipowner.
4.2. US vs. Quinajon. (G.R. No. 8686. July 30, 1915)
From the evidence it would seem that there was clear discrimination made against the
province. It is not believed that the law prohibits common carriers from making special rates for
the handling and transporting merchandise when the same are made for the purpose of
increasing their business. Absolute equality, under certain circumstances and conditions may
give shippers an advantage over others. It is only unjust, undue and unreasonable
discrimination which the law forbids. The law of equality is in force only where the services
performed in the different cases are substantially the same, and the circumstances and
conditions are similar.
4.3. Loadstar Shipping Co., Inc. vs. Court of Appeals. (G.R. No. 131621. September 28, 1999)
It is not necessary that the carrier be issued a certificate of public convenience, and this public
character is not altered by the fact that the carriage of the goods in question was periodic,
occasional, episodic or unscheduled. Loadstar fits the definition of a common carrier under Art.
1732 of the Civil code.
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both by land, water, or air for
compensation offering their services to the public.
The liability arises the moment a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the requirements of the applicable
regulatory statue and implementing regulations and has been granted a certificate of public
convenience or other franchise. To exempt private respondent from the liabilities of a common
carrier because he has not secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private respondent precisely for
failing to comply with applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property of those members
of the general community who happen to deal with such carrier.
Loadstar was at fault of negligent in not maintaining a seaworthy vessel and in having allowed
its vessel to sail despite knowledge of an approaching typhoon. In any event, it did not sink
because of any storm that may be deemed as force majeure, in asmuch as the wind condition in
the performance of its duties, LOADSTAR cannot hide behind the limited liability doctrine to
escape responsibility for the loss of the vessel and its cargo.
4.4. National Steel Corporation vs. Court of Appeals. (G.R. No. 112287. December 12, 1997)
In the instant case, it is undisputed that VSI did not offer its services to the general public. As
found by the Regional Trial Court, it carried passengers or goods only for those it chose under a
“special contract of charter party.” As correctly concluded by the Court of Appeals, the MV
Vlasons I “was not a common but a private carrier.” Consequently, the rights and obligations of
VSI and NSC, including their respective liability for damage to the cargo, are determined
primarily by stipulations in their contract of private carriage or charter party. Recently, in
Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers
Shipping Corporation, the Court ruled:
“ x x x [I]n a contract of private carriage, the parties may freely stipulate their duties and
obligations which perforce would be binding on them. Unlike in a contract involving a common
carrier, private carriage does not involve the general public. Hence, the stringent provisions of
the Civil Code on common carriers protecting the general public cannot justifiably be applied to
a ship transporting commercial goods as a private carrier. Consequently, the public policy
embodied therein is not contravened by stipulations in a charter party that lessen or remove
the protection given by law in contracts involving common carriers.”
4.5 Certificate of Public Convenience (De Guzman vs. Court of Appeals. G.R. No. L-47822
December 22, 1988)
A certificate of Public convenience is not a requisite for the incurring of liability under the Civil
code governing common carriers. That liability arises the moment a person or firm acts as a
common carrier.
4.6. Ownership of Vehicle Used as Carrier
4.6.1. Registered Owner Rule
4.6.1.a. Liability of the Registered Owner
4.6.1.b. Gelisan vs. Alday. G.R. No. L-30212. September 30, 1987
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.
The lease contract, adverted to, had not been approved by the Public Service Commission. If
the property covered by a franchise is transferred or leased to another without obtaining the
requisite approval, the transfer is not binding upon the public and third persons.
A registered owner of a public service vehicle is to be hled jointly and severally liable with the
driver for damages incurred by passengers or third persons as a consequence of injuries
sustained in the operation of the said vehicles.
4.6.1.c. Benedicto vs. Intermediate Appellate Court. G.R. No. 70876 July 19, 1990
The prevailing doctrine on common carriers makes the registered owner liable for
consequences flowing from the operations of the carrier, even though the specific vehicle
involved may already have been transferred to another person. This doctrine rests upon the
principle that in dealing with vehicles registered under the Public Service Law, the public has
the right to assume that the registered owner is the actual or lawful owner thereof it would be
very difficult and often impossible, for members of the general public to enforce the rights of
action that they may have injuries inflicted by the vehicles being negligently operation if they
should be required to prove who the actual owner is. The registered owner is not allowed to
deny liability by proving the identity of the alleged transferee. Thus, contrary to petitioner’s
claim, private respondent is not required to go beyond the vehicle’s cert. Of registration to
ascertain the owner of the carrier.
4.6.1.d. Erezo vs. Jepte. G.R. No. L-9605. September 30, 1957
A victim of recklessness on the public is usually without means to discover or identify the
person actually causing the injury or damage. He has no means other than by a recourse to the
registration in the Motor Vehicles Office to determine who is the owner. The protection that
the law aims to extend to him would become illusory were the registered owner given the
opportunity to escape the liability by disproving his ownership. If the policy of the law is to be
enforced and carried out, the registered owner should not be allowed to prove the contrary to
the prejudice of the person injured, that is to prove that a third person or another has become
the owner, so that he may thereby be relieved of the responsibility to the injured person.
The registered owner of a motor vehicle is primarily responsible for the damage caused to the
vehicle of the plaintiff-appellee but the registered owner has a right to be indemnified by the
real or actual owner of the amount that he may be required to pay as damage for the injury
caused to the plaintiff-appellant.
4.6.2. Cebu Salvage Corporation vs. Philippine Home Assurance Corporation. (G.R. No.
150403 January 25, 2007)
May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not
own?
YES. Petitioner was the one which contracted with MCCII for the transport of the cargo. It had
control over what vessel it would use. All throughout its dealings with MCCII, it represented
itself as a common carrier. The fact that it did not own the vessel it decided to use to
consummate the contract of carriage did not negate its character and duties as a common
carrier. The MCCII (respondent's subrogor) could not be reasonably expected to inquire about
the ownership of the vessels which the petitioner carrier offered to utilize. As a practical
matter, it is very difficult and often impossible for the general public to enforce its rights of
action under a contract of carriage if it should be required to know who the actual owner of the
vessel is. In fact, in this case, the voyage charter itself denominated petitioner as the
owner/operator of the vessel.
5. Distinguished from Private Carrier
5.1. Planters Products Inc. vs. Court of Appeals. G.R. No. 101503. September 15, 1993
Does a charter-party between a shipowner and a charterer transform a common carrier into a
private one as to negate the civil law presumption of negligence in case of loss or damage to its
cargo?
Charter party - a contract by which an entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use; a contract of affreightment by which the
owner of a ship or other vessel lets the whole or a part of her to a merchants or other person
for the conveyance of goods, on a particular voyage, in consideration of the payment freight.
When petitioner chartered the vessel, the ship, captain, its officers and compliment were under
the employ of the shipowner and therefore continued to be under its direct supervision and
control. It is therefore imperative that a public carrier shall remain as such, notwithstandin the
charter of the whole or portion of a vessel by one or more persons, provided the charter is
limited to the ship only. It is only when the charter includes both the vessel and its crew as in a
bareboat or demise that a common carrier becomes private at least insofar as the particular
voyage covering the charter-party is concerned.
5.2. San Pablo vs. Pantranco. G.R. No. L-61461 & 61501. August 21, 1987
Pantranco does not deny that it charges its passengers separately from the charges for the bus
trips and issues separate tickets whenever they board the MV Black double that crosses
Matnog to Allen. Pantranco cannot pretend that in issuing tickets to its passengers it did so as a
private carrier and not as a common carrier.
5.3. Limited Clientele

5.3.1. Philippine American General Insurance Company vs. PKS Shipping Company. (G.R.
No. 149038. April 9, 2003)
Complementary to the codal definition is Section 13, paragraph (b), of the Public Service Act; it
defines "public service" to be — ". . . every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or steamship, or steamship
line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or
both, shipyard, marine repair shop, wharf or dock, ice plant, ice refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and power petroleum,
sewerage system, wire or wireless communication systems, wire or wireless broadcasting
stations and other similar public services.
Applying Article 1732 of the Code, in conjunction with Section 13(b) of the Public Service Act,
this Court has held: "The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such carrying
only as an ancillary activity (in local idiom, as 'a sideline')..
5.3.2. FGU Insurance Corporation vs. G.P. Sarmiento Trucking Corporation. (G.R. No.
141910. August 6, 2002)
The Court finds the conclusion of the trial court and the Court of Appeals to be amply justified.
GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or
offering its services to no other individual or entity, cannot be considered a common carrier.
Common carriers are persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or air, for hire or
compensation, offering their services to the public, whether to the public in general or to a
limited clientele in particular, but never on an exclusive basis.
The true test of a common carrier is the carriage of passengers or goods, providing space for
those who opt to avail themselves of its transportation service for a fee. Given accepted
standards, GPS scarcely falls within the term "common carrier."
5.4. Conversion of a Common Carrier into a Private Carrier
Contract of Carriage Distinguished From Other Transactions
6.1. Towage (Baer Senior & Co. vs. La Compañia Maritima. G.R. No. 1963. April 30, 1906)
A contract of towage is not a contract for the carriage of goods.

"An engagement to tow does not impose either an obligation to insure or the liability of
common carriers. The burden is always upon him who alleges the breach of such a contract to
show either that there has been no attempt at performance, or that there has been negligence
or unskillfulness to his injury in the performance. Unlike the case of common carriers, damage
sustained by the tow does not ordinarily raise a presumption that the tug has been in fault. The
contract requires no more than that he who undertakes to tow shall carry out his undertaking
with that degree of caution and skill which prudent navigators usually employ in similar
services." (The Webb, 14 Wall., 406, 414; The Burlington, 137 U. S., 386, 391. See also The L. P.
Dayton, 120 U. S., 337, 351.)
6.2. Stevedoring (Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance
Company of New York/Mcgee & Co., Inc. G.R. No. 162467. May 8, 2009)
Mindanao Terminal, a stevedoring company which was charge with the loading and stowing the
cargoes of Del Monte aboard MV Mistrau, had acted merely as a labor provider in the case at
bar. There is no specific provision of law that imposes a higher degree of diligence than ordinary
diligence for a stevedoring company or one who is charged only with the loading and stowing of
cargoes.
A stevedore is not a common carrier for it does not transport goods or passengers; it is not akin
to a warehouseman for it does not store goods for profit. The loading and stowing of cargoes
would not have a far reaching public ramification as that of a common carrier and a
warehouseman; the public is adequately protected by our laws on contract and on quasi-delict.
The public policy considerations in legally imposing upon a common carrier or a warehouseman
a higher degree of diligence is not present in a stevedoring outfit which mainly provides labor in
loading and stowing of cargoes for its clients
Arrastre - refer to hauling of cargo, comprehends the handling of cargo on the wharf or
between the establishment of the consignee of shipper and the ship’s tackle. Responsibility
lasts until the delivery of the cargo to the consignee. Performed by Longshoremen.
Stevedoring - refers to the handling of the cargo in the holds of the vessel or between the ship’s
tackle and the holds of the vessel. The responsibility of steve dore ends upon the loading and
stowing of the cargo in the vessel.
6.3. Arrastre/ Terminal Operator (Asian Terminals, Inc. vs. Daehan Fire and Marine Insurance
Co., Ltd. G.R. No. 171194. February 4, 2010;
The relationship between the consignee and the arrastre operator is akin to that existing
between the consignee and/or the owner of the shipped goods and the common carrier, or
that between a depositor and warehouseman. In the performance of its obligations, an arrastre
operator should observe the same degree of diligence as that required of a common carrier and
a warehouseman. Being the custodian of the goods discharged from a vessel, an arrastre
operator’s duty is to take good care of the goods and to turn them over to the party entitled to
their possession.
(Asian Terminal Inc. vs. First Lepanto-Taisho Insurance Corporation. G.R. No. 185964. June 16,
2014)
To prove the exercise of diligence in handling the subject cargoes, an arrastre operator must do
more than merely show the possibility that some other party could be responsible for the loss
or the damage. It must prove that it used all reasonable means to handle and store the
shipment with due care and diligence including safeguarding it from weather elements, thieves
or vandals.
6.4. Freight Forwarding (Unsworth Transport International (Phils.), Inc. vs. Court of Appeals.
G.R. No. 166250. July 26, 2010)
Freight Forwarder - a firm holding itself out to the general public to provide transportation of
property for compensation and in the ordinary course of its business,
1. To assemble and consolidate or to provide for assembling and consolidating, shipments,

and to perform or provide for break bulk and distribution operations of shipments
2. To assume responsibility for the transportation of goods from place of receipt to the
place of destination
3. To use for any part of the transportation a carrier subject to the federal law pertaining
to common carriers.
Where the forwarder contracts to deliver goods to their destination instead of merely arranging
for their transportation, it becomes liable as a common carrier for loss or damage to goods. A
freight forwarder assumes the responsibility of a carrier, which actually executes the transport,
even though the forwarder does not carry the merchandise itself.
Bill of Lading - a written acknowledgment of the receipt of goods and an agreement to

