Transportation Law by Atty.

Rodiel

Common carriers
1. Concept of common carriers
1. Contracts of adhesion
1. A contract of adhesion is a contract where only one of the parties
prepares the terms of the agreement, and the other merely affixes his
signature on the contract.
2. As a rule, it is valid.
3. However, when the weaker party is completely deprived of the
opportunity to bargain in equal terms, the contract is void for being
contrary to public policy. (Sweet Lines v Teves, 1978)
2. What are common carriers?
1. Common carriers are:
1. Persons, corporations, firms, or associations
2. Engaged in the business of carrying or transporting passengers or
good or both,
3. By land, water, or air,
4. For compensation,
5. Offering their services to the public. (Art. 1732, NCC)
3. Art. 1732 does not distinguish, so we must not distinguish
1. Art. 1732 does not distinguish whether:
1. Principal business activity or merely ancillary activity;
2. Regular/scheduled basis, or merely occasional/episodic/
unscheduled basis.
3. General public or narrow segment/limited clientele. (Cruz v Sun
Holidays, 2010)
4. Fixed and publicly known routes or one that does not. (Asia
Lighterage and Shipping v CA, 2003)
2. Brokerage - A brokerage can be considered as a common carrier if it
undertakes the carriage of goods as an ancillary activity. (Torres-
Madrid Brokerage v FEB Mitsui, 2016)
3. Arraste operator - An arrest operator is not a common carrier because
it is a mere custodian of goods discharged from a vessel. However,
the relationship between the consignee and the arrester operator is
similar to common carrier-shipper OR warehouseman-depositor.
(Asian Terminals v Daehan Fire and Marine Insurance, 2010)
4. Stevedore - A stevedore is not a common carrier because it does not
transport goods or passengers. It is merely engaged in the loading
and stowing of cargoes. (Mindanao Terminal and Brokerage Service v
Phoenix Assurance, 2009)
 5. Travel agency - A travel agency is not a common carrier because it
does not undertake to transport passengers from one place to
another. Its covenant is simply to make travel arrangements on behalf
of customers. (Crisostomo v CA, 2003)
4. Private carriers
1. What is the test to determine if the carrier is common or private?
1. Whether carriage is held out to the general public as the carrier’s
business or occupation, and not merely a single transaction/
casual occupation.
2. In private carriage, the provisions on ordinary contracts of the govern
the contract. Further, the diligence required is only the diligence of a
good father of the family. (Spouses Pereña v Spouses Zarate, 2012)
2. Classification of transport network vehicle services and transport
network companies
1. Transport network companies (TNC)
1. It refers to a person or entity that provides pre-arranged
transportation services for compensation using internet-based
technology application or digital platform technology to connect
passengers with drivers using their personal vehicles. (Sec. 1, DO
2018-012)
2. Transport network vehicle services (TNVS)
1. It refers to a TNC-accredited private vehicle owner, which is a
common carrier, using the internet-based technology application or
digital platform technology transporting passengers from one point to
another for compensation.
2. The TNVS cannot operate as a common carrier outside of or
independent from the use of the internet-based technology of the
TNC or TNCs to which they are accredited.(Sec. 2, DO 2018-012)
3. Both the operator (TNC) and the driver/owner (TNVS) shall be treated as
public transport providers, so they are considered in the operation of a
public utility. (Sec. 3, DO 2018-012) The TNCs and the TNVS are subject
to the full regulation and supervision by the LTFRB.
1. Hence, both are common carriers.
2. Further, since both are public utilities, foreign equity should be limited
to 40%.
4. Application of TNC/TNVS to the concept of common carriers
(Angkas):
1. Are Angkas-accredited riders common carriers? YES.
1. In this relation, DBDOYC further claims that another distinguishing
factor of its business is that “the drivers may refuse at any time
any legitimate demand for service by simply not going online or
not logging in to the online platform.” However, the law avoids any
distinctions between a common carrier that offers its services on
 a regular or scheduled basis and on an occasional, episodic, or
unscheduled basis. As such, when they put themselves online,
their services are bound for indiscriminate public consumption, so
they are deemed as common carriers.
2. Further, DBDOYC posits that its accredited bikers are private
carriers as they do not hold out their services generally to the
public because they cannot just be hailed on the street as they
only contract via the Angkas online front. However, the law avoids
any distinctions between a common carrier that offers its services
to the general public or to a narrow segment of the population. As
such, the fact that the Angkas drivers are not physically hailed on
the street does not automatically render Angkas-accredited
drivers as private carriers.
3. Lastly, based on the way the app works, it appears that there is
really no contractual discretion between the Angkas bikers and
would-be passengers because the app automatically pairs them.
Hence, it is not a purely private arrangement between the biker
and his passenger. (LTFRB v Judge Valenzuela, 2019)
3. Diligence required of common carriers
1. Common carriers are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported
by them. (Art. 1733)
4. Liabilities of common carriers
1. Goods
1. Common carriers are PRESUMED to be at fault/negligence in case
goods are lost/destroyed/deteriorated. (Art. 1735)
2. Exceptions:
1. Art. 1734 (CWOCC)
2. Unless they prove that they observed extraordinary diligence.
(Art. 1735)
2. Passengers
1. Common carriers are PRESUMED to have been at fault/negligent in
case of death or injuries of passengers,
2. Exception:
1. Unless they prove that they observed extraordinary diligence.
(Art. 1756)

