LAW ON TRANSPORTATION AND PUBLIC one that holds itself out as ready to engage in the transportation of goods for
e transportation of goods for hire as a public
UTILITIES
Contract of Transportation person obligates
himself to transport persons or property from one
place to another for a consideration.
2 KINDS:
1. CARRIAGE OF PASSENGERS
Parties: common carrier & passenger (carried
gratuitously or not)
Perfection:
> contract to carry (agreement to carry the
passenger at some future date) consensual
contract and perfected by mere consent
* AIRCRAFT perfected even without issuance of
ticket as long as there was already meeting of
minds with respect to the subject matter and
consideration
> contract of carriage
real contract; not until the facilities of the
carrier are actually used can the carrier be said to
have assumed the obligation of the carrier;
perfected by actual use.
* AIRCRAFT perfected if it was established that
the passenger had checked in at the departure
counter, passed through customs and immigration,
boarded the shuttle bus and proceeded to the
ramp of the aircraft and baggage already loaded to
the aircraft.
* Public Utility Bus or Jeepneys once it stops it is
in effect making a continuous offer to riders;
perfected when passenger is already attempting
to board the vehicle
* TRAINS perfected when a person:
a. purchased a ticket/ possess sufficient
fare with which to pay for his passage
b. presented himself at the proper
place and in a proper manner to be
transported
c. has a bona fide intention to use
facilities of the carrier
2. CARRIAGE OF GOODS
Parties: shipper & carrier
Perfection:
> contract to carry goods consensual
> contract of carriage - act of delivery of goods (
goods are unconditionally placed in the possession
and control of the carrier and upon their receipt
by the carrier for transportation)
CARRIER:
Common carriers (CC) (1732)
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. (NOT the means of
transportation)
employment and not as a casual occupation.
Tests for determining WON a party is a common carrier of goods:
1. 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.
2. He must undertake to carry good of the kind to which his business is confined.
3. he must undertake to carry by the method by which his business is conducted and over his established
roads
4. transportation must be for hire.
Characteristics of Common carriers (CC):
no distinction between one whose principal business is the transportation of persons/goods and one
who does such as an ancillary business
still a CC even if services offered to a limited clientele
pipeline operators are CCs not necessarily motor vehicles
CHARTER PARTY:
- 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.
2 types:
1. Contract of affreightment
involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for
another
- CC = observe extraordinary diligence; in case of loss, deterioration or destruction of goods of goods, CCs are
presumed to be at fault or have acted negligently
2. Charter by demise/ Bareboat Charter
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.
- charter includes both vessel and crewCC becomes private carrier (PC) insofar as that particular voyage is
concerned
- if PC- ordinary diligence in the carriage of goods will suffice
- PC = undertaking is a single transaction, not a part of the general business or occupation, although involving the
carriage of goods for a fee; NO presumption of negligence applies whosoever alleges damage to or deterioration
of the goods carried has the burden of proving that the cause was the negligence of the carrier.
CCs v. Towage, Arrastre and Stevedoring
Towage- a vessel is hired to bring another vessel to another place
e.g. a tugboat may be hired by CC to bring the vessel to a port (operator of tugboat not CC)
Arrastre operators functions has nothing to do with the trade and business of navigation nor to the use or
operation of vessels. Services are not maritime.
Stevedoring- involves the loading and unloading of coastwise vessels calling at the port.
>>> Common carriers are public utilities, impressed with public interest and concern subject to regulation by the
state.
REGISTERED OWNER RULE
- the registered owner of a vehicle is liable from any damage caused by the negligent
operation of the vehicle although the same was already sold or conveyed to another person at the time of
the accident.
- The registered owner is liable to the injured party subject to his right of recourse against
the transferee or the buyer
- Applicable in case of lease
- Registered owner not liable if vehicle was taken from him without his knowledge and
consent.