transport and to deliver them at a specified place to a person named or on his or her order. It
operates both as a receipt and a contract.
6.5. Travel Agency (Crisostomo vs. Court of Appeals. G.R. No. 138334. August 25, 2003)
A travel agency is not a common carrier.
Respondent’s services as a travel agency include procuring tickets and facilitating travel permits
or visas as well as booking customers for tours. While petitioner concededly bought her plane
ticket through the efforts of respondent company, this does not mean that the latter ipso facto
is a common carrier. At most, respondent acted merely as an agent of the airline, with whom
petitioner ultimately contracted for her carriage to Europe.
7. Government Regulation of Common Carrier’s Business; Public Policies
7.1. Public Interest Doctrine (KMU Labor Center vs. Garcia. G.R. No. 115381. December 23,
1994)
When private properties are affected with public interest, they cease to be juris privati only.
When one devotes his property to a use in which the public has an interest, he in effect grants
to the public an interest in that use, and must submit to the control by the public for the
common good, to the extent of the interest he has thus created.
The challenged administrative issuances and orders, namely: DOTC Department Order No. 92-
587, LTFRB Memorandum Circular No. 92- 009, and the order dated March 24, 1994 issued by
respondent LTFRB are hereby DECLARED contrary to law and invalid insofar as they affect
provisions therein
(a) delegating to provincial bus and jeepney operators the authority to increase or decrease the
duly prescribed transportation fares; and
(b) creating a presumption of public need for a service in favor of the applicant for a certificate
of public convenience and placing the burden of proving that there is no need for the proposed
service to the oppositor.
7.2. Tatad vs. Garcia, Jr. G.R. No. 124360. G.R. No. 124360. G.R. No. 114222. April 6, 1995
Republic Act No. 8180, or the Downstream Oil Industry Regulation Act of 1996, was enacted by
Congress for the purpose of deregulating the downstream oil industry. Its validity was
challenged on the following constitutional grounds:
a) that the imposition of different tariff rates on imported crude oil and imported refined
petroleum products violates the equal protection clause;
b) the imposition of different tariff rates does not deregulate the downstream oil industry but
instead controls the oil industry;
c) the inclusion of the tariff provision in Section 5(b) of RA 8180 violates the one title-one
subject requirement of the Constitution;
d) that Section 15 thereof constitutes undue delegation of legislative power to the President
and the Secretary of Energy and violates the constitutional prohibition against monopolies; and
e) that Executive Order No. 392 implementing R.A. 8180 is arbitrary and unreasonable because
it was enacted due to the alleged depletion of OPSF fund — a condition not found in the law.
This Court has adopted a liberal construction of the one title-one subject rule. A law having a
single general subject indicated in the title may contain any number of provisions, so long as
they are not inconsistent with or foreign to the general subject, and may be considered in
furtherance of such subject by providing for the method and means of carrying out the general
subject. Section 5(b) providing for tariff differential is germane to the subject of R.A. No. 8180
which is the deregulation of the downstream oil industry.
Section 15 can hurdle both completeness test and the sufficient standard test. Full deregulation
at the end of March 1997 is mandatory and the Executive has no discretion to postpone it for
any purported reason. Thus, the law is complete on the question of the final date of full
deregulation.
Section 15 of R.A. No. 8180 did not mention the depletion of the OPSF fund as basis of
deregulation, thus said extraneous factor constitutes a misapplication of R.A. No. 8180.
The 4% tariff differential and the inventory requirement are significant barriers which
discourage new players to enter the market. As the dominant players, Petron, Shell and Caltex
boast of existing refineries of various capacities and easily comply with the inventory
requirement as against prospective new players.
The offending provisions of R.A. No. 8180 so permeate its essence that the entire law has to be
struck down. R.A. No. 8180 with its anti-competition provisions cannot be allowed by this Court
to stand even while Congress is working to remedy its defects.
7.3. Kabit System
7.3.1. Santos vs. Sibug. (G.R. No. L-26815. May 26, 1981)
The Kabit should not be allowed to defeat the levy on his vehicle and to avoid his
responsibilities as a Kabit owner for he had led the public to believe that the vehicle belonged
to the operator.
Sec. 20 Public Service Act
- It shall be unlawful for any public service or for the owner, lessee or operator thereof,
without the approval and authorization of the commission to sell, alienate, mortgage,
encumber or lease its property, franchise, certificates, privileges or rights or any part
thereof.
In the case at bar, Santos had fictitiously sold the jeepney to VIDAD, who had become the
registered owner and operator of record at the time of the accident. It is true that Vidad had
executed a re-sale to Santos, but the document was not registered. In asserting his rights of
ownership to the vehicle in question, Santos candidly admitted his participation in the illegal an
pernicious practice in the transportation business known as kabit system.
Although SANTOS, as the kabit, was the true owner as against VIDAD, the latter, as the
registered owner/operator and grantee of the franchise, is directly and primarily responsible
and liable for the damages caused to SIBUG, the injured party, as a consequence of the
negligent or careless operation of the vehicle. This ruling is based on the principle that 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 where such sale had not been approved by the then Public Service Commission.
The real owner of the motor vehicle can go against the actual operator who was responsible for
the accident, for the recovery of whatever damages the real owner may suffer by reason of the
execution. In fact, if the real owner, as the kabit, had been impleaded as a party defendant in
the action for damages, he should be held jointly and severally liable with the operator and the
driver for damages suffered by the victim,as well as for exemplary damages.
7.3.2. Lita Enterprises, Inc. vs. Intermediate Appellate Court. (G.R. No. 64693. April 27, 7984)
The parties herein operated under an arrangement, commonly known as the "kabit system,"
whereby a person who has been granted a certificate of convenience allows another person
who owns motor vehicles to operate under such franchise for a fee. A certificate of public
convenience is a special privilege conferred by the government. Abuse of this privilege by the
grantees thereof cannot be countenanced. The "kabit system" has been identified as one of the
root causes of the prevalence of graft and corruption in the government transportation offices.
In the words of Chief Justice Makalintal, (Dizon vs. Octavio, 51 O.G. 4059) "this is a pernicious
system that cannot be too severely condemned. It constitutes an imposition upon the good
faith of the government."
The proposition is universal that no action arises, in equity or at law, from an illegal contract; no
suit can be maintained for its specific performance, or to recover the property agreed to be sold
or delivered, or damages for its violation. The rule has sometimes been laid down as though it
was equally universal, that where the parties are in pari delicto, no affirmative relief of any kind
will be given to one against the other." Although certain exceptions to the rule are provided by
law, We see no cogent reason why the full force of the rule should not be applied in the instant
case
7.3.3. Teja Marketing vs. Intermediate Appellate Court. (G.R. No. L-65510. March 9, 1987)
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 under Article
1409 of the Civil Code. 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. Upon this premise it would
be error to accord the parties relief from their predicament. Article 1412 of the Civil Code
denies them such aid.
It provides: "Art. 1412. If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
"1. When the fault is on the part of both contracting parties, neither may recover that he has
given by virtue of the contract, or demand, the performance of the other's undertaking."
The defect of inexistence of a contract is permanent and cannot be cured by ratification or by

prescription. The mere lapse of time cannot give efficacy to contracts that are null and void.llcd
7.3.4. Lim vs. Court of Appeals. (G.R. No. 125817. January 16, 2002)
WON the new owner of a passenger jeepney who continued to operate the same under the so-
called kabit system and in the course thereof met an accident has the legal personality to bring
the action for damages against the erring vehicle.
According to the Court, the thrust of the law in enjoining the kabit system is not much as to
penalize the parties but to identify the person upon whom responsibility may be fixed in case of
an accident with the end view of protecting the riding public. In the present case, it is once
apparent that the evil sought to be prevented in enjoining the kabit system does not exist.
Hence, the private respondent has the right to proceed against petitioners for the damage
caused on his passenger jeepney as well as on his business.
7.4. Boundary System
7.4.1. Magboo vs. Bernardo. (G.R. No. L-16790. April 30, 1963)
To exempt from liability the owner of a public vehicle who operates it under the "boundary
system" on the ground that he is a mere lessor would be not only to abet flagrant violations of
the Public Service Law but also to place the riding public at the mercy of reckless and
irresponsible drivers — reckless because the measure of their earnings depends largely upon
the number of trips they make and, hence, the speed at which they drive; and irresponsible
because most if not all of them are in no position to pay the damages they might cause.
Defendant should have taken it to himself to aid in the defense of Conrado Roque. Having failed
to take this step and the accused having been declared guilty by final judgment of the crime of
homicide thru reckless imprudence, there appears no more way for the defendant to escape his
subsidiary liability as provided for in Article 103 of the Revised Penal Code.
7.4.2. Sps. Hernandez vs. Sps. Dolor. (G.R. No. 160286. July 30, 2004)
WON the Hernandez spouses are solidarily liable with Juan Gonzales, although it is of record
that they were not in the passenger jeepney driven when the accident occurred.
YES. Article 2180 provides Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks, even though the former
are not engaged in any business or industry.
8. Obligations of Common Carrier, in General

8.1. Commencement
8.1.1. Carriage of Goods
ART. 1736. The extraordinary responsibility of common carriers lasts from the time the goods
are unconditionally placed in the possession of and received by the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee or to the
person who has a right to receive them, without prejudice to the provisions of Art. 1738
8.1.2. Carriage of Passengers
8.2. Effects of Delay
a. Merely suspends and generally does not terminate the contract of carriage
b. Carrier remains duty bound to exercise extraordinary diligence
c. Natural disaster shall not free the carrier from responsibility (Art.1740)
d. If delay is without just cause, the contract limiting the common carrier’s liability cannot be
availed of in case of loss or deterioration of the goods (Art.1747)
8.2.1. Excusable Delay
8.2.2. Inexcusable Delay
8.3. Duty to Exercise Extraordinary Diligence
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the safety
of the passengers transported by them, according to all the circumstances of each case.
● VIGILANCE OVER GOODS
1. Extraordinary Diligence Required of Common Carriers (Article 1733, Civil Code)
1.1. Definition and Reason for the Policy
1. From the nature of the business and for reasons of public policy (Art. 1733)
2. Relationship of trust
3. Business is impressed with a special public duty
4. Possession of the goods
5. Preciousness of human life
1.1.1.1. Republic vs. Lorenzo Shipping Corporation. G.R. No. 153563. February 7, 2005
The surrender of the original bill of lading is not a condition precedent for a common carrier to
be discharged of its contractual obligation. In the instant case, the respondent exercised
extraordinary diligence when respondent’s agents demanded from Abdurahman the certified
true copies of the bills of lading. They also asked the latter and in his absence, his designated
subordinates, to sign the cargo delivery receipts.
1.1.1.2. Doctrine of Non-delegable Duty as Applied to Common Carriers
The duty of seaworthiness, the duty of care of the cargo is non delegable, and the carrier is
accordingly responsible for the acts of the master, the crew, the stevedore and his other
agents.
The duty of the master of a vessel to unload the cargo and place it in readiness for delivery to
the consignee and there is an implied obligation that this shall be accomplished with sound
machinery, competent hands, and in such manner that no unnecessary injury shall be done
thereto.
1.2. Carriage by Sea
1.2.1. Seaworthiness; Meaning
"(1) Generally, seaworthiness is that strength, durability and engineering skill made a part of a
ship's construction and continued maintenance, together with a competent and sufficient crew,
which would withstand the vicissitudes and dangers of the elements which might reasonably be
expected or encountered during her voyage without loss or damage to her particular cargo. The
Cleveco, D. C. Ohio, 59 F. Supp. 71, 78, aBrmed, C. C. A., 154 F. 2d 606." (80 C. J. S. 997,
Footnote.)
1.2.1.1 Standard Vacuum Oil Company vs. Luzon Stevedoring Company. G.R. No. L-5203. April
18, 1956
Under Article 361 of the Code of Commerce. merchandise transported in the sea by virtue of a
contract entered into between the shipper and the carrier, is deemed transported at the risk
and venture of the shipper, if the contrary is not stipulated, and all damages suffered by the
merchandise during the transportation by reason of accident o r force majeure shall be for the
account and risk of the shipper, but the proof of these accidents is incumbent on the carrier. In
the present case, the gasoline was delivered in accordance with the contract but defendant
failed to transport it to its place of destination, not because of accident or force majeure or
cause beyond its control, but due to the unseaworthiness of the tugboat towing the large
carrying the gasoline, lack of necessary spare parts on board, and deficiency or incompetence in
the man power of the tugboat. The loss was also caused because the defendant did not have in
readiness any tugboat sufficient in tonnage and equipment to attend to the rescue. Under the
circumstances, defendant is not exempt from liability under the law.
1.2.1.2. Loadstar Shipping Co., Inc. vs. Court of Appeals
M/V "Cherokee" was not seaworthy when it embarked on its voyage on 19 November 1984.
The vessel was not even sufficiently manned at the time. "For a vessel to be seaworthy, it must
be adequately equipped for the voyage and manned with a sufficient number of competent
officers and crew. The failure of a common carrier to maintain in seaworthy condition its vessel
involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the
Civil Code."
The doctrine of limited liability does not apply where there was negligence on the part of the
vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy
vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In
any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch
as the wind condition in the area where it sank was determined to be moderate. Since it was
remiss in the performance of its duties, LOADSTAR cannot hide behind the "limited liability"
doctrine to escape responsibility for the loss of the vessel and its cargo.
1.2.1.3. Statutes in Pari Materia
Statutes are said to be inpari materia when they relate to the same person or thing, or to the
same class of persons or things, or have the same purpose or object. When statutes are in pari
materia, the rule of statutory construction dictates that they should be construed together. This
is because all enactments of the same legislature on the same subject matter are supposed to
form part of one uniform system; that later statutes are supplementary or complimentary to
the earlier enactments and in the passage of its acts the legislature is supposed to have in mind
the existing legislation on the same subject and to have enacted its new act with reference
thereto.
1.2.1.3.a. Sec. 3[1] [a] and [b], COGSA;
Section 3. (1) The carrier shall be bound, before and at the beginning of the voyage, to exercise
due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
1.2.1.3.b. Secs. 116 and 119, Insurance Code
Section 116. A ship is seaworthy when reasonably fit to perform the service and to encounter
the ordinary perils of the voyage contemplated by the parties to the policy.
Section 119. Where different portions of the voyage contemplated by a policy differ in respect
to the things requisite to make the ship seaworthy therefor, a warranty of seaworthiness is
complied with if, at the commencement of each portion, the ship is seaworthy with reference
to that portion.
1.3. Carriage by Land
1.3.1. Roadworthiness and Railworthiness
1.3.2. Motor Vehicle Must be in Good Condition
1.3.3. Warranty Against Defective Vehicle Parts
Art. 1561. An implied warranty against hidden defects in that the vendor shall be responsible
for any hidden defects which render the thing sold unfit for the use for which it is intended, or
should they diminish its fitness for such use to such an extent that, had the vendee been aware
thereof, he would not have acquired it or would have given a lower price.
In an implied warranty against hidden defects, vendors cannot raise the defense of ignorance as
they are responsible to the vendee for any hidden defects even if they were not aware of its
existence.
1.3.4. Compliance with Traffic Regulations (Doctrine of Negligence Per Se)
Petitioner has the burden of showing a causal connection between the injury received and the
violation of the Land transportation and traffic code. He must show that the violation of the
statute was the proximate or legal cause of the injury or that it substantially contributed
thereto. Negligence, consisting in whole or in part, of violation of law, like any other negligence,
is without legal consequence unless it is a contributing cause of the injury.
1.3.5. Prohibition Against Improper Deviation (Art.359, Code of Commerce)
Article 359
If there should be an agreement between the shipper and the carrier with regard to the road
over which the transportation is to be made, the carrier can not change the route, unless
obliged to do so by force majeure; and should he do so without being forced to, he shall be
liable for any damage which may be suffered by the goods transported for any other cause
whatsoever, besides being required to pay the amount which may have been stipulated for
such a case.
When on account of the said force majeure the carrier is obliged to take another route, causing
an increase in the transportation charges, he shall be reimbursed for said increase after
presenting the formal proof thereof.
1.4. Carriage by Air
1.4.1. Cathay Pacific Airways, Lt. vs. Court of Appeals, G.R. No. 60501. March 5 1993
Petitioner breached its contract of carriage with private respondent when it failed to deliver his
luggage at the designated place and time, it being the obligation of a common carrier to carry
its passengers and their luggage safely to their destination, which includes the duty not to delay
their transportation, and the evidence shows that petitioner acted fraudulently or in bad faith.
The Warsaw Convention declares the carrier liable for damages in the enumerated cases and
under certain limitations. However, it must not be construed to preclude the operation of the
Civil Code and other pertinent laws. It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of its passengers under the contract of carriage,
especially if wilfull misconduct on the part of the carrier's employees is found or established,
which is clearly the case before Us
1.4.2. Saludo vs. Court of Appeals, G.R. No. 95536, March 23, 1992
While petitioners hinge private respondents' culpability on the fact that the carrier "certifies
goods described below were received for carriage," they may have overlooked that the
statement on the face of the airway bill properly and completely reads — "Carrier certifies
goods described below were received for carriage subject to the Conditions on the reverse
hereof the goods then being in apparent good order and condition except as noted hereon."
Private respondents further aptly observe that the carrier's certification regarding receipt of the
goods for carriage "was of a Waybill, including Condition No. 5 — and thus if plaintiffs-
appellants had recognized the former, then with more reason they were aware of the latter." In
the same vein, it would also be incorrect to accede to the suggestion of petitioners that the
typewritten specifications of the flight, routes and dates of departures and arrivals on the face
of the airway bill constitute a special contract which modifies the printed conditions at the back
thereof. We reiterate that typewritten provisions of the contract are to be read and understood
subject to and in view of the printed conditions, fully reconciling and giving effect to the
manifest intention of the parties to the agreement.
As pithily explained by the Court of Appeals: . . . "Consequently, when the cargo was received
from C.M.A.S. at the Chicago airport terminal for shipment, which was supposed to contain the
remains of Crispina Saludo, Air Care International and/or TWA, had no way of determining its
actual contents, since the casket was hermetically sealed by the Philippine Vice-Consul in
Chicago and in an air pouch of C.M.A.S., to the effect that Air Care International and/or TWA
had to rely on the information furnished by the shipper regarding the cargo's content. Neither
could Air Care International and/or TWA open the casket for further verification, since they
were not only without authority to do so, but even prohibited. "Thus, under said circumstances,
no fault and/or negligence can be attributed to PAL (even if Air Care International should be
considered as an agent of PAL) and/or TWA, the entire fault or negligence being exclusively
with C.M.A.S." It can correctly and logically be concluded, therefore that the switching occurred
or, more accurately, was discovered on October 27, 1976; and based on the above findings of
the Court of Appeals, it happened while the cargo was still with CMAS, well before the same
was placed in the custody of private respondents.
1.4.3. Airworthiness (Sec. 3[z], Civil Aviation Authority Act)
Airworthiness" means that an aircraft, its engines, propellers, and other components and
accessories, are of proper design and construction, and are safe for air navigation purposes,
such design and construction being consistent with accepted engineering practice and in
accordance with aerodynamic laws and aircraft science.
1.4.4. Duty to Inspect Cargo and Baggage (Sec. 8, R.A. 6235)
Section 8. Aircraft companies which operate as public utilities or operators of aircraft which are
for hire are authorized to open and investigate suspicious packages and cargoes in the presence
of the owner or shipper, or his authorized representatives if present; in order to help the
authorities in the enforcement of the provisions of this Act: Provided, That if the owner, shipper
or his representative refuses to have the same opened and inspected, the airline or air carrier is
authorized to refuse the loading thereof.
2. Liability of Carriers for Loss, Destruction and Deterioration of Goods (Articles 1734-1735;
Articles 1739-1743, Civil Code)
2.1. Presumption of Negligence (Regional Container Lines of Singapore vs. Netherlands