Vigilance over goods

1. Exempting cause
1. Requirement of absence of negligence
2. Absence of delay
3. Due diligence to prevent or lessen loss
1. (CWOCC) is an exclusive list.
 2. Fire is not within the ambit of natural disaster or calamity. This must
be so as it arises almost invariably from some act of man or by human
means. (Eastern Shipping Lines v IAC, 1987)
3. Likewise, mechanical defects of the conveyance does not normally fall
within the ambit of fortuitous event. (Necesito v Paras, 1958)
4. For all other cases, such as theft or robbery, a common carrier is
presumed at fault unless it can prove that it observed extraordinary
diligence. (Torres-Madrid Brokerage v FEB Mitsui, 2016) Theft/robbery
are not included in “act of a public enemy in war.”
1. To be exempted due to theft/robbery, the common carrier must
show that it exercised extraordinary diligence in the care and
custody of goods.
2. Further, it can also be exempted from liability if a) there is a
stipulation limiting the liability of the carrier, and b) the thieves/
robber acted with grave or irresistible threat/violence/force. (Art.
Art. 1745)
5. If the fact of improper packing is known to the carrier or its servants
or apparent upon ordinary observation, but it accepts the goods
notwithstanding such condition, it is not relieved of liability for loss or
injury resulting therefrom (Southern Lines v. CA, 1962)
6. To be exempted from liability, the intervention of the competent public
authority must be of a character that would render impossible the
fulfillment by the carrier of the obligation. (Ganzon v CA, 1988)
Exempting
causes
Flood/storm/ In order to be Further, the If the common
lightning/ exempted, the common carrier carrier
earthquake/ natural disaster must exercise due NEGLIGENTLY
natural disaster/ must be the diligence to incurs in DELAY,
calamity PROXIMATE and prevent or a natural disaster
ONLY cause of minimize the loss shall NOT free the
the cause of loss. BEFORE, carrier from
DURING, AND responsibility.
AFTER the
occurrence of the
natural disaster.
Act or omission of The same as The same as N/a
a public enemy in above above
war (international
or domestic)
Act or omission of If the owner/
the owner or shipper MERELY
shipper of the CONTRIBUTED to
goods the loss of the
goods, the
PROXIMATE
Act or omission of The same as The same as N/a
a public enemy in above above
war (international
or domestic)
Act or omission of If the owner/
the owner or shipper MERELY
shipper of the CONTRIBUTED to
goods the loss of the
goods, the
PROXIMATE
CAUSE thereof is
the negligence of
the common
carrier, the latter
shall be liable, but
equitably reduced.
Character of the Even if the loss
goods/Defect in should be caused
the packaging or by the character of
in the containers the goods/packing/
the containers, the
common carrier
must exercise due
diligence to
FORESTALL or
LESSEN the loss.
Act or omission of If through the
a competent order of public
public authority authority, goods
(Art. 1734) are seized or
destroyed, the
common carrier is
NOT responsible,
provided the
public authority
had the POWER
TO ISSUE THE
ORDER.
In cases other
than Art. 1734, the
common carrier
shall be
PRESUMED at
fault/negligent for
the loss/injury of
the goods,
UNLESS it proves
that it exercised
EXTRAORDINARY
DILIGENCE in the
care and custody
 public authority
had the POWER
TO ISSUE THE
ORDER.
In cases other
than Art. 1734, the
common carrier
shall be
PRESUMED at
fault/negligent for
the loss/injury of
the goods,
UNLESS it proves
that it exercised
EXTRAORDINARY
DILIGENCE in the
care and custody
of goods. (Art.
1735)
2. Contributory negligence
1. Already stated above.
3. Duration of liability
1. Delivery of goods to common carrier
2. Actual or constructive delivery
3. Temporary unloading or storage
1. Despite the subcontract, TMBI remained responsible for the cargo.
Under Article 1736, a common carrier’s extraordinary responsibility
over the shipper’s goods lasts from the time these goods are
unconditionally placed in the possession of, and received by, the
carrier for transportation, until they are delivered, actually or
constructively, by the carrier to the consignee.
2. However, the common carrier and the subcontractor cannot be held
solidarily liable under Art. 2194 for quasi-delict, because the
obligation of the common carrier arises from contract, while the
obligation of the subcontractor arises from quasi-delict. (Torres-
Madrid Brokerage v FEB Mitsui, 2016)
Duration of “Without Temporary Why will it not
liability, in prejudice to Art. unloading or remain if right to
general 1738”; Stored in storage stoppage in
warehouse of transitu was
carrier at the exercised?
place of
destination
The extraordinary The extraordinary The common Such right can be
responsibility lasts liability carrier’s duty exercised by 1)
FROM the time the CONTINUES to be REMAINS in full obtaining the
goods are operative even force and effect actual possession
UNCONDITIONAL during the time even when they of the goods, or 2)
LY PLACED at the the goods are are by giving notice of
possession/ STORED IN THE TEMPORARILY his claim to the
 warehouse of transitu was
carrier at the exercised?
place of
destination
The extraordinary The extraordinary The common Such right can be
responsibility lasts liability carrier’s duty exercised by 1)
FROM the time the CONTINUES to be REMAINS in full obtaining the
goods are operative even force and effect actual possession
UNCONDITIONAL during the time even when they of the goods, or 2)
LY PLACED at the the goods are are by giving notice of
possession/ STORED IN THE TEMPORARILY his claim to the
received by the WAREHOUSE OF UNLOADED OR carrier. Hence, if
common carrier, THE CARRIER AT STORED IN the unpaid seller
UNTIL the same THE PLACE OF TRANSIT, unless obtained ACTUAL
are DELIVERED, DESTINATION, the owner has POSSESSION of
actually or until the made use of the the goods, the
constructively, by consignee has right of stoppage common carrier’s
the carrier to the been advised of in transitu. (Art. duty ceases.
consignee/right to the arrival of the 1737)
receive, without goods, and had
prejudice to Art. reasonable
1738. (Art. 1736) opportunity to
remove or dispose
them. (Art. 1738)
4. Stipulation for limitation of liability
1. Void stipulations
2. Limitation of liability to fixed amount
3. Limitation of liability in absence of declaration of greater value
1. Discussed below.
4. Liability for baggage of passengers (checked-in baggage)
1. The provisions of articles 1733 to 1753 shall apply to the passenger's
baggage which is not in his personal custody or in that of his
employee. (Art. 1754)
1. Art. 1733 to 1753 usually apply to “cargos.”
2. However, they also apply to checked-in baggage.
5. Baggage in possession of passengers (hand-carried baggage)
1. As to other baggage, the rules in articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be applicable.
(Art. 1754)
2. By analogy:
1. The common carriers are responsible as depositaries, provided
that:
1. Notice was given to them, or to their employees, of the
effects brought by the passengers; and
2. The passengers take the precautions which the common
carrier advised relative to the care and vigilance of their
baggage. (Art. 1998)
 2. In case of loss or injury, the carrier is LIABLE if the loss or injury is
caused by:
1. His servants;
2. His employees;
3. Strangers (Art. 2000); or
4. A thief or robber done WITHOUT the use of arms or
irresistible force (Art. 2001)
3. The carrier is NOT LIABLE if loss or injury is caused by:
1. Force majeure (Art. 2000);
2. Theft or robbery WITH the use of arms or irresistible force
(Art. 2001);
3. The acts of the passenger, his family, servants, or visitors;
4. The character of the baggage (Art. 2002).
4. The following provisions also figure in determining the liability of