Insurance Co., Inc. 1.1.1. G.R. No. 168151. September 4, 2009)
A common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported.
To overcome the presumption of negligence, the common carrier must establish by adequate
proof that it exercised extraordinary diligence over the goods. It must do more than merely
show that some other party could be responsible for the damage.
To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the
common carrier is burdened to prove any of the causes in Article 1734 of the Civil Code claimed
by it by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted

to the shipper to prove that the carrier is negligent.
2. Liability of Carriers for Loss, Destruction and Deterioration of Goods (Articles 1734-1735;
Articles 1739-1743, Civil Code)
ART. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the following causes only:
1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
2) Act of the public enemy in war, whether international or civil; 3) Act of omission of the
shipper or owner of the goods;
4) The character of the goods or defects in the packing or in the containers;
5) Order or act of competent public authority.
ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding
article, if the goods are lost, destroyed, or deteriorated, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as required by article 1733.
ART. 1736. The extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without prejudice to the provisions
of articles 1738.
ART. 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them.
ART. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the loss.
2.1. Presumption of Negligence (Regional Container Lines of Singapore vs. Netherlands

Insurance Co., Inc. 1.1.1. G.R. No. 168151. September 4, 2009)
In the present case, RCL and EDSA Shipping disclaim any responsibility for the loss or damage to
the goods. They contend that the cause of the damage to the cargo was the fluctuation that
occurred after the cargo had already been discharged from the vessel. It was already under the
custody of the arrastre operator.
A common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported. To overcome the presumption, the
common carrier must establish by adequate proof that it exercised extraordinary diligence over
the goods. It must do more than merely show that some other party could be responsible for
the damage.
RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence. The
evidence they have oes not disprove that the condenser fan - which cause the fluctuation of the
temperature in the refrigerated container - was not damaged while the cargo was being
unloaded from the ship. It is settled in maritime law that cargoes while being unloaded
generally remain under the custody of the carrier, RCL and EDSA failed to dispute this.
2.2. Defenses of Common Carriers
2.2.1. Acts of God (Arts. 1734[1], 1739 and 1740)
2.2.1.1. Schmitz Transport & Brokerage Corporation vs. Transport Venture, Inc. G.R. No.
150255. April 22, 2005
In order to be considered a fortuitous event:
1. The cause of the unforeseen and unexpected occurrence or the failure of the debtor to
comply with his obligation must be independent of human will
2. It must be impossible to foresee the event which constitute the caso fortuito or if it can
be foreseen it must be impossible to avoid
3. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in any manner
4. The obligor must be free from any participation in the aggravation of the injury resulting
to the creditor
From a review of the records, there is no indication that there was a greater risk in loading the
cargoes outside the breakwater. The weather remained normal with moderate sea condition
such that port operations continued and proceeded normally.
It cannot be said that the defendants were negligent in not unloading the cargoes upon the
barge on October 26 1991 inside the breakwater.
That no tugboat towed back the barge to the pier is a material fact - it was the proximate cause
of the loss of the cargoes. Had the barge been towed back promptly to the pier, the
deteriorating sea conditions notwithstanding, the loss could have been avoided. But the barge
was left floating in open sea until big waves set in at 5:30 am, causing it to sink along with the
cargoes. The loss thus falls outside the act of God doctrine.
TVI’s failure to promptly provide a tugboat did not only increase the risk but was the proximate
cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge floating
for a considerable number of hours, at such a precarious time, and in the open sea, knowing
that the barge does not have any power of its own and is totally defenseless from the ravages
of the sea. That is was nighttime, and therefore, the members of the crew of the tugboat would
be charging overtime pay did not excuse TVI from calling for one such tugboat.
While petitioner sent checkers and a supervisor on board the vessel to counter-check the
operation of TVI, it failed to take all available and reasonable precautions to avoid the loss.
After noting that TVI failed to arrange for the prompt towerage of the barge despite the sea
conditions, it should have summoned the same or another tugboat to extend help, but it did
not.
2.2.1.2. Transimex Co. v. Mafre Asian Insurance Corp. G.R. No. 190271, September 14, 2016
This case involves a money claim filed by an insurance company against the ship agent of a
common carrier. The dispute stemmed from an alleged shortage in a shipment of fertilizer
delivered by the carrier to a consignee. Before this Court, the ship agent insists that the
shortage was caused by bad weather, which must be considered either a storm under Article
1734 of the Civil Code or a peril of the sea under the Carriage of Goods by Sea Act (COGSA)
It must be emphasized that not all instances of bad weather may be categorized as storms or
perils of the sea within the meaning of the provisions of the Civil Code and COGSA on common
carriers. To be considered absolutory causes under either statute, bad weather conditions must
reach a certain threshold of severity.
In this case, the documentary and testimonial evidence cited by petitioner indicate that M/V
Meryem Ana faced winds of only up to 40 knots while at sea. This wind force clearly fell short of
the 48 to 55 knots required for "storms" under Article 1734 (1) of the Civil Code based on the
threshold established by PAGASA. Petitioner also failed to prove that the inclement weather
encountered by the vessel was unusual, unexpected, or catastrophic. In particular, the strong
winds and waves, which allegedly assaulted the ship, were not shown to be worse than what
should have been expected in that particular location during that time of the year.
Consequently, this Court cannot consider these weather conditions as "perils of the sea" that
would absolve the carrier from liability.
Even assuming that the inclement weather encountered by the vessel amounted to a "storm"
under Article 1734 (1) of the Civil Code, there are two other reasons why this Court cannot
absolve petitioner from liability for loss or damage to the cargo under the Civil Code. First, there
is no proof that the bad weather encountered by M/V Meryem Ana was the proximate and only
cause of damage to the shipment. Second, petitioner failed to establish that it had exercised
the diligence required from common carriers to prevent loss or damage to the cargo.
Before the trial court, petitioner limited itself to the defense of denial. The latter refused to
admit that the shipment sustained any loss or damage and even alleged overage of the cargo
delivered. As a result, the evidence it submitted was severely limited,i.e., the testimony of a
witness that supposedly confirmed the alleged excess in the quantity of the fertilizer delivered
to the consignee in Albay. No other evidence was presented to demonstrate either the
proximate and exclusive cause of the loss or the extraordinary diligence of the carrier
2.2.2. Acts of Public Enemy (Arts. 1734[2] and 1739)
2.2.3. Shipper or Owner’s Fault (Arts. 1734[3] and Art. 1 741)
2.2.3.1. Who are Considered Shipper and/or Owner?
2.2.3.2. Sole and Proximate vs. Contributory Only
2.2.3.3. Delsan Transport Lines, Inc. vs. American Home Assurance Corporation. G.R. No.
149019. August 15, 2006
Delsan would have the Court absolve it from liability for the loss of its cargo on two grounds.
First, the loss through spillage was partly due to the contributory negligence of Caltex; and
Second, the loss through backflow should not be borne by Delsan because it was already
delivered to Caltex's shore tank
As aptly pointed out by the CA, it had been established that the proximate cause of the spillage
and backflow of the diesel oil was due to the severance of the port bow mooring line of the
vessel and the failure of the shore tender to close the storage tank gate valve even as a check
on the drain cock showed that there was still a product on the pipeline.
To be sure, the extraordinary responsibility of common carrier lasts from the time the goods
are unconditionally placed in the possession of, and received by, the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee, or to a
person who has the right to receive them. The discharging of oil products to Caltex Bulk Depot
has not yet been finished, Delsan still has the duty to guard and to preserve the cargo. The
carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its
having the goods transported.
2.2.4. Inherent Vice (Arts. 1734[4] and 1742)
2.2.4.1. Belgian Overseas Chartering and Shipping N.V. vs. Philippine First Insurance Co., Inc.
G.R. No. 143133. June 5, 2002
In their attempt to escape liability, petitioners further contend that they are exempted from
liability under Article 1734(4) of the Civil Code. They cite the notation "metal envelopes rust
stained and slightly dented" printed on the Bill of Lading as evidence that the character of the
goods or defect in the packing or the containers was the proximate cause of the damage.
We are not convinced.

From the evidence on record, it cannot be reasonably concluded that the damage to the four
coils was due to the condition noted on the Bill of Lading. The aforecited exception refers to
cases when goods are lost or damaged while in transit as a result of the natural decay of
perishable goods or the fermentation or evaporation of substances liable therefor, the
necessary and natural wear of goods in transport, defects in packages in which they are
shipped, or the natural propensities of animals. None of these is present in the instant case.
Having been in the service for several years, the master of the vessel should have known at the
outset that metal envelopes in the said state would eventually deteriorate when not properly
stored while in transit. Equipped with the proper knowledge of the nature of steel sheets in
coils and of the proper way of transporting them, the master of the vessel and his crew should
have undertaken precautionary measures to avoid possible deterioration of the cargo. But none
of these measures was taken. Having failed to discharge the burden of proving that they have
exercised the extraordinary diligence required by law, petitioners cannot escape liability for the
damage to the four coils.
Even if the fact of improper packing was known to the carrier or its crew or was apparent upon
ordinary observation, it is not relieved of liability for loss or injury resulting therefrom, once it
accepts the goods notwithstanding such condition. Thus, petitioners have not successfully
proven the application of any of the exceptions in the present case
2.2.4.2. Asian Terminals. Inc. vs. Simon Enterprises, Inc. G.R. No. 177116. February 27, 2013
In this case, respondent failed to prove that the subject shipment suffered shortage, for it was
not able to establish that the subject shipment was weighed at the port of origin at Darrow,
Louisiana, U.S.A. and that the actual weight of the said shipment was 3,300 metric tons.
The respondent having failed to present evidence to prove the actual weight of the subject
shipment when it was loaded onto the M/V "Tern," its cause of action must then fail because it
cannot prove the shortage that it was alleging. Indeed, if the claimant cannot definitively
establish the weight of the subject shipment at the point of origin, the fact of shortage or loss
cannot be ascertained.
As indicated in the Proforma Invoice mentioned above, the moisture content of the subject
shipment was 12.5%. Taking into consideration the phenomena of desorption, the change in
temperature surrounding the Soybean Meal from the time it left wintertime Darrow, Louisiana,
U.S.A. and the time it arrived in Manila, and the fact that the voyage of the subject cargo from
the point of loading to the point of unloading was 36 days, the shipment could have definitely
lost weight, corresponding to the amount of moisture it lost during transit.
Considering that respondent was not able to establish conclusively that the subject shipment
weighed 3,300 metric tons at the port of loading, and that it cannot therefore be concluded
that there was a shortage for which petitioner should be responsible; bearing in mind that the
subject shipment most likely lost weight in transit due to the inherent nature of Soya Bean
Meal; assuming that the shipment lost weight in transit due to desorption, the shortage of
199.863 metric tons that respondent alleges is a minimal 6.05% of the weight of the entire
shipment, which is within the allowable 10% allowance for loss; and noting that the respondent
was not able to show negligence on the part of the petitioner and that the weighing methods
which respondent relied upon to establish the shortage it alleges is inaccurate, respondent
cannot fairly claim damages against petitioner for the subject shipment's alleged shortage.
2.2.5. Defects in the Packing or in the Container (Arts. 1734[4] and 1742)
2.2.5.1. Philippine Charter Insurance Corporation vs. Unknown Owner of M/V "National
Honor”. G.R. No. 161833. July 8, 2005
"Defect" is the want or absence of something necessary for completeness or perfection; a lack
or absence of something essential to completeness; a deficiency in something essential to the
proper use for the purpose for which a thing is to be used. On the other hand, inferior means of
poor quality, mediocre, or second rate. A thing may be of inferior quality but not necessarily
defective. In other words, "defectiveness" is not synonymous with "inferiority."
The petitioner failed to adduce any evidence to counter that of respondent ICTSI. The petitioner
failed to rebut the testimony of Dauz, that the crates were sealed and that the contents thereof
could not be seen from the outside.
There is no showing in the Bill of Lading that the shipment was in good order or condition when
the carrier received the cargo, or that the three wooden battens under the flooring of the cargo
were not defective or insufficient or inadequate. On the other hand, under Bill of Lading No.
NSGPBSML512565 issued by the respondent NSCP and accepted by the petitioner, the latter
represented and warranted that the goods were properly packed and disclosed in writing the
"condition, nature, quality or characteristic that may cause damage, injury or detriment to the
goods." Absent any signs on the shipment requiring the placement of a sling cable in the mid-
portion of the crate, the respondent ICTSI was not obliged to do so.
The statement in the Bill of Lading, that the shipment was in apparent good condition, is
sufficient to sustain a finding of absence of defects in the merchandise. Case law has it that
such statement will create a prima facie presumption only as to the external condition and not
to that not open to inspection.
2.2.6. Acts of Public Authority (Arts. 1734[5] and 1743)
- Public authority must have the power to issue the order

- Must be lawful
2.2.7. Extraordinary Diligence
2.2.8. Fortuitous Events

2.2.8.1. Casus Fortuitos Nemo Prestat; Impossibilum Nulla Obligatio Est
2.2.8.2. Loadmasters Customs Services vs. Glodel Brokerage Corp. G.R. No. 179446. January
10, 2011
It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose
employees (truck driver and helper) were instrumental in the hijacking or robbery of the
shipment. As employer, Loadmasters should be made answerable for the damages caused by
its employees who acted within the scope of their assigned task of delivering the goods safely
to the warehouse.
Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure
that Loadmasters would fully comply with the undertaking to safely transport the subject cargo
to the designated destination. It should have been more prudent in entrusting the goods to
Loadmasters by taking precautionary measures, such as providing escorts to accompany the
trucks in delivering the cargoes. Glodel should, therefore, be held liable with Loadmasters. Its
defense of force majeure is unavailing.
2.2.8.3. Torres-Madrid Brokerage, v. FEB Mitsui Marine Insurance Co. G.R. No. 194121. July
11, 2016
Consequently, TMBI should be held responsible for the loss, destruction, or deterioration of the
goods it transports unless it results from:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
For all other cases — such as theft or robbery — a common carrier is presumed to have been at
fault or to have acted negligently, unless it can prove that it observed extraordinary diligence.
Simply put, the theft or the robbery of the goods is not considered a fortuitous event or a force
majeure. Nevertheless, a common carrier may absolve itself of liability for a resulting loss:
(1) if it proves that it exercised extraordinary diligence in transporting and safekeeping the
goods; or
(2) if it stipulated with the shipper/owner of the goods to limit its liability for the loss,
destruction, or deterioration of the goods to a degree less than extraordinary diligence.
However, a stipulation diminishing or dispensing with the common carrier's liability for acts
committed by thieves or robbers who do not act with grave or irresistible threat, violence, or
force is void under Article 1745 of the Civil Code for being contrary to public policy.
Jurisprudence, too, has expanded Article 1734's five exemptions. De Guzman v. Court of
Appeals interpreted Article 1745 to mean that a robbery attended by "grave or irresistible
threat, violence or force" is a fortuitous event that absolves the common carrier from liability.
2.2.4. Partial Defense: Shipper/Consignee’s Contributory Fault or Negligence
2.2.4.1. Tabacalera Insurance Co. vs. North Front Shipping Services, Inc., G.R. No. 119197.
May 16, 1997
We cannot attribute the destruction, loss or deterioration of the cargo solely to the carrier. We
find the consignee Republic Flour Mills Corporation guilty of contributory negligence. It was
seasonably notified of the arrival of the barge but did not immediately start the unloading
operations. No explanation was proffered by the consignee as to why there was a delay of six
(6) days. Had the unloading been commenced immediately the loss could have been completely
avoided or at least minimized. As testified to by the chemist who analyzed the corn samples,
the mold growth was only at its incipient stage and could still be arrested by drying. The corn
grains were not yet toxic or unfit for consumption. For its contributory negligence, Republic
Flour Mills corporation should share at least 40% of the loss.
3. Commencement, Duration and Termination of Carrier’s Responsibility over the Goods
(Articles 1736-1738, Civil Code)
3.1. Philippines First Insurance Co., Inc. vs. Wallem Phils. Shipping, Inc. G.R. No. 165647.
March 26, 2009
The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to the consignee, or to the
person who has a right to receive them.
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable
for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at
the port of loading, until he delivers it on the shore or on the discharging wharf at the port of
unloading, unless agreed otherwise.
On the other hand, the functions of an arrastre operator involve the handling of cargo
deposited on the wharf or between the establishment of the consignee or shipper and the
ship's tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's
duty is to take good care of the goods and to turn them over to the party entitled to their
possession.
The records are replete with evidence which show that the damage to the bags happened
before and after their discharge and it was caused by the stevedores of the arrastre operator
who were then under the supervision of Wallem.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier. In the instant case, the damage or losses were incurred during
the discharge of the shipment while under the supervision of the carrier. Consequently, the
carrier is liable for the damage or losses caused to the shipment. As the cost of the actual
damage to the subject shipment has long been settled, the trial court's finding of actual
damages in the amount of P397,879.69 has to be sustained.
4. Stipulations Limiting Carrier’s Liability
4.1. Articles 1744-1748, 1751-1752, Civil Code
4.2. Minimum Degree of Diligence Required
4.3. Void Stipulations (Art. 1745, Civil Code)
4.3.1. Sweet Lines vs. Teves. G.R. No. L-37750. May 19, 1978
Two passengers of an inter-island vessel sued petitioner company in the Court o First Instance
of Misamis Oriental for breach of contract of carriage. Petitioner moved to dismiss the
complaint on the ground of improper venue. The motion was premised on the condition
printed att he back of the tickets that actions arising from "the provisions of this ticket shall be
filed in the competent courts in the City of Cebu.
The trial court denied the motion to dismiss as well as the motion for reconsideration. The
Supreme Court sustained the trial court and declared the condition void and unenforceable as
contrary to public policy which is to make the courts accessible to all who may have need of
their services.
A written agreement of the parties as to venue, as authorized by Section 3, Rule 4, is not only
binding between the parties but also enforceable by the courts. After an action has been filed,
change or transfer of venue by agreement of the parties is controllable in the discretion of the
court.
The Court may declare the agreement as to venue to be in effect contrary to public policy, —
despite that in general, changes and transfers of venue by written agreement of the parties are
allowable — whenever it is shown that a stipulation as to venue works injustice by practically
denying to the party concerned designated by the rules.
4.4. Reasonable Time in Delivery of Goods
4.5. Articles 1749-1750, Civil Code; Limitation on the Amount of Liability

4.5.1. Citadel Lines, Inc. vs. Court of Appeals. G.R. No. 88092. April 25, 1990
We, however, find the award of damages in the amount of P312,800.00 for the value of the
goods lost, based on the alleged market value thereof, to be erroneous. It is clearly and
expressly provided under Clause 6 of the aforementioned bills of lading issued by the CARRIER
that its liability is limited to $2.00 per kilo. Basic is the rule, long since enshrined as a statutory
provision, that a stipulation limiting the liability of the carrier to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is
binding. Further, 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.
4.5.2. Everett Steamship Corp. vs. Court of Appeals. G.R. No. 122494. October 8, 1998
In the bill of lading, the carrier made it clear that its liability would only be up to One Hundred
Thousand (¥100,000.00) Yen. However, the shipper, Maruman Trading, had the option to
declare a higher valuation if the value of its cargo was higher than the limited liability of the
carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for
not complying with the stipulations.
To defeat the carrier's limited liability, the aforecited Clause 18 of the bill of lading requires that
the shipper should have declared in writing a higher valuation of its goods before receipt
thereof by the carrier and insert the said declaration in the bill of lading, with the extra freight
paid.
These requirements in the bill of lading were never complied with by the shipper, hence, the
liability of the carrier under the limited liability clause stands. The Commercial Invoice No.
MTM-941 does not in itself sufficiently and convincingly show that petitioner has knowledge of
the value of the cargo as contended by private respondent. No other evidence was proffered by
private respondent to support is contention. Thus, we are convinced that petitioner should be
liable for the full value of the lost cargo. In fine, the liability of petitioner for the loss of the
cargo is limited to One Hundred Thousand (¥100,000.00) Yen, pursuant to Clause 18 of the bill
of lading.
Greater vigilance, however, is required of the courts when dealing with contracts of adhesion in
that the said contracts must be carefully scrutinized "in order to shield the unwary (or weaker
party) from deceptive schemes contained in ready-made covenants," such as the bill of lading in
question. The stringent requirement which the courts are enjoined to observe is in recognition
of Article 24 of the Civil Code which mandates that "(i)n all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap, the courts must be
vigilant for his protection.
5. Passenger’s Baggages (Article 1754, Civil Code)

5.1. Checked-in vs. Hand-carried Baggages
5.2. Quisumbing, Sr. vs. Court of Appeals. G.R. No. 50076. September 14, 1990
THIS CASE WAS A FREAKING HIJACK!!! OMG
Quisumbing - passenger
The Appellate Court also ruled that in light of the evidence PAL could not be faulted for want of
diligence, particularly for failing "to take positive measures to implement Civil Aeronautics
Administration regulations prohibiting civilians from carrying firearms on board aircrafts;" and
that "the absence of coded transmissions, the amateurish behavior of the pilot in dealing with
the NBI agent, the allegedly open cockpit door and the failure to return to Mactan, in the light
of the circumstances of the case . . ., were not negligent acts sufficient to overcome the force
majeure nature of the armed robbery."
Under the circumstances of the instant case, the acts of the airline and its crew cannot be
faulted as negligence. The hijackers had already shown their willingness to kill one passenger
was in fact killed and another survived gunshot wounds. The lives of the rest of the passengers
and crew were more important than their properties. Cooperation with the hijackers until they
released their hostages at the runway end near the South Superhighway was dictated by the
circumstances."
5.3. Pan American Airlines vs. Rapadas. G.R. No. 60673. May 19, 1992
The main issue raised in the case at bar is whether or not a passenger is bound by the terms of
a passenger ticket declaring that the limitations of liability set forth in the Warsaw Convention.
Since the checking-in was against the will of the respondent, we treat the lost bag as partaking
of involuntarily and hurriedly checked-in luggage and continuing its earlier status as unchecked
luggage. The fair liability under the petitioner's own printed terms is $400.00. Since the trial
court ruled out discriminatory acts or bad faith on the part of Pan Am or other reasons
warranting damages, there is no factual basis for the grant of P20,000.00 damages.
passengers are also allowed one handcarried bag each provided it conforms to certain
prescribed dimensions. If Mr. Rapadas was not allowed to handcarry the lost attache case, it
can only mean that he was carrying more than the allowable weight for all his luggages or more
than the allowable number of handcarried items or more than the prescribed dimensions for
the bag or valise. The evidence on any arbitrary behavior of a Pan Am employee or inexcusable
negligence on the part of the carrier is not clear from the petition. Absent such proof, we
cannot hold the carrier liable because of arbitrariness, discrimination, or mistreatment.
We are not by any means suggesting that passengers are always bound to the stipulated
amounts printed on a ticket, found in a contract of adhesion, or printed elsewhere but referred
to in handouts or forms. We simply recognize that the reasons behind stipulations on liability
limitations arise from the difficulty, if not impossibility, of establishing with a clear
preponderance of evidence the contents of a lost valise or suitcase. Unless the contents are
declared, it will always be the word of a passenger against that of the airline. If the loss of life or
property is caused by the gross negligence or arbitrary acts of the airline or the contents of the
lost luggage are proved by satisfactory evidence other than the self-serving declarations of one
party, the Court will not hesitate to disregard the fine print in a contract of adhesion. (See
Sweet Lines Inc. v. Teves, supra) Otherwise, we are constrained to rule that we have to enforce
the contract as it is the only reasonable basis to arrive at a just award.
5.4. Alitalia vs. Intermediate Appellate Court. G.R. No. 71929. December 4, 1990
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the
employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her
baggage and failed to deliver it to her at the time appointed — a breach of its contract of
carriage, to be sure — with the result that she was unable to read the paper and make the
scientific presentation (consisting of slides, autoradiograms or films, tables and tabulations)
that she had painstakingly labored over, at the prestigious international conference, to attend
which she had traveled hundreds of miles, to her chagrin and embarrassment and the
disappointment and annoyance of the organizers. She felt, not unreasonably, that the invitation
for her to participate at the conference, extended by the Joint FAO/IAEA Division of Atomic
Energy in Food and Agriculture of the United Nations, was a singular honor not only to herself,
but to the University of the Philippines and the country as well, an opportunity to make some
sort of impression among her colleagues in that field of scientific activity. The opportunity to
claim this honor or distinction was irretrievably lost to her because of Alitalia's breach of its
contract.
Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety,
which gradually turned to panic and finally despair, from the time she learned that her suitcases
were missing up to the time when, having gone to Rome, she finally realized that she would no
longer be able to take part in the conference. As she herself put it, she "was really shocked and
distraught and confused."
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for delay in the
transport of baggage. She is not, of course, entitled to be compensated for loss or damage to
her luggage
● SAFETY OF PASSENGERS
1. ‘Utmost Diligence’ Required of Common Carriers (Article 1755, Civil Code)