the common carrier:
1. The fact that passengers are constrained to rely on the
vigilance of the common carrier shall be considered in
determining the degree of care required of him (Art 2000);
2. The common carrier CANNOT FREE himself from
responsibility by POSTING NOTICES to the effect that he is
not liable for the articles brought by the passenger;
3. Any STIPULATION whereby the responsibility of the common
carrier as set forth in Arts. 1998-2001 is suppressed or
DIMINISHED shall be VOID. (Art. 2003)
1. Hence, for hand-carried baggage, there can be no
limitation of liability. They are allowed only for “cargoes”
and “checked-in baggage.”
Valid stipulation Void stipulation
Stipulation limiting the liability of the The following are considered
carrier for the loss of the goods to a unreasonable, unjust, or contrary to
DEGREE LESS THAN EXTRAORDINARY public policy:
DILIGENCE shall be VALID, provided it 1. Risk of the owner/shipper
be: 2. Not liable for any loss
1. IN WRITING AND SIGNED by the 3. Not observe any diligence
shipper or owner 4. Less than good father of the family
2. Supported by a valuable 5. Not responsible for act of
consideration OTHER than the employees
SERVICE RENDERED by the common 6. Not responsible for the acts of
carrier thieves/robbers, who do not act with
3. REASONABLE, JUST, NOT grave or irresistible threat/violence/
CONTRARY TO PUBLIC POLICY. (Art. force
1744) 7. Not responsible for loss on account
of defective condition of the car/
vehicle/ship/airship/equipment. (Art.
1745)
An agreement limiting the common An agreement LIMITING the common
 Valid stipulation
Stipulation limiting the liability of the
carrier for the loss of the goods to a
DEGREE LESS THAN EXTRAORDINARY
DILIGENCE shall be VALID, provided it
be:
1. IN WRITING AND SIGNED by the
shipper or owner
2. Supported by a valuable
consideration OTHER than the
SERVICE RENDERED by the common
carrier
3. REASONABLE, JUST, NOT
CONTRARY TO PUBLIC POLICY. (Art.
1744)
An agreement limiting the common
carrier's liability for DELAY on account
of STRIKERS or RIOTS are valid. (Art.
1748)
A stipulation that the common carrier's
liability is LIMITED to the VALUE OF
THE GOODS appearing in the BILL OF
LADING, unless the shipper or owner
declares a GREATER VALUE, is
binding. (Art. 1749)
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. (Art. 1750)
Correlate to contract of adhesion.
Safety of passengers
Void stipulation
The following are considered
unreasonable, unjust, or contrary to
public policy:
1. Risk of the owner/shipper
2. Not liable for any loss
3. Not observe any diligence
4. Less than good father of the family
5. Not responsible for act of
employees
6. Not responsible for the acts of
thieves/robbers, who do not act with
grave or irresistible threat/violence/
force
7. Not responsible for loss on account
of defective condition of the car/
vehicle/ship/airship/equipment. (Art.
1745)
An agreement LIMITING the common
carrier's liability may be ANNULLED by
the shipper or owner if the common
carrier REFUSED TO CARRY the goods
unless the FORMER AGREED to such
stipulation. (Art. 1746) Relate to Art.
1745.
If the common carrier, WITHOUT
JUST CAUSE, 1) DELAYS the
transportation of the goods or 2)
CHANGES the stipulated or usual
ROUTE, the contract LIMITING the
common carrier's liability CANNOT be
availed of in case of the loss,
destruction, or deterioration of the
goods. (Art. 1747)
1. Void stipulations
1. Discussed below.
2. Duration of liability
1. Waiting for carrier or boarding of carrier
1. It includes the waiting time for the carrier
1. Train - The carrier is bound to exercise utmost diligence with
respect to passengers the moment the person who purchases the
ticket or token from the carrier presents himself at the proper
place and in a proper manner to be transported. (LRTA v Navidad,
2003)
2. Train - Such duty obligates the common carrier not only during
the course of the trip, but for so long as the passengers are within
the premises and where they ought to be in pursuance to the
contract of carriage. (LRTA v Navidad, 2003)
3. Airplane - Such person must have a bona fide intention to use the
facilities of the carrier, possess sufficient fare with which to pay
for his passage, and present himself to the carrier for
transportation in the place and manner provided. When an airline
issues a ticket to a passenger, confirmed for a particular flight for
a certain date, a contract of carriage arises. The passenger then
has every right to expect that he be transported on that flight and
on that date. (Singapore Airlines Limited v Fernandez, 2003)
2. It includes the time of boarding the carrier
1. Bus/Jeepney - Further, by stepping and standing on the platform
of the bus, the victim is already considered a passenger and is
entitled to all the rights and protection pertaining to such a
contractual relation. Hence, it has been held that the duty which
the carrier of passengers owes to its patrons extends to persons
boarding the cars as well as to those alighting therefrom. (Dangwa
Transportation Co. v CA, 1991)
2. Arrival at destination
1. It has been recognized as a rule that the relation of the carrier and the
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.
2. What is reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances (such as the kind of common
carrier, the nature of its business, the customs of the place, and so
forth).
1. Thus, a person who, after alighting from a train walks along the
station platform is still considered a passenger. (La Mallorca v CA,
1966)
 2. Also, the following persons are still considered passengers: a) the
father who returned to the bus to get one of his baggages which
was not unloaded when they aligned from the bus; and b) his child
followed the father. However, although the father was still on the
running board of the bus, the bus started to run and the child was
ran over by it. The presence of the passengers near the bus was
not unreasonable and they must be still considered as passengers
of the carrier. (La Mallorca v CA, 1966)
3. Lastly, the very nature of petitioner’s business as a shipper, the
passengers of vessels are allotted a longer period of time to
disembark from the ship than other common carriers such as a
passenger bus. For vessels, it is a common shipping procedure
that a minimum time of 1 hour is allowed for passengers to
disembark and retrieve their baggages. (Aboitiz Shipping v CA,
1989)
3. Liability of the carrier
1. Unlike vigilance over goods, it is not enough that the accident was caused
by force majeure, the common carrier must still prove that it was not
negligent in causing the injuries resulting from such accident. (Bachelor
Express v CA, 1990)
2. The CONTRIBUTORY NEGLIGENCE of the passenger does NOT bar the
recovery of damages for his death/injuries, if the PROXIMATE CAUSE is
the negligence of the common carrier, but the damages shall be equitably
reduced. (Art. 1763)
4. Liability for acts of others
1. Employees
2. Other passengers and strangers
1. Discussed below.
5. Liability for delay in commencement of voyage
1. A “delayed voyage” refers to a voyage involving:
1. A late departure of the ship from its port of origin; or
2. A late arrival of the ship to its port of destination.
2. In case of delayed voyages, passengers shall have the following rights:
1. Right to information
2. Right to refund or revalidation
1. Should the delay be for more than 3 hours, to offer the option to
request a refund of the ticker price or for the revalidation of the
ticket.
3. Right to amenities
1. Should the delay require a waiting time of more than 8 hours but
not exceeding 24 hours, to provide free accommodation and
transportation to and from the port and the place of
accommodation.(Maritime Industry Authority Circular No.
 1.