1.1. Common Carrier Doctrine
1.2. Mecenas vs. Court of Appeals. G.R. No. 88052. December 14, 1989
On the evening of that same day, 22 April 1980, at about 10:30 o'clock, the "Tacloban City" and
the "Don Juan" collided at the Talbas Strait near Maestra de Ocampo Island in the vicinity of the
island of Mindoro. When the collision occurred, the sea was calm, the weather fair and visibility
good. As a result of this collision, the M/V "Don Juan" sank and hundreds of its passengers
perished. Among the ill-fated passengers were the parents of petitioners, the spouses Perfecto
Mecenas and Sofia Mecenas, whose bodies were never found despite intensive search by
petitioners.
Article 2332. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner
We believe that the behaviour of the captain of the "Don Juan" in this instance — playing
mahjong "before and up to the time of collision" — constitutes behaviour that is simply
unacceptable on the part of the master of a vessel to whose hands the lives and welfare of at
least seven hundred fifty (750) passengers had been entrusted. Whether or not Capt.
Santisteban was "off-duty" or "on-duty" at or around the time of actual collision is quite
immaterial; there is, both realistically speaking and in contemplation of law, no such thing as
"off-duty" hours for the master of a vessel at sea that is a common carrier upon whom the law
imposes the duty of extraordinary diligence —
"[t]he duty 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.
The record does not show that was the first or only time that Capt. Santisteban had entertained
himself during a voyage by playing mahjong with his officers and passengers; Negros Navigation
in permitting, or in failing to discover and correct such behaviour, must be deemed grossly
negligent.
1.3. Negros Navigation Co., Inc. vs. Court of Appeals. G.R. No. 110398. November 7, 1997
This is a petition for review on certiorari of the decision of the Court of Appeals affirming with
modification the Regional Trial Court's award of damages to private respondents for the death
of their four relatives as a result of the sinking of M/V Don Juan, a vessel owned by petitioner.
The issues raised in this petition were: first, whether the members of private respondents;
families were actually passengers of the M/V Don Juan; second, whether the ruling in the
previous case (Mecenas vs. Court of Appeals) involving the same incident be binding on this
case; third, whether the total loss of the M/V Don Juan extinguished petitioner's liability; and
whether the damages awarded by the appellate court are excessive, unreasonable and
unwarranted.
The award of exemplary damages should be increased to P300,000.00 for Ramon Miranda and
P100,000.00 for the de la Victoria spouses in accordance with our ruling in the Mecenas case:
Exemplary damages are designed by our civil law to permit the courts to reshape behavior that
is socially deleterious in its consequence by creating negative incentives or deterrents against
such behaviour.
In requiring compliance with the standard of extraordinary diligence, a standard which is in fact
that of the highest possible degree of diligence, from common carriers and in creating a
presumption of negligence against them, the law seeks to compel them to control their
employees, to tame their reckless instincts and to force them to take adequate care of human
beings and their property. The Court will take judicial notice of the dreadful regularity with
which grievous maritime disasters occur in our waters with massive loss of life. The bulk of our
population is too poor to afford domestic air transportation.
So it is that notwithstanding the frequent sinking of passenger vessels in our waters, crowds of
people continue to travel by sea. This Court is prepared to use the instruments given to it by
the law for securing the ends of law and public policy. One of those instruments is the
institution of exemplary damages; one of those ends, of special importance in an archipelagic
state like the Philippines, is the safe and reliable carriage of people and goods by sea.
1.4. Korean Airlines Co. Ltd. vs. Court of Appeals. G.R. No. 114061. August 3, 1994
— This Court has held that a contract to transport passengers is different in kind and degree
from any other contractual relation. The business of the carrier is mainly with the traveling
public. It invites people to avail themselves of the comforts and advantages it offers. The
contract of air carriage generates a relation attended with a public duty. Passengers have the
right to be treated by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct, injurious
language, indignities and abuses from such employees.
So it is that any discourteous conduct on the part of these employees toward a passenger gives
the latter an action for damages against the carrier. The breach of contract was aggravated in
this case when, instead of courteously informing Lapuz of his being a "waitlisted" passenger, a
KAL officer rudely shouted "Down! Down!" while pointing at him, thus causing him
embarrassment and public humiliation. When he later asked for another booking, his ticket
was canceled by KAL. Consequently, he was unable to report for his work in Saudi Arabia within
the stipulated 2-week period and so lost his employment.
1.5. Sps. Viloria vs. Continental Airlines. G.R. No. 188288. January 16, 2012
On the basis of the foregoing and given the allegation of Spouses Viloria that Fernando's
consent to the subject contracts was supposedly secured by Mager through fraudulent means,
it is plainly apparent that their demand for a refund is tantamount to seeking for an annulment
of the subject contracts on the ground of vitiated consent.
After meticulously poring over the records, this Court finds that the fraud alleged by Spouses
Viloria has not been satisfactorily established as causal in nature to warrant the annulment of
the subject contracts. In fact, Spouses Viloria failed to prove by clear and convincing evidence
that Mager's statement was fraudulent. Specifically, Spouses Viloria failed to prove that (a)
there were indeed available seats at Amtrak for a trip to New Jersey on August 13, 1997 at the
time they spoke with Mager on July 21, 1997; (b) Mager knew about this; and (c) that she
purposely informed them otherwise.
1.6 Sulpicio Lines, Inc. v. Sesante, G.R. No. 172682. July 27, 2016
On September 18, 1998, at around 12:55 p.m., the M/V Princess of the Orient, a passenger
vessel owned and operated by the petitioner, sank near Fortune Island in Batangas. Of the 388
recorded passengers, 150 were lost. 3 Napoleon Sesante, then a member of the Philippine
National Police (PNP) and a lawyer, was one of the passengers who survived the sinking. He
sued the petitioner for breach of contract and damages.
Sesante sustained injuries due to the buffeting by the waves and consequent sinking of M/V
Princess of the Orient where he was a passenger. To exculpate itself from liability, the common
carrier vouched for the seaworthiness of M/V Princess of the Orient, and referred to the BMI
report to the effect that the severe weather condition — a force majeure — had brought about
the sinking of the vessel.
The petitioner was directly liable to Sesante and his heirs.
Even assuming the seaworthiness of the M/V Princess of the Orient, the petitioner could not
escape liability considering that, as borne out by the aforequoted findings of the BMI, the
immediate and proximate cause of the sinking of the vessel had been the gross negligence of its
captain in maneuvering the vessel.
1.7. Emergency Rule (Isaac vs. A.L. Ammen Trans. G.R. No. L-9671. August 23, 1957)
it appears that Bus No. 31, immediately prior to the collision, was running at a moderate speed
because it had just stopped at the school zone of Matacong, Polangui, Albay. The pick-up car
was at full speed and was running outside of its proper lane. The driver of the bus, upon seeing
the manner in which the pick-up was then running, swerved the bus to the very extreme right
of the road until its front and rear wheels have gone over the pile of stones or gravel situated
on the rampart of the road. Said driver could not move the bus farther right and run over a
greater portion of the pile, the peak of which was about 3 feet high, without endangering the
safety of his passengers. And notwithstanding all these efforts, the rear left side of the bus was
hit by the pick-up car.
Thus, it was held that "where a carrier's employee is confronted with a sudden emergency, the
fact that he is obliged to act quickly and without a chance for deliberation must be taken into
account, and he is not held to the same degree of care that he would otherwise be required to
exercise in the absence of such emergency but must exercise only such care as any ordinary
prudent person would exercise under like circumstances and conditions, and the failure on his
part to exercise the best judgment the case renders possible does not establish lack of care and
skill on his part which renders the company, liable. . . ." (13 C. J. S., 1412; 10 C. J., 970).
Considering all the circumstances, we are persuaded to conclude that the driver of the bus has
done what a prudent man could have done to avoid the collision and in our opinion this relieves
appellee from liability under our law.
A circumstance which militates against the stand of appellant is the fact borne out by the
evidence that when he boarded the bus in question, he seated himself on the left side thereof
resting his left arm on the window sill but with his left elbow outside the window, this being his
position in the bus when the collision took place. It is for this reason that the collision resulted
in the severance of said left arm from the body of appellant thus doing him a great damage. It is
therefore apparent that appellant is guilty of contributory negligence.
2. Doctrine of Last Clear Chance; Applicability
2.1. Philippine Rabbit Bus Lines vs. IAC. G.R. Nos. 66102-04. August 30, 1990
The jeepney practically occupied and blocked the greater portion of the western lane, which is
the right of way of vehicles coming from the north, among which was Bus No. 753 of petitioner
Philippine Rabbit Bus Lines, Inc. (Rabbit) driven by Tomas delos Reyes. Almost at the time when
the jeepney made a sudden U-turn and encroached on the western lane of the highway as
claimed by Rabbit and delos Reyes, or after stopping for a couple of minutes as claimed by
Mangune, Carreon and Manalo, the bus bumped from behind the right rear portion of the
jeepney. As a result of the collision, three passengers of the jeepney (Catalina Pascua, Erlinda
Meriales and Adelaida Estomo) died while the other jeepney passengers sustained physical
injuries.
We reiterate that "[t]he principle about the 'last clear chance' would call for application in a suit
between the owners and drivers of the two colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its contractual obligations. For it
would be inequitable to exempt the negligent driver of the jeepney and its owners on the
ground that the other driver was likewise guilty of negligence."
The jeepney, which was then travelling on the eastern shoulder, making a straight skid mark of
approximately 35 meters, crossed the eastern lane at a sharp angle, making a skid mark of
approximately 15 meters from the eastern shoulder to the point of impact (Exhibit "K," Pascua).
Hence, delos Reyes could not have anticipated the sudden U-turn executed by Manalo. The
respondent court did not realize that the presumption was rebutted by this piece of evidence.
If We adopt the speed of 80 kilometers per hour, delos Reyes would have covered that distance
in only 2.025 seconds. Verily, he had little time to react to the situation. To require delos Reyes
to avoid the collision is to ask too much from him. Aside from the time element involved, there
were no options available to him.
2.2. Bustamante vs. Court of Appeals. G.R. No. 89880. February 6, 1991
Ang bubu, joking daw
Immediately before the collision, the cargo truck and the passenger bus were approaching each
other, coming from the opposite directions of the highway. While the truck was still about 30
meters away, Susulin, the bus driver, saw the front wheels of the vehicle wiggling. He also
observed that the truck was heading towards his lane. Not minding this circumstance due to his
belief that the driver of the truck was merely joking, Susulin shifted from fourth to third gear in
order to give more power and speed to the bus, which was ascending the inclined part of the
road, in order to overtake or pass a Kubota hand tractor being pushed by a person along the
shoulder of the highway. While the bus was in the process of overtaking or passing the hand
tractor and the truck was approaching the bus, the two vehicles sideswiped each other at each
other's left side. After the impact, the truck skidded towards the other side of the road and
landed on a nearby residential lot, hitting a coconut tree and felling it."
the doctrine of last clear chance means that even though a person's own acts may have placed
him in a position of peril, and an injury results, the injured person is entitled to recovery. As the
doctrine is usually stated, a person who has the last clear chance or opportunity of avoiding an
accident, notwithstanding the negligent acts of his opponent or that of a third person imputed
to the opponent is considered in law solely responsible for the consequences of the accident.
The practical import of the doctrine is that a negligent defendant is held liable to a negligent
plaintiff, or even to a plaintiff who has been grossly negligent in placing himself in peril, if he,
aware of the plaintiffs peril, or according to some authorities, should have been aware of it in
the reasonable exercise of due care, had in fact an opportunity later than that of the plaintiff to
avoid an accident.
All premises considered, the Court is convinced that the respondent Court committed an error
of law in applying the doctrine of last clear chance as between the defendants, since the case at
bar is not a suit between the owners and drivers of the colliding vehicles but a suit brought by
the heirs of the deceased passengers against both owners and drivers of the colliding vehicles.
Therefore, the respondent court erred in absolving the owner and driver of the cargo truck
from liability.
2.3. Maritime Collision
3. Accommodation Passenger
3.1. Lara vs. Valencia. G.R. No. L-9907. June 30, 1958
It therefore appears that the deceased, as well as his companions who rode in the pick-up of
defendant, were merely accommodation passengers who paid nothing for the service and so
they can be considered as invited guests within the meaning of the law. 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 owner and driver of a vehicle owes to accommodation passengers or invited guests merely
the duty to exercise reasonable care so that they may be transported safely to their
destination. Thus, "The rule is established by 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.
The owner of the vehicle in the case at bar is only required to observe ordinary care, and is not
in duty bound to exercise extraordinary diligence as required by our law.
A passenger must observe the diligence of a father of a family to avoid injury to himself (Article
1761, new Civil Code) which means that if the injury to the passenger has been proximately
caused by his own negligence, the carrier cannot be held liable.
3.2. Distinguished from Gratuitous Passenger and Discounted Passenger
4. Caveat Viator; Carrier Not Insurer Against All Risks of Travel; Exception
4.1. Japan Airlines vs. Court of Appeals. G.R. No. 118664. August 7, 1998
Private respondents boarded a Japan Airlines (JAL) flight in San Francisco, California bound for
Manila with an overnight stopover at Narita, Japan at JAL's expense. Due to the Mt. Pinatubo
eruption, private respondents' trip to Manila was cancelled. JAL rebooked all the Manila-bound
passengers and paid for the hotel expenses for their unexpected overnight stay. The flight of
private respondents was again cancelled due to NAIA's indefinite closure. Since JAL did not
defray their hotel accommodation expenses during their stay in Narita, Japan, private
respondents were forced to pay for their accommodations and meal expenses from their
personal funds.
The Supreme Court held that when JAL was prevented from resuming its flight to Manila due to
the effects of Mt. Pinatubo eruption, whatever losses or damages in the form of hotel and meal
expenses the stranded passengers incurred, cannot be charged to JAL. The Court, however, did
not completely absolved JAL from any liability. While JAL was no longer required to defray
private respondents' living expenses during their stay in Narita, Japan on account of fortuitous
event, JAL had the duty to make the necessary arrangements to transport private respondents
on the first available connecting flight to Manila. Petitioner JAL reneged on its obligation to look
after the comfort and convenience of its passengers when it declassified private respondents
from "transit passengers" to "new passengers" as a result of which private respondents were
obliged to make the necessary arrangements themselves for the next flight to Manila.
Consequently, the award of nominal damages is in order. Nominal damages are adjudicated in
order that a right of a plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized and for the purpose of indemnifying any loss suffered by him. The
court may award nominal damages in every obligation arising from any source enumerated in
Article 1157, or in every case where any property right has been invaded. Petitioner JAL is
ordered to pay each of the private respondents nominal damages in the sum of P100,000.00
each including attorney's fees of P50,000.00 plus costs.
4.2. Japan Airlines vs. Asuncion. G.R. No. 161730. January 28, 2005
We find that JAL did not breach its contract of carriage with respondents. It may be true that
JAL has the duty to inspect whether its passengers have the necessary travel documents,
however, such duty does not extend to checking the veracity of every entry in these
documents. JAL could not vouch for the authenticity of a passport and the correctness of the
entries therein. The power to admit or not an alien into the country is a sovereign act which
cannot be interfered with even by JAL. This is not within the ambit of the contract of carriage
entered into by JAL and herein respondents. As such, JAL should not be faulted for the denial of
respondents' shore pass applications.
5. Commencement, Duration and Termination of Carrier’s Responsibility
5.1. Light Rail Transit Authority vs. Navidad. G.R. No. 145804. February 6, 2003
Suntukan sa LRT lol
On 14 October 1993, Nicanor Navidad, then drunk, entered the EDSA LRT station after
purchasing a "token" (representing payment of the fare). Junelito Escartin, the security guard
(Prudent Security Company) assigned to the area, approached Navidad. A misunderstanding or
an altercation between the two apparently ensued that led to a fist fight. At the exact moment
that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in. Navidad
was struck by the moving train, and he was killed instantaneously.
The foundation of LRTA's liability is the contract of carriage and its obligation to indemnify the
victim arises from the breach of that contract by reason of its failure to exercise the high
diligence required of the common carrier. In the discharge of its commitment to ensure the
safety of passengers, a carrier may choose to hire its own employees or avail itself of the
services of an outsider or an independent firm to undertake the task. In either case, the
common carrier is not relieved of its responsibilities under the contract of carriage.
The Supreme Court affirmed the decision of the Court of Appeals. If there is any liability that
could be attributed to Prudent, it could only be for tort under the provisions of Article 2176 and
related provisions, in conjunction with Article 2180, of the Civil Code. In the absence of
satisfactory explanation by the carrier on how the accident occurred, which petitioners,
according to the appellate court, have failed to show, the presumption would be that it has
been at fault, an exception from the general rule that negligence must be proved. Regrettably
for LRT, as well as the surviving spouse and heirs of the late Nicanor Navidad, the Court is
concluded by the factual finding of the Court of Appeals that there was nothing to link Prudent
to the death of Nicanor Navidad, for the reason that the negligence of its employee, Escartin,
has not been duly proven.
The Court also absolved petitioner Rodolfo Roman, there being no showing that he is guilty of
any culpable act or omission and also for the reason that the contractual tie between the LRT
and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be
made liable only for his own fault or negligence.
The Court also ruled that the award of nominal damages, in addition to actual damages, is
untenable stressing that nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him. It is also an
established rule that nominal damages cannot co-exist with compensatory damages.
5.2. La Mallorca vs. Court of Appeals G.R. No. L-20761. July 27, 1966
In the present case, the father returned to the bus to get one of his baggages which was not
unloaded when he and other members of his family alighted from the bus. The victim, one of
his minor daughters, must have followed her father. However, although the father was still on
the running board of the bus awaiting for the conductor to hand to him the bag or bayong, the
bus started to run, so that even he (the father) had to jump down from the moving vehicle. It
was at this instance that the child, who must be near the bus, was run over and killed. The
presence of said passengers near the bus was not unreasonable and they are, therefore, to be
considered still as passengers of the carrier, entitled to the protection under their contract of
carriage.
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 a reasonable opportunity to leave the carrier's
premises.
6. Presumption of Negligence: Liability of Carriers for Death or Injury to Passengers;
Exceptions (Articles 1756-1758, Civil Code)
6.1. Calalas vs. Court of Appeals. G.R. No. 122039. May 31, 2000
It is immaterial that the proximate cause of the collision between the jeepney and the truck
was the negligence of the truck driver. The doctrine of proximate cause is applicable only in
actions for quasi-delict, not in actions involving breach of contract. In the case at bar, upon the
happening of the accident, the presumption of negligence at once arose, and it became the
duty of petitioner to prove that he had observed extraordinary diligence in the care of his
passengers. The fact that Sunga was seated in an "extension seat" placed her in a peril greater
than that to which the other passengers were exposed. Therefore, not only was petitioner
unable to overcome the presumption of negligence imposed on him for the injury sustained by
Sunga, but also, the evidence showed he was actually negligent in transporting passengers. The
decision of the Court of Appeals was, affirmed, with the modification that the award of moral
damages was deleted.
1. Negligence or Intentional Assault by Carrier’s Employee
1.1. Maranan vs. Perez. G.R. No. L-22272. June 26, 1967
R.C. was a passenger in a taxicab owned by P. P. when he was stabbed to death by the driver,
S.V. In the subsequent action for damages, P. P. cited Gillaco vs. MRR, 97 Phil., 884, which ruled
that the carrier is under no absolute liability for assaults of its employees upon the passengers.
Held, the Gillaco case does not apply. There, the passenger was killed outside the scope and
course of duty of the guilty employee while here, the killing took place in the course of duty of
the guilty employee and when he was acting within the scope of his duties.
There, the basis of the carrier's liability for assaults on passengers committed by its drivers rest
either on (1) the doctrine of respondent superior, or (2) the principle that it is the carrier's
implied duty to transport the passenger safely.
Under the first, which is the minority view, the carrier is liable only when the act of the
employee is within the scope of his authority and duty. It is not sufficient that the act be within
the course of employment only. Under the second view, upheld by the majority and also by the
later cases, it is enough that the assault happens within the course of the employee's duty. It is
no defense for the carrier that the act was done in excess of authority or in disobedience of the
carrier's orders (10 Am. Jur. 105-107; 263-265). The carrier's liability her is absolute in the sense
that it practically secures the passengers from assaults committed by its own employees.
As can be gleaned from the Article 1759, the Civil Code of the Philippines evidently follows the
rule based on the second view:
(1) the special undertaking of the carrier requires that it furnish its passengers that full measure
of protection afforded by the exercise of the high degree of care prescribed by the law, inter
alia from violence and insults at the hands of strangers and other passengers, but above all,
from the acts of the carrier's own servants charged with the passenger's safety;
(2) said liability of the carrier from the servant's violations of duty to passengers, is the result of
the former's confiding in the servant's hands the performance of his contract to safely transport
the passenger, with the utmost care prescribed by law; and
(3) 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.
2. Passenger’s Duty to Observe Diligence to Avoid Injury; Contributory Negligence
2.1. Philippine National Railways vs. Court of Appeals. G.R. No. L-55347. October 4, 1985
The appellate court found, the petitioner does not deny, that the train boarded by the
deceased Winifredo Tupang was so overcrowded that he and many other passengers had no
choice but to sit on the open platforms between the coaches of the train. It is likewise
undisputed that the train did not even slow down when it approached the Iyam Bridge which
was under repair at the time. Neither did the train stop, despite the alarm raised by other
passengers that a person had fallen off the train at Iyam Bridge.
The petitioner has the obligation to transport its passengers to their destinations and to
observe extraordinary diligence in doing so. Death or any injury suffered by any of its
passengers gives rise to the presumption that it was negligent in the performance of its
obligation under the contract of carriage. Thus, as correctly ruled by the respondent court, the
petitioner failed to overthrow such presumption of negligence with clear and convincing
evidence.
But while petitioner failed to exercise extraordinary diligence as required by law, 8 it appears
that the deceased was chargeable with contributory negligence. Since he opted to sit on the
open platform between the coaches of the train, he should have held tightly and tenaciously on
the upright metal bar found at the side of said platform to avoid falling off from the speeding
train. Such contributory negligence, while not exempting the PNR from liability, nevertheless
justified the deletion of the amount adjudicated as moral damages. By the same token, the
award of exemplary damages must be set aside. Exemplary damages may be allowed only in
cases where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. 9 There being no evidence of fraud, malice or bad faith on the part of petitioner, the
grant of exemplary damages should be discarded.
3. Injury to Passenger Due to Acts of Co-passenger or Stranger
3.1. Fortune Express Inc. vs. Court of Appeals. G.R. No. 119756. March 18, 1999
Petitioner Fortune Express, Inc. is a bus company in Northern Mindanao. On November 18,
1989, one of its buses collided with a jeepney owned by a Maranao which resulted in the death
of several passengers of the jeepney including two Maranaos. In relation thereto, the Philippine
Constabulary of Cagayan de Oro warned the petitioner, through its operations manager
Diosdado Bravo, that the Maranaos were planning to take revenge on the petitioner by burning
some of its buses. Bravo assured them that the necessary precautions to ensure the safety of
lives and properties of the passengers would be taken. On November 22, 1989, three armed
Maranaos who pretended to be passengers, seized and burned the bus of the petitioner at
Linamon, Lanao del Norte while on its way to Iligan City which resulted in the death one of its
passengers, Atty. Talib Caorong.
In the present case, it is clear that because of the negligence of petitioner's employees, the
seizure of the bus by Mananggolo and his men was made possible. Despite warning by the
Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge
on the petitioner by burning some of its buses and the assurance of petitioner's operation
manager, Diosdado Bravo, that the necessary precautions would be taken, petitioner did
nothing to protect the safety of its passengers. Had petitioner and its employees been vigilant
they would not have failed to see that the malefactors had a large quantity of gasoline with
them. Under the circumstances, simple precautionary measures to protect the safety of
passengers, such as frisking passengers and inspecting their baggages, preferably with non-
intrusive gadgets such as metal detectors, before allowing them on board could have been
employed without violating the passenger's constitutional rights.
3.2. G.V. Florida Transport, Inc. v. Heirs of Battung, Jr., G.R. No. 208802. October 14, 2015
Respondents alleged that in the evening of March 22, 2003, Romeo L. Battung, Jr. (Battung)
boarded petitioner's bus with body number 037 and plate number BVJ-525 in Delfin Albano,
Isabela, bound for Manila. Battung 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, Duplio, 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 Battung at his head, and then left with a
companion. The bus conductor, Daraoay, notified Duplio of the incident and thereafter, brought
Romeo to the hospital, but the latter was pronounced dead on arrival.
While the law requires the highest degree of diligence from common carriers in the safe
transport of their passengers and creates a presumption of negligence against them, it does
not, however, make the carrier an insurer of the absolute safety of its passengers.
In this case, Battung's death was neither caused by any defect in the means of transport or in
the method of transporting, or to the negligent or willful acts of petitioner's employees,
namely, that of Duplio and Daraoay, in their capacities as driver and conductor, respectively.
Instead, the case involves the death of Battung wholly caused by the surreptitious act of a
copassenger who, after consummating such crime, hurriedly alighted from the vehicle.
Relevantly, the Court, in Nocum v. Laguna Tayabas Bus Company, 29 has held that common
carriers should be given sufficient leeway in assuming that the passengers they take in will not
bring anything that would prove dangerous to himself, as well as his co-passengers, unless
there is something that will indicate that a more stringent inspection should be made.
With no such indication, there was no need for them to conduct a more stringent search (i.e.,
bodily search) on the aforesaid men. By all accounts, therefore, it cannot be concluded that
petitioner or any of its employees failed to employ the diligence of a good father of a family in
relation to its responsibility under Article 1763 of the Civil Code. As such, petitioner cannot
altogether be held civilly liable.
CHAPTER III. ACTIONS AND DAMAGES IN CASE OF BREACH (Article 1764, NCC)
1. Concurrent Causes of Actions
1.1. Distinctions; Importance (Del Prado vs. Manila Electric Co., supra)
The distinction between these two sorts of negligence is important in this jurisdiction, for the
reason that where liability arises from a mere tort (culpa aquiliana), not involving a breach of
positive obligation, an employer, or master, may exculpate himself, under the last paragraph of
article 1903 of the Civil Code, by proving that he had exercised due diligence to prevent the
damage; whereas this defense is not available if the liability of the master arises from a breach
of contractual duty (culpa contractual). in the case before us the company pleaded as a special
defense that it had used all the diligence of a good father of a family to prevent the damage
suffered by the plaintiff; and to establish this contention the company introduced testimony
showing that due care had been used in training and instructing the motorman in charge of this
car in his art. But this proof is irrelevant in view of the fact that the liability involved was derived
from a breach of obligation under article 1101 of the Civil Code and related provisions.
2. Solidary Liability
2.1. Fireman’s Fund Insurance Co. vs. Metro Port Service Inc. G.R. No. 83613. Feb. 21. 1990
The records reveal that Maersk Line provided the chassis and the tractor which carried the
subject shipment. It merely requested the ARRASTRE to dispatch a tractor operator to drive the
tractor inasmuch as the foreign shipping line did not have any truck operator in its employ.
Such arrangement is allowed between the ARRASTRE and the CARRIER pursuant to the
Management Contract. It was clearly one of the services offered by the ARRASTRE. We agree
with the petitioner that it is the ARRASTRE which had the sole discretion and prerogative to hire
and assign Librando to operate the tractor. It was also the ARRASTRE's sole decision to detail
and deploy Librando for the particular task from among its pool of tractor operators or drivers.
It is, therefore, inacurrate to state that Librando should be considered an employee of Maersk
Line on that specific occasion.
It is true that Maersk Line is also at fault for not providing twist locks on the chassis. However,
we find the testimony of Manuel Heraldez who is the Motor Pool General Superintendent of
Metro Port rather significant.
Whether or not the twist lock can be seen by the naked eye when the cargo has been loaded on
the chassis, an efficient and diligent tractor operator must nevertheless check if the cargo is
securely loaded on the chassis. We, therefore, find Metro Port Service Inc., solidarily liable in
the instant case for the negligence of its employee. With respect to the limited liability of the
ARRASTRE, the records disclose that the value of the importation was relayed to the arrastre
operator and in fact processed by its chief claims examiner based on the documents submitted.
2.2. Eastern Shipping Lines vs. CA. G.R. No. 97412. July 12, 1994
(a) whether or not a claim for damage sustained on a shipment of goods can be a solidary, or
joint and several, liability of the common carrier, the arrastre operator and the customs broker;
In Fireman's Fund Insurance vs. Metro Port Services (182 SCRA 455), we have explained in
holding the carrier and the arrastre operator liable in solidum, thus: Cdpr "The legal relationship
between the consignee and the arrastre operator is akin to that of a depositor and
warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]. The relationship between
the consignee and the common carrier is similar to that of the consignee and the arrastre
operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the duty of
the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good
condition to the consignee, such responsibility also devolves upon the CARRIER. Both the
ARRASTRE and the CARRIER are therefore charged with the obligation to deliver the goods in
goods condition to the consignee."
2.3. Philippines First Insurance Co., Inc. vs. Wallem Phils. Shipping, Inc., supra
The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v. Court of
Appeals with the clarification that the arrastre operator and the carrier are not always and
necessarily solidarily liable as the facts of a case may vary the rule.
Thus, in this case the appellate court is correct insofar as it ruled that an arrastre operator and a
carrier may not be held solidarily liable at all times. But the precise question is which entity had
custody of the shipment during its unloading from the vessel?
The records are replete with evidence which show that the damage to the bags happened
before and after their discharge and it was caused by the stevedores of the arrastre operator
who were then under the supervision of Wallem.
under the custody of the carrier. In the instant case, the damage or losses were incurred during
the discharge of the shipment while under the supervision of the carrier. Consequently, the
carrier is liable for the damage or losses caused to the shipment. As the cost of the actual
damage to the subject shipment has long been settled, the trial court's finding of actual
damages in the amount of P397,879.69 has to be sustained.
2.4 Tiu vs. Arriesgado. G.R. No. 1380601. September 2004
2.5. Philippine Rabbit Bus Lines vs. IAC, supra
2.6. Eastern Shipping Lines vs. BPI/MS Insurance Corp. G.R. No. 193986. January 15, 2014
SHIPPING LAW
CHAPTER I – GENERAL CONCEPTS
1. Maritime Law; Admiralty Law
1.1. Definitions; Distinction
2. Characteristics of Maritime Transactions; Real and Hypothecary
2.1. Limited Liability Rule; Nature and Rationale
2.2. Exceptions
2.3. Abandonment
2.4. Cases
2.4.1. Dela Torre v. Court of Appeals, G.R. No. 160088. July 13, 2011
On November 23, 1984, the LCT-Josephine with its cargo of sand and gravel arrived at Philpos,
Isabel, Leyte. The vessel was beached near the NDC Wharf. With the vessel's ramp already
lowered, the unloading of the vessel's cargo began with the use of Larrazabal's payloader.
While the payloader was on the deck of the LCT-Josephine scooping a load of the cargo, the
vessel's ramp started to move downward, the vessel tilted and sea water rushed in. Shortly
thereafter, LCT-Josephine sank.
With respect to petitioners' position that the Limited Liability Rule under the Code of
Commerce should be applied to them, the argument is misplaced. The said rule has been
explained to be that of the real and hypothecary doctrine in maritime law where the shipowner
or ship agent's liability is held as merely co-extensive with his interest in the vessel such that a
total loss thereof results in its extinction.
In view of the foregoing, Concepcion as the real shipowner is the one who is supposed to be
supported and encouraged to pursue maritime commerce. Thus, it would be absurd to apply
the Limited Liability Rule against him who, in the first place, should be the one benefitting from
the said rule
Therefore, even if the contract is for a bareboat or demise charter where possession, free
administration and even navigation are temporarily surrendered to the charterer, dominion
over the vessel remains with the shipowner. Ergo, the charterer or the sub-charterer, whose
rights cannot rise above that of the former, can never set up the Limited Liability Rule against
the very owner of the vessel.
2.4.2. Central Shipping Co. Inc. vs. Insurance Company of North America, G.R. No. 150751.
September 20, 2004
The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable to
the present case. This rule does not apply to situations in which the loss or the injury is due to
the concurrent negligence of the shipowner and the captain. It has already been established
that the sinking of M/V Central Bohol had been caused by the fault or negligence of the ship
captain and the crew, as shown by the improper stowage of the cargo of logs. "Closer
supervision on the part of the shipowner could have prevented this fatal miscalculation." As
such, the shipowner was equally negligent. It cannot escape liability by virtue of the limited
liability rule.
2.4.3. Aboitiz Shipping Corp. vs. Court of Appeals. G.R. No. 121833. October 17, 2008
Nonetheless, there are exceptional circumstances wherein the ship agent could still be held
answerable despite the abandonment of the vessel, as where the loss or injury was due to the
fault of the shipowner and the captain. The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner's liability, does not apply to cases
where the injury or average was occasioned by the shipowner's own fault. Likewise, the
shipowner may be held liable for injuries to passengers notwithstanding the exclusively real and
hypothecary nature of maritime law if fault can be attributed to the shipowner.
The finding of actual fault on the part of Aboitiz is central to the issue of its liability to the
respondents. Aboitiz's contention, that with the sinking of M/V P. Aboitiz, its liability to the
cargo shippers and shippers should be limited only to the insurance proceeds of the vessel
absent any finding of fault on the part of Aboitiz, is not supported by the record. Thus, Aboitiz is
not entitled to the limited liability rule and is, therefore, liable for the value of the lost cargoes
as so duly alleged and proven during trial
The instant petitions provide another occasion for the Court to reiterate the well-settled
doctrine of the real and hypothecary nature of maritime law. As a general rule, a ship owner's
liability is merely co-extensive with his interest in the vessel, except where actual fault is
attributable to the shipowner. Thus, as an exception to the limited liability doctrine, a
shipowner or ship agent may be held liable for damages when the sinking of the vessel is
attributable to the actual fault or negligence of the shipowner or its failure to ensure the
seaworthiness of the vessel. The instant petitions cannot be spared from the application of the
exception to the doctrine of limited liability in view of the unanimous findings of the courts
below that both Aboitiz and the crew failed to ensure the seaworthiness of the M/V P. Aboitiz.
2.4.4. Allied Banking Corporation vs. Cheng Yong. G.R. No. 151040. October 5, 2005
We thus declare and so hold that Allied Bank's foreclosure of the chattel mortgage constituted
over the vessel "Jean III" was justified. On this score, we also rule that the loss of the mortgaged
chattel brought about by its sinking must be borne not by Allied Bank but by the spouses Cheng.
As owners of the fishing vessel, it was incumbent upon the spouses to insure it against loss.
Thus, when the vessel sank before the chattel mortgage could be foreclosed, uninsured as it is,
its loss must be borne by the spouses Cheng.
2.4.5. Phil-Nippon Kyoei, Corp. v. Gudelosao, G.R. No. 181375, July 13, 2016
In this jurisdiction, the limited liability rule is embodied in Articles 587, 590 and 837 under Book
III of the Code of Commerce, viz.:
Art. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons
which arise from the conduct of the captain in the care of the goods which the vessel carried;
but he may exempt himself therefrom by abandoning the vessel with all her equipment and the
freightage he may have earned during the voyage.
Art. 590. The co-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, referred to in Art. 587. Each part-
owner may exempt himself from this liability by the abandonment before a notary of the part
of the vessel belonging to him.
Art. 837. The civil liability incurred by the shipowners in the cases prescribed in this section,
shall be understood as limited to the value of the vessel with all its appurtenances and
freightage earned during the voyage.
Article 837 applies the limited liability rule in cases of collision. Meanwhile, Articles 587 and 590
embody the universal principle of limited liability in all cases wherein the shipowner or agent
may be properly held liable for the negligent or illicit acts of the captain. These articles precisely
intend to limit the liability of the shipowner or agent to the value of the vessel, its
appurtenances and freightage earned in the voyage, provided that the owner or agent
abandons the vessel. When the vessel is totally lost, in which case abandonment is not required
because there is no vessel to abandon, the liability of the shipowner or agent for damages is
extinguished.
Nonetheless, the limited liability rule is not absolute and is without exceptions. It does not
apply in cases:
(1) where the injury or death to a passenger is due either to the fault of the shipowner, or to
the concurring negligence of the shipowner and the captain;
(2) where the vessel is insured; and
(3) in workmen's compensation claims.
CHAPTER II –CHARTER PARTIES (Arts. 652 – 718, Code of Commerce)