2018-27)
4. Right to compensation
5. Right to remain on board
6. Right to return
7. Right to damages
1. If the delay were due exclusively to thecaptain or agent, the
passengers may furthermore demand indemnity for losses and
damages (Art. 698, COC).
6. Liability for defects in equipment and facilities
1. While a carrier is not an insurer of the safety of the passengers, it should
nevertheless be held to answer for the flaws of its equipment and
mechanical defects, if such flaws were at all discoverable.
2. The manufacturer of the defective appliance is considered in law, as the
agent of the carrier, and the good repute of the manufacturer will NOT
relieve the carrier from liability.
1. Why? The passenger has no privity with the manufacturer of the
defective equipment. Hence, he has no remedy against him, while the
carrier usually has (Necesito vs. Paras, 1958)
7. Extent of liability for damages
1. Damages, in cases comprised in this Section (Common Carriers), shall be
awarded in accordance with the Title on Damages.
2. Art. 2206 shall also apply to the DEATH of a PASSENGER caused b the
breach of contract by the common carrier. (Art. 1764)
1. Actual damages
1. Under Art. 2201, the liability for damages include:
1. In case the common carrier acted in good faith
1. The natural and probable consequence of the breach
2. Those which the parties have foreseen/reasonably
foreseen at the time the obligation was constituted
2. In case the common carrier acted in bad faith
1. All damages which may be reasonably attributed to the
non-performance of obligation
2. Under Art. 2206, as related to “death of passenger,” actual
damages shall include:
1. Loss of earning capacity, unless the deceased had no earning
capacity at the time of death; and
2. Support, if the deceased was obliged to give support to a
person who is not an heir
2. Moral damages
1. Under Art. 2206, as related to “death of passenger,” the spouse/
descendants/ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the
deceased.
 2. Further, moral damages are recoverable in breach of contract of
carriage when it is proved that the carrier was guilty of fraud or
bad faith, even if death does not result. (China Airlines v IAC,
1989)
1. Bad faith is present where there was inattentiveness and
rudeness on the part of the airport personnel. (Singapore
Airlines Limited v Fernandez, 2003)
2. Willful and deliberate overbooking on the part of the airline
carrier constitutes bad faith. (United Airlines v CA, 2001)
3. Exemplary damages
1. In a contract of carriage, exemplary damages may be awarded if
the common carrier acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner. (Art. 2232, NCC)
Valid stipulations Void stipulations
When a passenger is carried The responsibility for the safety of
GRATUITOUSLY, a stipulation passengers CANNOT be dispensed/
LIMITING the liability for negligence is lessened by a) stipulation, b) posting
VALID, but NOT for a) WILLFUL ACTS of notices, c) statements on tickets,
or b) GROSS NEGLIGENCE. (Art. or d) otherwise. (Art. 1757)
1758)
Reduction of fare does NOT justify
any limitation of the common carrier’s
liability. (Art. 1758)
Liability for acts of others
Employees Common carriers are liable for the
injuries of passengers through the
NEGLIGENCE/WILLFUL ACTS of the
former’s EMPLOYEES, although the
employees may have acted BEYOND
the scope of their authority or IN
VIOLATION OF THE ORDERS of the
common carriers.
The liability does NOT cease upon
proof that they exercised the diligence
of good father of a family in the 1)
selection or 2) supervision of
employees. (Art. 1759)
Other passengers and strangers Common carriers are responsible for
injuries suffered by a passenger on
account of the NEGLIGENCE/WILLFUL
ACTS of OTHER PASSENGERS or
STRANGERS, if the common carrier,
through the exercise of the diligence of
a good father of a family, could have
PREVENTED or STOPPED the act or
omission. (Art. 1763)

Other passengers and strangers
proof that they exercised the diligence
of good father of a family in the 1)
selection or 2) supervision of
employees. (Art. 1759)
Common carriers are responsible for
injuries suffered by a passenger on
account of the NEGLIGENCE/WILLFUL
ACTS of OTHER PASSENGERS or
STRANGERS, if the common carrier,
through the exercise of the diligence of
a good father of a family, could have
PREVENTED or STOPPED the act or
omission. (Art. 1763)
However, the passenger must observe
the diligence of a good father of a
family to AVOID INJURY TO HIMSELF.
(Art. 1761)

Bill of lading
1. Three-fold character
1. Receipt for the goods shipped.
2. Evidence of the terms of the Contract of carriage
3. Document of title to the goods specified in the Bill of Lading. (Keng Hua
Paper Products v CA, 1998)
1. However, a bill of lading is not indispensable for the creation of a
contract of carriage. (Compania Maritima v Insurance Co., 1964)
2. Delivery of goods
1. Period for delivery
1. Should a period of delivery be stipulated in the bill of lading, delivery
must be made within the period fixed therein. (Art. 370, CC)
2. Should no period within which goods are to be delivered be previously
fixed, the carrier shall be under the obligation to forward them in the
FIRST SHIPMENT of the SAME OR SIMILAR MERCHANDISE which he
may make to the point of delivery; and should he not do so, the
damages occasioned by the delay shall be suffered by him. (Sec. 358,
CC)
2. Delivery without surrender of bill of lading
1. If surrender of the original bill of lading is not possible,
acknowledgment of the delivery by SIGNING THE DELIVERY RECEIPT
suffices for a common carrier to be discharged of its contractual
obligation. (National Trucking and Forwarding Corp v Lorenzo
Shipping Corp, 2005)
1. This receipt produces the same effects as the return of the bill of
lading. (Art. 353, CC)
3. Refusal of consignee to take delivery
1. The consignee may refuse to take delivery in the following cases:
1. If only part of the goods transported should be delivered, when
 1.
he proves that he cannot make use thereof without the others
(Art. 363, CC);
2. In case part of the goods is in good condition and separation is
possible, the consignee may refuse to receive only the damaged
goods (Art. 365, CC);
3. When the goods are rendered useless for purposes of sale or
consumption in the use for which they are properly destined, in
which case the consignee may demand payment of the goods at
current market prices (Art. 365, CC);
4. Where the delay is through the fault of the carrier. (Art. 371, CC)
3. Period for filing claims (with the carrier)
1. For domestic shipping of GOODS (overland/coastwise), the Code of
Commerce applies. It establishes a condition precedent:
1. A claim, on account of damage found, must be made against the
carrier:
1. Within 24 hours - if the indication of damage CANNOT be
ascertained from the EXTERIOR of the package
2. At the time of receipt (immediately) - if the indication of damage
CAN be so ascertained. (Art. 366, CC)
2. The 24-hour claim requirement is a condition precedent to the accrual
of right of action against the carrier. (UCPB v Aboitiz Shipping, 2009)
1. In case of failure to file such claim, no claim shall be admitted
against the carrier. (Art. 366, CC)
2. For international shipping of GOODS, the Carriage of Goods at Sea
applies.
1. It does not require the filing of claim with the common carrier.
1. “A failure to file the notice of claim within 3 days will NOT bar the
recovery, if a suit is filed within 1 year from delivery.” (Wallem
Shipping v SR Farms, 2010)
2. It only requires the filing of action with the court.
3. For carriage of PASSENGERS, whether domestic or international, the
Civil Code applies.
1. It does not require the filing of claim with the common carrier.
2. It only requires the filing of action with the court.
4. Period for filing actions (with the court)
1. General Rule:
1. 10 years - from the time the right of action accrues, if the contract of
carriage is in writing
2. 6 years - from the time the right of action accrues, if the contract of
carriage is oral.
1. This applies to domestic shipping of GOODS, and carriage of
PASSENGERS.
2. Exception:
 1. COGSA - A suit must be brought within 1 year after delivery of the
goods or the date it should have been delivered. Otherwise, the
carrier is discharged from liability.
1. This applies to international shipping of GOODS.
3. Exception to the exception:
1. Jurisprudence recognized the validity of an agreement EXTENDING
THE 1-YEAR PERIOD in COGSA. (Cua v Wallem Philippines Shipping,
2012)
5. Effects of stipulations
1. No liability - exempting the carrier from all liability. (VOID)
2. Limited liability - unqualified limitation of the liability to an agreed
amount. (VOID)
3. Qualified liability - an agreement limiting the liability of the carrier to the
value of the goods appearing in the bill of lading, unless the shipper
declares a greater value, is binding. (VALID)