1. Definition and Concept
2. Kinds
2.1. Bareboat Charter
2.1.1. Beneficial Owner vs. Disponent Owner; Owner Pro Hac Vice
2.1.2. Litonjua Shipping vs. National Seamen Board. G.R. No. 51910. August 10, 1989
In modern maritime law and usage, there are three (3) distinguishable types of charter parties:
(a) the "bareboat" or "demise" charter;
(b) the "time" charter; and
(c) the "voyage" or "trip" charter.
A bareboat or demise charter is a demise of a vessel, much as a lease of an unfurnished house

is a demise of real property. The shipowner turns over possession of his vessel to the charterer,
who then undertakes to provide a crew and victuals and supplies and fuel for her during the
term of the charter. The shipowner is not normally required by the terms of a demise charter to
provide a crew, and so the charterer gets the "bare boat", i.e., without a crew. Sometimes, of
course, the demise charter might provide that the shipowner is to furnish a master and crew to
man the vessel under the charterer's direction, such that the master and crew provided by the
shipowner become the agents and servants or employees of the charterer, and the charterer
(and not the owner) through the agency of the master, has possession and control of the vessel
during the charter period.
In a demise or bare boat charter, the charterer is treated as owner pro hac vice of the vessel.
The charterer or owner pro hac vice, and not the general owner of the vessel, is held liable for
the expenses of the voyage including the wages of the seamen.
A time charter, upon the other hand, like a demise charter, is a contract for the use of a vessel
for a specified period of time or for the duration of one or more specified voyages. In this case,
however, the owner of a time- chartered vessel (unlike the owner of a vessel under a demise or
bareboat charter), retains possession and control through the master and crew who remain
his employees. What the time charterer acquires is the right to utilize the carrying capacity and
facilities of the vessel and to designate her destinations during the term of the charter.
A voyage charter, or trip charter, is simply a contract of affreightment, that is, a contract for
the carriage of goods, from one or more ports of loading to one or more ports of unloading, on
one or on a series of voyages. In a voyage charter, master and crew remain in the employ of the
owner of the vessel.
2.2. Contract of Affreightment

2.2.1. Time Charter
2.2.2. Voyage Charter
2.3. PHILAM Insurance Company vs. Heung-A Shipping Corporation. G.R. No. 187701. July 23,
2014)
As the carrier of the subject shipment, HEUNG-A was bound to exercise extraordinary diligence
in conveying the same and its slot charter agreement with DONGNAMA did not divest it of such
characterization nor relieve it of any accountability for the shipment.
A charter party has two types. First, it could be a contract of affreightment whereby the use of
shipping space on vessels is leased in part or as a whole, to carry goods for others. The
charter-party provides for the hire of vessel only, either for a determinate period of time (time
charter) or for a single or consecutive voyage (voyage charter). The shipowner supplies the
ship's stores, pay for the wages of the master and the crew, and defray the expenses for the
maintenance of the ship. The voyage remains under the responsibility of the carrier and it is
answerable for the loss of goods received for transportation. The charterer is free from liability
to third persons in respect of the ship.
Second, charter by demise or bareboat charter under which the whole vessel is let to the
charterer with a transfer to him of its entire command and possession and consequent control
over its navigation, including the master and the crew, who are his servants. The charterer
mans the vessel with his own people and becomes, in effect, the owner for the voyage or
service stipulated and hence liable for damages or loss sustained by the goods transported.
Clearly then, despite its contract of affreightment with DONGNAMA, HEUNG-A remained
responsible as the carrier, hence, answerable for the damages incurred by the goods received
for transportation. "[C]ommon carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence and vigilance with respect to the
safety of the goods and the passengers they transport. Thus, common carriers are required to
render service with the greatest skill and foresight and 'to use all reasonable means to ascertain
the nature and characteristics of the goods tendered for shipment, and to exercise due care in
the handling and stowage, including such methods as their nature requires.'"
3. Effect on Carrier’s Character (Planter Products Inc. vs. CA, supra)
When petitioner chartered the vessel, the ship, captain, its officers and complement were
under the employ of the shipowner and therefore continued to be under its direct supervision
and control. It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only. It is only when the charter includes both the
vessel and its crew as in a bareboat or demise that a common carrier becomes private at least
insofar as the particular voyage covering the charter-party is concerned.
4. Requisites of a Charter Party
1. Consent of the contracting parties

2. Existing vessel which should be placed at the disposition of the shipper
3. Freight
4. Compliance with Art. 652 of the Code of Commerce
a. In writing
b. Drawn in duplicate
c. Signed by the parties
d. Containing the circumstances required to be contained in the charter party
BILL OF LADING
1. Concept and Nature of Bill Lading (B/L)
Written acknowledgement of the receipt of goods and an agreement to transport and to deliver
them at a specified place to a person named or on his or her order.
1.1. Importance in Trade and Commerce
1.2. Three-fold Character
A. Receipt for the goods received

B. It is a contract of the 3 parties, shipper, carrier and consignee
C. It is a document of title
a. In case of charter of the entire vessel, the bill of lading issued by the master to
the charterer as shipper, is in fact and in legal contemplation merely a receipt
and a document of title, not a contract, for the contract is the charter party
1.2.1. Philippine American General Insurance vs. Sweet Lines, Inc. G.R. No. 87434. August 5,
1992
On this point, in denying petitioner's motion for reconsideration, the Court of Appeals resolved
that although the bills of lading were not offered in evidence, the litigation obviously revolves
on such bills of lading which are practically the documents or contracts sued upon, hence, they
are inevitably involved and their provisions cannot be disregarded in the determination of the
relative rights of the parties thereto.
In the case at bar, prescription as an affirmative defense was seasonably raised by SLI in its
answer, except that the bills of lading embodying the same were not formally offered in
evidence, thus reducing the bone of contention to whether or not prescription can be
maintained as such defense and, as in this case, consequently upheld on the strength of mere
references thereto.
As petitioners are suing upon SLI's contractual obligation under the contract of carriage as
contained in the bills of lading, such bills of lading can be categorized as actionable documents
which under the Rules must be properly pleaded either as causes of action or defenses, and the
genuineness and due execution of which are deemed admitted unless specifically denied under
oath by the adverse party. The rules on actionable documents cover and apply to both a cause
of action or defense based on said documents.
1.2.2. National Union Fire Insurance Company of Pittsburg vs. Stolt-Nielsen Philippines Inc.
G.R. No. 87958. April 26, 1990
The Bill of Lading incorporates by reference the terms of the Charter Party. It is settled law that
the charter may be made part of the contract under which the goods are carried by an
appropriate reference in the Bill of Lading (Wharton Poor, Charter Parties and Ocean Bills of
Lading (5th ed., p. 71). This should include the provision on arbitration even without a specific
stipulation to that effect. The entire contract must be read together and its clauses interpreted
in relation to one another and not by parts. Moreover, in cases where a Bill of Lading has been
issued by a carrier covering goods shipped aboard a vessel under a charter party, and the
charterer is also the holder of the bill of lading, "the bill of lading operates as the receipt for the
goods, and as document of title passing the property of the goods, but not as varying the
contract between the charterer and the shipowner"
The Bill of Lading becomes, therefore, only a receipt and not the contract of carriage in a
charter of the entire vessel, for the contract is the Charter Party (Shell Oil Co. vs. M/T Gilda, 790
F 2d 1209, 1212 [5th Cir. 1986] and is the law between the parties who are bound by its terms
and condition provided that these are not contrary to law, morals, good customs, public order
and public policy (Article 1306, Civil Code).
As the respondent Appellate Court found, the INSURER "cannot feign ignorance of the
arbitration clause since it was already charged with notice of the existence of the charter party
due to an appropriate reference thereof in the bill of lading and, by the exercise of ordinary
diligence, it could have easily obtained a copy thereof either from the shipper or the charterer."
The INSURER cannot avoid the binding effect of the arbitration clause. By subrogation, it
became privy to the Charter Party as fully as the SHIPPER before the latter was indemnified,
because as subrogee, it stepped into the shoes of the SHIPPER-ASSURED and is subrogated
merely to the latter's rights. It can recover only the amount that is recoverable by the assured.
And since the right of action of the SHIPPER-ASSURED is governed by the provisions of the Bill
of Lading, which includes by reference the terms of the Charter Party. Any claim of
inconvenience or additional expense on its part should not render the arbitration clause
unenforceable.
1.2.3. Cebu Salvage Corporation vs. Philippine Home Assurance Corporation. G.R. No. 150403.
January 25, 2007
May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does not
own?
Petitioner was the one which contracted with MCCII for the transport of the cargo. It had
control over what vessel it would use. All throughout its dealings with MCCII, it represented
itself as a common carrier. The fact that it did not own the vessel it decided to use to
consummate the contract of carriage did not negate its character and duties as a common
carrier. The MCCII (respondent's subrogor) could not be reasonably expected to inquire about
the ownership of the vessels which petitioner carrier offered to utilize. As a practical matter, it
is very difficult and often impossible for the general public to enforce its rights of action under a
contract of carriage if it should be required to know who the actual owner of the vessel is. In
fact, in this case, the voyage charter itself denominated petitioner as the "owner/operator" of
the vessel.
Petitioner next contends that if there was a contract of carriage, then it was between MCCII and
ALS as evidenced by the bill of lading ALS issued.
Again, we disagree.
The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had
been received for transportation. It was not signed by MCCII, as in fact it was simply signed by
the supercargo of ALS. This is consistent with the fact that MCCII did not contract directly with
ALS. While it is true that a bill of lading may serve as the contract of carriage between the
parties, it cannot prevail over the express provision of the voyage charter that MCCII and
petitioner executed:
To summarize, a contract of carriage of goods was shown to exist; the cargo was loaded on
board the vessel; loss or non-delivery of the cargo was proven; and petitioner failed to prove
that it exercised extraordinary diligence to prevent such loss or that it was due to some casualty
or force majeure. The voyage charter here being a contract of affreightment, the carrier was
answerable for the loss of the goods received for transportation.
1.3. Kinds of B/L
1.3.1. On Board vs. Received
1.3.2. Negotiable vs. Non-negotiable (Straight)
1.3.3. Clean vs. Foul/Claused
1.3.4. Through B/L
1.3.5. Custody vs. Port
1.3.6. Spent B/L
1.4. Sea-Land Services, Inc. vs. Intermediate Appellate Court. G.R. No. 75118. August 31, 1987
The main issue here is whether or not the consignee of seaborne freight is bound by
stipulations in the covering bill of lading limiting to a fixed amount the liability of the carrier for
loss or damage to the cargo where its value is not declared in the bill.
This Court has also ruled that the Carriage of Goods by Sea Act is applicable up to the final port
of destination and that the fact that transshipment was made on an interisland vessel did not
remove the contract of carriage of goods from the operation of said Act.
the provisions of the Carriage of Goods by Sea Act on package limitation [sec. 4(5) of the Act
hereinabove referred to] are as much a part of a bill of lading as though actually placed therein
by agreement of the parties.
Private respondent, by making claim for loss on the basis of the bill of lading, to all intents and
purposes accepted said bill. Having done so, he —becomes bound by all stipulations contained
therein whether on the front or the back thereof. Respondent cannot elude its provisions
simply because they prejudice him and take advantage of those that are beneficial. Secondly,
the fact that respondent shipped his goods on board the ship of petitioner and paid the
corresponding freight thereon shows that he impliedly accepted the bill of lading which was
issued in connection with the shipment in question, and so it may be said that the same is
finding upon him as if it had been actually signed by him or by any other person in his behalf.
The stipulation in the questioned bill of lading limiting Sea-Land's liability for loss of or damage
to the shipment covered by said bill to US$500.00 per package is held valid and binding on
private respondent.
CHAPTER IV - CARRIAGE OF GOODS BY SEA ACT (COGSA)
1. Scope of Application
2. Parties
3. Duties of Carrier
4. Ang vs. American Steamship. G.R. Nos. L-25047 and L-25050. March 18, 1967
The two shipments were delivered to the notify parties, Davao Merchandising Corporation and
Herminio Teves, despite the latter's inability to present the proper bills of lading and without
the knowledge and consent of plaintiff-appellant Domingo Ang to whom were endorsed the
bills of lading. There is, therefore, misdelivery, not nondelivery in this case. And the recipients
of said goods did not file any complaint with defendant regarding any damage to the same. No
loss nor damage is therefore involved in these cases. Thus the prescriptive period is that found
in the Civil Code, namely, either ten years for breach of a written contract or four years for
quasi-delict (Arts. 1144[1] and 1146). Since the complaints in these appealed cases were filed
two years and five months (as to Davao Merchandising Corp. shipment) and 2 years and 8
months (as to Teves shipment), from the arrival of the two shipments, it is clear that the causes
of action have not yet prescribed.
The one year prescriptive period under Section 3(6), paragraph 4 of Carriage of Goods by Sea
Act does not apply to cases of misdelivery or conversion.
5. American Insurance Company vs. Compania Maritima. G.R. No.L-24515. November 18,
1967
Under Sec. 3(6) of the Carriage of Goods by Sea Act of the United States which was made
applicable to all contracts for the carriage of goods by sea to and from Philippine ports in
foreign trade by Sec. 1 of Commonwealth Act 65, the liability of the carrier for loss or damage
ceases "unless suit is brought within one year after delivery of the goods or the date when the
goods shall have been delivered," and where an amended complaint impleading such carrier
was filed beyond the prescribed period, the order dismissing it as against such carrier must be
upheld by reason of prescription.
6. Notice of Damage and Prescriptive Period to File Actions per COGSA
6.1. Patent vs Latent Damage
6.2. Insurance Company of North America v. Asian Terminals, Inc., G.R. No. 180784. Feb. 15,
2012
It is noted that the term "carriage of goods" covers the period from the time when the goods
are loaded to the time when they are discharged from the ship; thus, it can be inferred that the
period of time when the goods have been discharged from the ship and given to the custody of
the arrastre operator is not covered by the COGSA.
From the provision above, the carrier and the ship may put up the defense of prescription if the
action for damages is not brought within one year after the delivery of the goods or the date
when the goods should have been delivered. It has been held that not only the shipper, but also
the consignee or legal holder of the bill may invoke the prescriptive period. However, the
COGSA does not mention that an arrastre operator may invoke the prescriptive period of one
year; hence, it does not cover the arrastre operator.
Respondent arrastre operator's responsibility and liability for losses and damages are set forth
in Section 7.01 of the Contract for Cargo Handling Services executed between the Philippine
Ports Authority and Marina Ports Services, Inc. (now Asian Terminals, Inc.)
Based on the Contract above, the consignee has a period of thirty (30) days from the date of
delivery of the package to the consignee within which to request a certificate of loss from the
arrastre operator. From the date of the request for a certificate of loss, the arrastre operator
has a period of fifteen (15) days within which to issue a certificate of non-delivery/loss either
actually or constructively. Moreover, from the date of issuance of a certificate of

nondelivery/loss, the consignee has fifteen (15) days within which to file a formal claim
covering the loss, injury, damage or non-delivery of such goods with all accompanying
documentation against the arrastre operator.
Like in the case of New Zealand Insurance Company Ltd. v. Navarro, the verification and
ascertainment of liability by respondent ATI had been accomplished within thirty (30) days from
the date of delivery of the package to the consignee and within fifteen (15) days from the date
of issuance by the Contractor (respondent ATI) of the examination report on the request for
bad order survey. Although the formal claim was filed beyond the 15-day period from the
issuance of the examination report on the request for bad order survey, the purpose of the
time limitations for the filing of claims had already been fully satisfied by the request of the
consignee's broker for a bad order survey and by the examination report of the arrastre
operator on the result thereof, as the arrastre operator had become aware of and had verified
the facts giving rise to its liability. Hence, the arrastre operator suffered no prejudice by the lack
of strict compliance with the 15-day limitation to file the formal complaint.
6.3. Asian Terminals, Inc. vs. Philam Insurance Co., Inc., G.R. No. 181163. July 24, 2013
under the custody of the carrier. 57 The Damage Survey Report 58 of the survey conducted by
Phil. Navtech Services, Inc. from April 20-21, 1995 reveals that Case No. 03-245-42K/1 was
damaged by ATI stevedores due to overtightening of a cable sling hold during discharge from
the vessel's hatch to the pier. Since the damage to the cargo was incurred during the discharge
of the shipment and while under the supervision of the carrier, the latter is liable for the
damage caused to the cargo.
This is not to say, however, that petitioner ATI is without liability for the damaged cargo.
While it is true that an arrastre operator and a carrier may not be held solidarily liable at all
times, the facts of these cases show that apart from ATI's stevedores being directly in charge of
the physical unloading of the cargo, its foreman picked the cable sling that was used to hoist
the packages for transfer to the dock. Moreover, the fact that 218 of the 219 packages were
unloaded with the same sling unharmed is telling of the inadequate care with which ATI's
stevedore handled and discharged Case No. 03-245-42K/1.
6.4 Suspension of the Prescriptive Period
MARITIME CONTRACTS: LOAN ON BOTTOMRY AND RESPONDENTIA
(Arts. 719 –736, Code of Commerce)