Maritime commerce
1. Charter parties
1. Bareboat/demise charter
2. Time charter
3. Voyage/trip character
Bareboat/demise Time charter Voyage/trip
charter charter
Nature The shipowner The shipowner Same.
TURNS OVER the RETAINS the
POSSESSION POSSESSION
AND CONTROL of AND CONTROL of
the vessel to the the vessel.
charterer.
The charterer The charterer
merely acquires the merely acquires the
right to use the right to use the
vessel during the vessel for ONE OR
TERM of the MORE PORTS.
charter.
Effect on liability The charterer is The shipowner is Same.
against third deemed the STILL considered
persons OWNER PRO HAC as the owner of
VICE of the vessel, the vessel, and he
and he ASSUMES RETAINS the
all the rights and rights and
responsibilities responsibilities
against third
against third
persons.
persons.
 right to use the right to use the
vessel during the vessel for ONE OR
TERM of the MORE PORTS.
charter.
Effect on liability The charterer is The shipowner is Same.
against third deemed the STILL considered
persons OWNER PRO HAC as the owner of
VICE of the vessel, the vessel, and he
and he ASSUMES RETAINS the
all the rights and rights and
responsibilities responsibilities
against third
against third
persons.
persons.
2. Liability of shipowners and shipping agents
1. Liability for acts of captain
1. General Rule:
1. The 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. (Art. 587, CC)
2. Exception: Limited liability rule (Hypothecary nature)
1. The rule provides that the the liability of the ship owner/agent is
LIMITED to the value of the vessel/equipment/freight.
2. Hence, he may exempt himself from liability by ABANDONING the
vessel with all her equipments and the freight he may have earned
during the voyage. (Art. 587, CC)
3. Further, all rights of the crew to demand any wages whatsoever
shall be extinguished. (Art. 643, CC)
3. Exceptions to the exception: (FIW)
1. Fault of shipowner
2. When the vessel is Insured
3. Workmen’s compensation claims. (Monarch Insurance v CA,
2000)
1. The vessel of AAA sank along with its passengers and crew.
Later, the wife of a crew member filed a claim for death
benefits. Can AAA Shipping deny the claim because it
abandoned the vessel/equipment/freight?
1. No, because the limited liability rule does not apply in
case of workmen’s compensation claims.
3. Accidents and damages in maritime commerce
1. General average
1. Jason clause
1. Jason clause is a provision in the contract of carriage that
requires the cargo owners to contribute in the general average,
though it may have been due to the fault of the shipowner/
captain.
2. Simple average
General average Simple average
Meaning This means ALL the This means ALL
DAMAGES OR DAMAGES OR
EXPENSES which are EXPENSES caused to
 General average Simple average
Meaning This means ALL the This means ALL
DAMAGES OR DAMAGES OR
EXPENSES which are EXPENSES caused to
deliberately caused to the vessel/cargo/both,
SAVE THE VESSEL/ which have NOT INURED
CARGO/BOTH, from a TO THE COMMON
real and known risk. (Art. BENEFIT OF ALL
811, CC) PERSONS INTERESTED
therein. (Art. 809)
Obligation to contribute Hence, ALL who have an The OWNER of the
INTEREST shall goods which gave rise to
CONTRIBUTE to the the expense or suffered
general average. (Art. the damage shall BEAR
812) the simple or particular
averages. (Art. 810, CC)

However, if
notwithstanding the
jettison, the VESSEL
should be LOST running
said risk, NO
CONTRIBUTION shall be
proper. Hence, the
owners of the goods
SAVED shall NOT be
liable to indemnify those
jettisoned/lost/damaged.
(Art. 860, CC)
If, after the VESSEL
having been SAVED from
the risk, she should be
LOST through ANOTHER
ACCIDENT, the goods
saved from the first risk
shall continue to be
LIABLE FOR
CONTRIBUTION by
reason of the general
average. (Art. 861, CC)
3. Collisions and allusions
1. Collision is the impact of two vessels both of which are moving.
2. Allision is an impact between a moving vessel and a stationary vessel.
2.
The rules are the same for both instances.
3. Possible damages that may arise from the same are: 1) damage to
each vessel; 2) damage to cargo; and 3) injury or death of passenger.
4. Pertinent rules on collision:
1. One vessel at fault: the owner of the vessel at fault shall
indemnify the losses and damages suffered, after an expert
appraisal. (Art. 826, CC)
2. Both vessels at fault: each one shall be liable for his own
damages, and both shall be jointly responsible for the losses and
damages suffered by their cargoes. (Art. 827, CC)
1. The doctrine of “last clear chance" does not apply to maritime
collisions. This doctrine applies only to suits between two
owners of land vehicles.
3. When it cannot be determined which vessel is at fault: The
provisions of the previous article are applicable. (Art. 828, CC)
1. This is called doctrine of “inscrutable fault.”
4. Cause is force majeure: each vessel and her cargo shall be liable
for their own damage. (Art. 830, CC)
1. To be excused based on force majeure, the Civil Code is also
applicable. 1) the natural disaster must be the proximate and
only cause of the loss; 2) the carrier exercised due diligence
to prevent or minimize the loss before, during, and after the
occurrence of the natural disaster; 3) the common carrier
must not be in delay; 4) the captain must have made a protest
before the competent authority at the first port he touched
within 24 hours.
5. Third vessel is the cause: the owner of the third vessel shall
indemnify for the losses and damages caused, the captain thereof
being civilly liable to said owner.
5. Zones in collision
1. To determine who is at fault, the zones of collision must be
examined.
2. In all collisions between vessels at sea there exist three zones of
collision:
1. The first division covers all the time up to the moment when
the risk of collision may be said to have begun. (NO RISK to
RISK)
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. (RISK to 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. (CERTAIN to ACTUAL COLLISION)
 3.

(G. Urrutia & Co. v. Baco River Plantation Co., 1913)