1. Definitions and Concepts
1.1. Bottomry vs. Respondentia
1.2. Distinguished from Simple Loan
1.3. Consequences of Loss
1.3.1. Exceptions
CHAPTER VI – MARITIME RISKS: AVERAGES (Arts. 806 – 818, Code of Commerce)
1. Average in General
2. Classifications
2.1. Simple Average
2.1.1. Definition
2.1.2. By Whom Born
2.1.3. Examples of Simple Average
2.2. General Average
2.2.1. Definition and Requisites
2.2.2. Jettison
CHAPTER VII – MARITIME RISKS: COLLISIONS (Arts. 826 – 839, Code of Commerce)
1. Definition and Concept
1.1. Distinguished from Allision
2. Zones of Time in Collision

2.1. Error in Extremis
2.1.2. A Urrutia & Co v Baco River Plantation Co., G.R. No. 7675. March 25, 1913
In all collisions between vessels at sea there exist three divisions or zones of time:
(1) The first division covers all the time up to the moment when the risk of collision may be said
to have begun.
(2) The second division covers the time between the moment when the risk of collision begins
and the moment when it has become practically certain.
(3) The third zone covers the time between the moment when the collision has become a
practical certainty and the moment of actual contact
— Nautical rules require that, where a steamship and sailing vessel are approaching each other
from opposite directions, or on intersecting lines, the steamship, from the moment the sailing
vessel is seen, shall watch with the highest diligence her course and movements so as to be
able to adopt such timely means of precaution as will necessarily prevent the two boats from
coming in contact.
— Nautical rules also require that, where a steamship and a sailing vessel are approaching each
other from opposite directions, or on intersecting lines, the sailing vessel is required to keep her
course unless the circumstances are such as to render a departure from the rule necessary in
order to avoid immediate danger. Where a steamship and a sailing vessel are approaching each
other bow on, or on intersecting lines, the steamship must give way. In case of a collision
between such vessels the steamship is prima facie in fault.
— Fault on the part of the sailing vessel at the moment preceding a collision, that is, during the
third division of time, does not absolve the steamship which has suffered herself and a sailing
vessel to get into such dangerous proximity as to cause inevitable alarm and confusion, and a
collision results as a consequence. The steamer having incurred a far greater fault in allowing
such proximity to be brought about is chargeable with all the damage resulting from the
collision; and the act of the sailing vessel having been done in extremis, even if wrong, it is not
responsible for the result.
3. Applicable Law
4. Rules on Liability
4.1. One Vessel at Fault
4.2. Both Vessel at Fault (“Both to Blame”; Divided Damages Rule)
4.3. Party at Fault Cannot be Determined (Doctrine of Inscrutable Fault)

4.4. Third Person at Fault
4.5. Fortuitous Event
5. Marine Protest
5.1. Form
5.2. Importance
5.3. Cases Applicable
5.4 When Made
CHAPTER VIII – MARITIME RISKS: ARRIVAL UNDER STRESS
1. Concept
2. When Illegal
3. Procedure
4. Liability of Ship owner or ship agent
CHAPTER IX - SALVAGE
● Concepts
● Subjects of Salvage
● Requisites for a Valid Salvage Claim
CIVIL AVIATION LAW

CHAPTER I – DUTIES OF AIR CARRIERS
1. Extraordinary Diligence
1.1. Yrasuegui vs. PAL, supra
1.2. PAL vs. Court of Appeals, G.R. No. L-46558, July 31, 1981
Respondent Jesus V. Samson, a regular co-pilot of the petitioner Philippine Airlines, suffered
physical injuries in the head, in a crash landing of petitioner's aircraft, allegedly due to the gross
negligence of petitioner airlines in allowing Captain Delfin Bustamante who was suffering from
a long standing tumor of the Nasopharynx and who was allowed by Civil Aeronautics
Administration to fly only as a co-pilot, to fly the plane to Daet as commanding pilot and whose
slow reaction and poor judgment resulted in the accident. Instead of providing private
respondent with expert medical assistance as demanded by him to determine the cause of his
periodic attack of dizzy spell and headache, petitioner discharged him on the ground of physical
disability. In a complaint for damages filed by private respondent, the Court of First Instance of
Albay denied petitioner's motion to dismiss claiming that the complaint is essentially a
Workmen's Compensation case not cognizable by the court and rendered a decision awarding
compensatory and moral damages, attorney's fees and costs. On appeal, The Court of Appeals
affirmed the decision of the lower court but modified the award of damages by imposing legal
rate of interest on the unearned income from the filing of the complaint.
On review by certiorari the Supreme Court held that the duty to exercise the utmost diligence
on the part of common carriers as required by Art. 1732 New Civil Code is for the safety of
passengers as well as for the members of the crew or the complement operating the carrier,
and agrees with the modification made by the Court of Appeals in ordering payment of legal
interest from the date of judicial demand.
2. Airworthiness (Sec. 3[z], Civil Aviation Authority Act)
3. Vigilance Over Goods and Baggage
4. Special Duties to Passengers
4.1. PAL vs. Lopez, G.R. No. 156654, November 20, 2008
PAL's procedural lapses notwithstanding, we had nevertheless carefully reviewed the records of
this case and found no compelling reason to depart from the uniform factual findings of the
trial court and the Court of Appeals that: (1) it was the negligence of PAL which caused the
downgrading of the seat of Lopez; and (2) the aforesaid negligence of PAL amounted to fraud or
bad faith, considering our ruling in Ortigas
4.2. Cathay Pacific Airways vs. Sps. Vasquez, G.R. No. 150843, March 14, 2003
The contract between the parties was for Cathay to transport the Vazquezes to Manila on a
Business Class accommodation in Flight CX-905. After checking-in their luggage at the Kai Tak
Airport in Hong Kong, the Vazquezes were given boarding cards indicating their seat
assignments in the Business Class Section. However, during the boarding time, when the
Vazquezes presented their boarding passes, they were informed that they had a seat change
from Business Class to First Class. It turned out that the Business Class was overbooked in that
there were more passengers than the number of seats. Thus, the seat assignments of the
Vazquezes were given to waitlisted passengers, and the Vazquezes, being members of the
Marco Polo Club, were upgraded from Business Class to First Class. We note that in all their
pleadings, the Vazquezes never denied that they were members of Cathay's Marco Polo Club.
They knew that as members of the Club, they had priority for upgrading of their seat
accommodation at no extra cost when an opportunity arises. But, just like other privileges, such
priority could be waived. The Vazquezes should have been consulted first whether they wanted
to avail themselves of the privilege or would consent to a change of seat accommodation
before their seat assignments were given to other passengers. Normally, one would appreciate
and accept an upgrading, for it would mean a better accommodation. But, whatever their
reason was and however odd it might be, the Vazquezes had every right to decline the upgrade
and insist on the Business Class accommodation they had booked for and which was designated
in their boarding passes. They clearly waived their priority or preference when they asked that
other passengers be given the upgrade. It should not have been imposed on them over their
vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage with
the Vazquezes.
4.3. Cathay Pacific Airways vs. Reyes. G.R. No. 185891. June 26, 2013
Sometime in March 1997, respondent Wilfredo Reyes (Wilfredo) made a travel reservation with
Sampaguita Travel for his family's trip to Adelaide, Australia scheduled from 12 April 1997 to 4
May 1997. Upon booking and confirmation of their flight schedule, Wilfredo paid for the airfare
and was issued four (4) Cathay Pacific round-trip airplane tickets for Manila-HongKongAdelaide-
HongKong-Manila.
On the day of their scheduled departure from Adelaide, Wilfredo and his family arrived at the
airport on time. When the airport check-in counter opened, Wilfredo was informed by a staff
from Cathay Pacific that the Reyeses did not have confirmed reservations, and only Sixta's flight
booking was confirmed. Nevertheless, they were allowed to board the flight to HongKong due
to adamant pleas from Wilfredo. When they arrived in HongKong, they were again informed of
the same problem. Unfortunately this time, the Reyeses were not allowed to board because the
flight to Manila was fully booked. Only Sixta was allowed to proceed to Manila from HongKong.
On the following day, the Reyeses were finally allowed to board the next flight bound for
Manila.
Cathay Pacific breached its contract of carriage with respondents when it disallowed them to
board the plane in Hong Kong going to Manila on the date reflected on their tickets. Thus,
Cathay Pacific opened itself to claims for compensatory, actual, moral and exemplary damages,
attorney's fees and costs of suit.
In contrast, the contractual relation between Sampaguita Travel and respondents is a contract
for services. The object of the contract is arranging and facilitating the latter's booking and
ticketing. It was even Sampaguita Travel which issued the tickets.
There was indeed failure on the part of Sampaguita Travel to exercise due diligence in
performing its obligations under the contract of services. It was established by Cathay Pacific,
through the generation of the PNRs, that Sampaguita Travel failed to input the correct ticket
number for Wilfredo's ticket. Cathay Pacific even asserted that Sampaguita Travel made two
fictitious bookings for Juanita and Michael.
5. Duty to Inspect Cargo and Baggage (R.A. 6235)
CHAPTER II – CONVENTIONS RELATING TO CIVIL AVIATION
1. Warsaw Convention, as Amended
1.1. Applicability
1.2. Transportation by Air
1.3. Liability of Air Carrier for Damages (Ex Contractu and Ex Delictu)
1.4. Limits of Liability
1.4.1. Cargo
1.4.1.1. Checked-in/Registered Baggage
1.4.1.2. Hand-carried Baggage
1.5. Passenger
1.6. Consequence of Willful Misconduct on the Limits of Liability
1.7. Action for Damages; Notice of Claim; Prescriptive Period
1.7.1. Venue of Suit
1.8. Jurisprudence on Liabilities of Airline Carriers

1.8.1. PAL vs. Court of Appeals. G.R. No. 82619. 15 September 1993
— The contract of air carriage is a peculiar one. Being imbued with public interest, the law
requires common carriers to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard for all the
circumstances. In Air France v. Carrascoso, we held that — "A contract to transport passengers
is quite different in kind and degree from any other contractual relation. And this, because of
the relation which an air carrier sustains with the public. Its business is mainly with the
travelling public. It invites people to avail of the comforts and advantages it offers. The contract
of air carriage, therefore, generates a relation attended with a public duty . . ." The position
taken by PAL in this case clearly illustrates its failure to grasp the exacting standard required by
law. Undisputably, PAL's diversion of its flight due to inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PAL's contract with its passengers. Being in the
business of air carriage and the sole one to operate in the country, PAL is deemed equipped to
deal with situations as in the case at bar. What we said in one case once again must be
stressed, i.e., the relation of carrier and passenger continues until the latter has been landed at
the port of destination and has left the carrier's premises. Hence, PAL necessarily would still
have to exercise extraordinary diligence in safeguarding the comfort, convenience and safety of
its stranded passengers until they have reached their final destination. On this score, PAL
grossly failed considering the then ongoing battle between government forces and Muslim
rebels in Cotabato City and the fact that the private respondent was a stranger to the place.
1.8.2. Singson vs. CA. G.R. No. 119995. 18 November 1997
1.8.3. Lufthansa German Airlines vs. CA. G.R. No. 836122. 04 November 1994
1.8.4. Federal Express Corporation vs. American Home Assurance Company. G.R. No. 150094.
August 18, 2004
1.8.5. Lhuillier vs. British Airways. G.R. No. 171092, March 15, 2010
1.8.6. Air France vs. Gillego, G.R. No. 165266, December 15, 2010
1.8.7. Alitalia vs. IAC. G.R. No. 71929. December 4, 1990
1.8.8. Pan American vs. IAC. G.R. No. L-70462. August 11, 1998
the contrary notwithstanding. Only recently, in Teresa Electric Power Co. v. Public Service
38
Commission, Justice Dizon succinctly restated the doctrine thus: "While it is true that operators of
public convenience and service deserve some protection from unnecessary or unlawful competition,
yet the rule is that nobody has any exclusive right to secure a franchise or a certificate of public
convenience. Above any or all considerations, the grant of franchises and certificates of public
convenience and service should be guided by public service and interest; the latter are the
primordial considerations to be taken into account." clearly then, this last error assigned cannot be
deemed meritorious. The correctness of the decision under review has not been successfully
impugned.

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TRANSPORTATION LAWS 2021 | FRANCISCO

● Governing Laws on Transportation Law

1.1. Applicable Laws

1.2. Conflicts Rule (Article 1753, Civil Code)

● Article 1732, Civil Code; Broad Concept

It makes no distinction as to the means of transporting, as long as it is by land, water or air. It

3. Contract of Carriage or Transportation

- There is a contract of transportation when a person obligates himself to transport

3.1 Parties to a Contract of Transportation

4.1. Test for Determining whether a Party is a Common Carrier

1. Two Pronged test

a. He must be engaged in the business of carrying goods for others as a public

4.2. US vs. Quinajon. (G.R. No. 8686. July 30, 1915)

4.6. Ownership of Vehicle Used as Carrier

4.6.1. Registered Owner Rule

4.6.1.a. Liability of the Registered Owner

5. Distinguished from Private Carrier

5.3. Limited Clientele

5.4. Conversion of a Common Carrier into a Private Carrier

Contract of Carriage Distinguished From Other Transactions

A contract of towage is not a contract for the carriage of goods.

1. To assemble and consolidate or to provide for assembling and consolidating, shipments,

Bill of Lading - a written acknowledgment of the receipt of goods and an agreement to

A travel agency is not a common carrier.

7. Government Regulation of Common Carrier’s Business; Public Policies

7.3. Kabit System

Sec. 20 Public Service Act

The defect of inexistence of a contract is permanent and cannot be cured by ratification or by

7.4. Boundary System

8. Obligations of Common Carrier, in General

8.1.1. Carriage of Goods

8.1.2. Carriage of Passengers

8.2. Effects of Delay

b. Carrier remains duty bound to exercise extraordinary diligence

8.2.1. Excusable Delay

8.2.2. Inexcusable Delay

8.3. Duty to Exercise Extraordinary Diligence

● VIGILANCE OVER GOODS

1. Extraordinary Diligence Required of Common Carriers (Article 1733, Civil Code)

1.1. Definition and Reason for the Policy

3. Business is impressed with a special public duty

4. Possession of the goods

5. Preciousness of human life

1.1.1.2. Doctrine of Non-delegable Duty as Applied to Common Carriers

1.2. Carriage by Sea

1.2.1. Seaworthiness; Meaning

1.2.1.2. Loadstar Shipping Co., Inc. vs. Court of Appeals

1.2.1.3. Statutes in Pari Materia

1.2.1.3.a. Sec. 3[1] [a] and [b], COGSA;

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

1.2.1.3.b. Secs. 116 and 119, Insurance Code

1.3. Carriage by Land

1.3.1. Roadworthiness and Railworthiness

1.3.2. Motor Vehicle Must be in Good Condition

1.3.3. Warranty Against Defective Vehicle Parts

1.3.4. Compliance with Traffic Regulations (Doctrine of Negligence Per Se)

1.3.5. Prohibition Against Improper Deviation (Art.359, Code of Commerce)

1.4. Carriage by Air

1.4.3. Airworthiness (Sec. 3[z], Civil Aviation Authority Act)

1.4.4. Duty to Inspect Cargo and Baggage (Sec. 8, R.A. 6235)

2.1. Presumption of Negligence (Regional Container Lines of Singapore vs. Netherlands

by it by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted

1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;