6. Error in Extrimis
1. Fault on the part of the innocent vessel in the third zone does not
absolve the guilty vessel that was at fault in the second zone.(G.
Urrutia & Co. v. Baco River Plantation Co., 1913)
2. Hence, whoever is negligent during the second zone is deemed as
the “vessel at fault.”
4. Salvage Law (Act 2616)
1. Who are not entitled to an award for the salvage/assistance?
1. Crew of the vessel shipwrecked
2. Without consent/Opposition of captain, proceeded to salvage
3. Failed to comply with Sec. 3
1. Sec. 3 provides that in the absence of the captain/unknown,
those salvaged shall be conveyed to BOC.
2. How will the award be divided?
1. If the vessel/cargo were assisted or saved by another vessel, the
distribution of award is as follows:
1. 1/2 - owner of vessel
2. 1/4 - captain of such vessel
3. 1/4 - crew. (Sec. 13)
Shipwreck Shipwreck
Vessel/cargo are BEYOND THE If the captain is PRESENT
CONTROL of the crew, or
ABANDONED by them
Th persons who salvaged the same are No one shall proceed to salvage the
entitled to a REWARD for the SALVAGE. same, WITHOUT THE CONSENT of the
captain.
5. Act allowing Foreign Vessels to transport and co-load Foreign
Cargoes for Domestic transshipment (RA 10668)
1. This Act shall apply exclusively to FOREIGN vessels carrying FOREIGN
CARGOES/CONTAINER VANS. (Sec. 3)
1. A foreign vessel is one registered in a flag registry other than the
Philippines.
2. A foreign cargo is an import or export cargo.
3. A domestic cargo is a merchandise to be shipped from one
Philippine port to another Philippine port.
4. A transshipment is a transfer of cargo from one port to another
FOR FURTHER TRANSIT to complete the voyage to its FINAL
DESTINATION. (Sec. 2)
2. NO foreign vessel shall be allowed to carry any domestic cargo or
domestic container van. (Sec. 8)
What if the foreign vessel is covered
by this Act?
Carriage conducted under this Act
shall be governed by COGSA, with
respect to liability of the carrier in case
of loss of goods carried. (Sec. 6)
The foreign vessels engaged in
carriage conducted under this Act are
NOT common carriers.
They are also NOT offering a PUBLIC
SERVICE. (Sec. 7)
Effects
1) The period to file the suit is only 1
year; and 2) Limitation of liability
applies.
1) Ordinary diligence is required, and 2)
No presumption of fault.
1) Public Service Act does not apply,
and 2) Domestic Shipping
Development Act of 2004 does not
apply.

4. Carriage of Goods by Sea Act (COGSA)

1. Application
1. It governs all contracts of carriage of goods by sea between
1. It applies in international shipping, from another country to the
Philippines.
2. What about from Philippines to another country?
1. This does not apply.
2. Why? Because Art. 1753, Civil Code provides that “the law of
the country to which the goods are to be transported shall
govern the liability of the common carrier.” Hence, foreign law
shall govern.
2. Clause paramount
1. It provides that a provision which states that COGSA shall apply,
even though the transportation is domestic, subject to the extent
that if any term of the bill of lading is repugnant to the COGSA or
applicable law, then to the extent thereof, the provision of the bill
of lading is void.
2. Notice of loss or damage
3. Period of prescription
1. Already discussed above.
4. Limitation of liability
1. The limit is set at a maximum of $500 per package or customary
freight unit. (Sec. 4(5), COGSA)
1. This does not apply to domestic shipping. For domestic shipping,
the Civil Code applies.
2. This is deemed incorporated in the bill of lading even if not
mentioned therein. (Eastern Shipping Lines v. IAC, 1987)
1. Why? Because statutes are deemed written in every contract.
 3. What then is the remedy of the shipper to prevent the limitation of
liability?
1. If the shipper DECLARES a GREATER VALUE for the package, the
carrier is liable for such amount, provided the declared amount is
the REAL VALUE of goods. (Aquino)

Public service act

1. Definition of public utility
1. A public utility is a business engaged in regularly supplying the public with
some commodity or service of public interest. (National Power
Corporation v. Court of Appeals, 1997)
2. Examples are electricity/gas/transportation/telephone services.
2. Necessity for certificate of public convenience
1. Requisites
Requisites (CPF)
Citizenship The applicant must be a citizen of the
Philippines, or a corporation or
associations organized under the laws
of the Philippines at least 60 per
centum of whose capital is owned by
such citizens. (Section 11, Article XII,
1987 Constitution)

Promotion of public interests The applicant must prove that the

operation of the public service
proposed and the authorization to do
business will promote the public
interest in a proper and suitable
manner.

Financial capability The applicant must be financially

capable of undertaking the proposed
service and meeting the
responsibilities incident to its
operations [Vda. De Lat v. Public
Service Commission, G.R. No. L-34978
(1988)].
2. Prior or Old operator rule
1. Meaning
1. Prior Operator Rule - no certificate of public convenience will be
issued to another operator as long as the prior operator is STILL
IN OPERATION and can SATISFY THE PUBLIC and still has the
capacity to do so.
2. Prior Applicant Rule - it protects the first applicant assuming all
other applicants are equally competent and qualified.
2. Exceptions: (CMFM)
1. Convenience of the public prevails over Prior Operator Rule.
1. Otherwise, it would encourage violation of the CPC, and would
prevent the establishment of an adequate/efficient/
satisfactory service. (Martires Ereno v Public Service
Commission, 1975)
2. When it would be conducive to monopoly.
3. When the prior operator failed to meet the increase in traffic.
Why? It cannot satisfy the public.
4. Maiden franchise, i.e., one which does not overlap with the entire
route of the old operator, and merely covers a short portion of the
same.
3. Ruinous competition
1. Protection of Investment Rule - the State has the duty to
protect utility operators from unfair and ruinous competition
2. When is there ruinous competition?
1. When the operator will be deprived of profits based on the
capital he invested.
1. Mere possibility of reduction of earnings is insufficient. It
must be proved that the business would NOT have
sufficient profits to pay the interest on its capital
investment. (Vda. De Lat v PSC, 1988)
3. Fixing of rate
1. Rate of return
1. In determining the just and reasonable rates to be charged by a
public utility, three major factors are considered by the regulating
agency: 1) Rate of return; 2) Rate base; and 3) Return itself.
2. The rate of return of a public utility is not prescribed by statute
but by administrative and judicial pronouncements.
1. This Court has consistently adopted a 12% rate of return for
public utilities.
3. The rate base is the valuation of the property devoted to public
utility or the value of invested capital.
2. Exclusion of income tax as operating expense
1. Income tax should not be included in the computation of
 1.
operating expense of a public utility, because income tax is
inconsistent with the nature of operating expense.
2. An operating expense is an expense reasonably incurred in
connection with the operation of the business to yield revenue.
3. Hence, to charge consumers for expenses which are NOT related
to the benefit derived by the customers from the public utility is
UNJUSTIFIED AND INEQUITABLE. (Republic v MERALCO, 2002)
4. Unlawful arrangements
1. Boundary system
1. Under a boundary system, the driver rents the vehicle by paying a
“boundary” fee, and pays for fuel and maintenance of the vehicle.
2. Whatever the driver earns from passenger fares in excess of the
boundary fee is his income. (Paguio Transport v NLRC, 1998)
3. The jeepney owner/operator-driver relationship under the
boundary system is that of employer-employee relationship and
not lessor-lessee. (Magboo v Bernardo, 1963)
4. The boundary system is a scheme by an owner-operator engaged
in transporting passengers as a common carrier to primarily
govern the compensation of the driver, that is, the latter’s daily
earnings are remitted to the owner-operator less the excess of the
boundary which represents the driver’s compensation. (Villamaria,
Jr. v CA, 2006)
5. Hence, the owner cannot exculpate itself from liability by claiming
that the driver is the lessee of the vehicle.
2. Kabit system
1. “Kabit system" is an arrangement whereby a person who has been
granted a certificate of public convenience allows another
person who owns motor vehicles to operate under such
franchise for a fee. (Teja Marketing v IAC, 1987)
2. 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 them both where
it finds them. (Lita Enterprises v IAC, 1984) Hence, the registered
owner, who entered into a “kabit system” with another, cannot
seek remedy against the actual owner for being in pari delicto.
5. Approval of sale, encumbrance, or lease of property
1. The approval and authorization of the Public Service Commission
(LTFRB) is required for the sale, encumbrance, or lease of property of
a public service (common carrier). (Sec. 20, CA 146)
2. If the property covered by a franchise is sold/encumbered/leased
WITHOUT such approval, the transfer is NOT binding upon third
 2.

persons/public. (Gelisan v Alday, 1987)

3. Significance? The Registered Owner Rule would then apply.
1. Such rule states that the person who is the registered owner of a
vehicle is liable for any damages caused by the negligent
operation of the vehicle although it was already sold or
conveyed to another person at the time of the accident.
(Villanueva v Domingo, 2004)
2. A registered owner who has already sold or transferred a vehicle
has the recourse to a third-party complaint, in the same action
brought against him to recover for the damage or injury done,
against the vendee or transferee of the vehicle. The
inconvenience of the suit is no justification for relieving him of
liability; said inconvenience is the price he pays for failure to
comply with the registration that the law demands and requires.
(Villanueva v Domingo, 2004)

Warsaw convention
1. Applicability
1. This applies to international AIR carriage of persons/goods. (Art. 1(1))
2. International carriage means any carriage in which, according to the
contract made by the parties:
1. The place of departure and the place of destination, whether or not
there be a break in the carriage or a transshipment, are situated
either:
1. within the territories of two High Contracting Parties, or
2. within the territory of a single High Contracting Party,
1. if there is an agreed stopping place within a territory of
another Power. (Art. 1(2))
3. Several successive air carriers; One undivided carriage; Single operation
1. A carriage to be performed by several successive air carriers
2. is deemed to be one undivided carriage,
3. if it has been regarded by the parties as a single operation,
1. whether under a single contract or of a series of contracts, and
2. it does not lose its international character merely because one
contract or a series of contracts is to be performed entirely within
a territory of the same High Contracting Party. (Art. 1(3))
4. Application:
1. The contract of carriage between the private respondent and
Singapore Airlines although performed by different carriers under a
series of airline tickets, including that issued by the petitioner,
constitutes a single operation. Members of the IATA are under a
general pool partnership agreement wherein they act as agent of each
other in the issuance of tickets to contracted passengers.(American
 Airlines v CA, 2000)
2. Venue/Jurisdiction (DDBB)
1. An action for damages must be brought, at the option of the plaintiff,
either before the Court:
1. Carrier is Domiciled, or
2. Principal place of Business, or
3. A place of Business by which the contract has been made or
4. Place of Destination. (Art. 28(1), WC)
2. “Place of destination” means the ultimate destination, and not merely an
agreed stopping place. (Santos III v Northwest Orient Airlines, 1992)
3. Further, the wording of the provision states “must” which underscores the
mandatory nature of Article 28(1). (Lhuiller v British Airways, 2010)
3. Limitation of liability
1. The carrier is liable fo damages sustained in the event of:
1. Death/wounding/bodily injury of a passenger
2. Destruction/loss/damage registered luggage or any goods
3. Delay in the carriage. (Art. 19)
2. Liability to passengers (death/wounding/bodily injury)
3. Liability to passengers (delay)
4. Liability for hand-carried baggage
5. Liability for checked-in baggage
Amount of liability
Passengers (death/wounding/bodily 100, 000 special drawing rights
injury)
Passengers (delay) 4, 150 special drawing rights
Hand-carried baggage 1, 000 special drawing rights
Checked-in baggage 17 special drawing rights per kilogram,
UNLESS the consignor has made, at
the time the package was handed to
the carrier, A SPECIAL DECLARATION
OF INTEREST AND HAS PAID A
SUPPLEMENTARY SUM.
4. Willful misconduct
1. The carrier is NOT entitled to avail of the provisions of this Convention
which EXCLUDE/LIMIT LIABILITY, if the damage is caused by:
1. The willful misconduct, or
2. The default on his part which is considered as equivalent to willful
misconduct. (Art. 22)
2. Hence, if there is willful misconduct/bad faith/recklessness/improper
conduct, this Convention will not apply. Instead, the provisions of the Civil
Code shall apply. (Cathay Pacific v CA, 1993)
1. An example is an air carrier was sentenced to pay not only
1.
compensatory but also moral and exemplary damages, and attorney’s
fees, for instance, where its employees rudely put a passenger holding
a first-class ticket in the tourist or economy section, or ousted a
brown Asian man in favor of a white man, or subjected a passenger to
rude/barbaric treatment by calling him a monkey. (Alitalia v IAC, 1990)