- Applicable to people involved on a kabit system (arrangement whereby a person who has
been granted a certificate of public convenience allows other persons who own motor vehicles to operate
them under his license, sometimes for a fee or percentage of the earnings --- contrary to public policy)
parties to the kabit system cannot invoke the same as against each
other either to enforce their illegal agreement or to invoke the same to escape liability --- pari delicto
rule
having entered into an illegal contract, neither can seek relief from
the courts and each must bear the consequences of his acts
also applicable to aircrafts and vessels basic rule that no person can
operate a common carrier without securing a certificate of public convenience and necessity.
 CHAPTER 2
OBLIGATIONS OF THE PARTIES
I. Obligations of the carrier
A. DUTY TO ACCEPT
A common carrier granted a certificate
of public convenience is duty bound to accept
passengers or cargo without any discrimination.
It is illegal for domestic ship operators to
refuse to accept or carry passengers or cargo
without just cause. (Section 16, RA 9295)
In air transportation, passengers with
confirmed tickets who were not allowed to
board are provided with denied boarding
compensation and priority boarding rules.
No compensation for refusal if it is because
of 1) government requisition of the space, 2)
substitution of equipment of lesser capacity
when required by operational and or safety
and/or other causes beyond the control of
the carrier, and 3) if arrangements have been
made for the passenger to take another
flight in a comparable air transportation
which will arrive not later than three hours
after the time of flight on which the
confirmed space is held is supposed to
arrive. (Civil Aeronautics Board Economic
Regulation)
a. Grounds for valid refusal to accept goods
1. dangerous objects or
substances including dynamites and
other explosives
2. goods are unfit for
transportation
3. acceptance would
result in overloading
4. contrabands or illegal
goods
5. goods injurious to
health
6. goods will be exposed
to untoward danger like flood, capture
by enemies and the like
7. goods like livestock
will be exposed to diseases
8. strike
9. failure to tender goods
on time
In Fisher v. Yangco, factors in determining
reasonable discrimination include, 1) suitability to
the vessel for the transportation of such products;
2) reasonable possibility of danger or disaster
resulting from their transportation in the form and
under the conditions in which they are offered for
carriage; and 3) the general nature of the business
done by the carrier.
(1) Hazardous and Dangerous Substances
Carrier not properly equipped to transport
dangerous chemicals or explosives may validly
refuse to accept the same for transport. Those
which are not authorized by the Maritime Industry
Authority to carry such goods may also validly
refuse the same for transport. There must be a
Special Permit to Carry from the MARINA.
(2) Unfit for Transport
Carriers may refuse to accept goods that are unfit
for transportation (by nature be unfit for
transportation or are unfit because of improper
packaging or defect in their containers). However, carriers may accept the goods and limit its liability by
stipulation.
If by reason of well-founded suspicion of falsity in the declaration as to the contents of the package carrier should
decide to examine and investigate it in the presence of witnesses, with the shipper and consignee in attendance. If
declaration of shipper is true, expenses occasioned by the examination and of repacking the packages shall be for
the account of the carrier
Even if the cause of 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.
B. DUTY TO DELIVER THE GOODS
a. Time of Delivery
Where a carrier has made an express contract, the goods must be delivered within a specified time otherwise he is
liable for any delay (indemnity for damages). In the absence of any agreement, goods must be delivered at its
destination within a reasonable time (depending on the attending circumstances, nature of the goods).
b. Consequences/Effects of Delay
Excusable delays in carriage suspend, but do not generally terminate, the contract of carriage; when the cause is
removed, the master must proceed with the voyage and make delivery. During the detention or delay, vessel
continues to be liable as a common carrier, not a warehouseman, and remains duty bound to exercise
extraordinary diligence.
If common carrier negligently delays in transporting the goods, a natural disaster shall not free it from
responsibility.
If common carrier delays , without just cause, in transporting the goods or changes the stipulated or usual route,
the contract limiting its liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.
(1) Abandonment
In case of delay through the fault of the carrier, the consignee may refuse to accept the goods or may leave the
goods in the hands of the carrier. It must be communicated to the carrier in writing. This right must be exercised
between the time of delay and before the arrival of the goods at its destination. The carrier must pay the full value
of the goods as if they had been lost or mislaid.
If abandonment is not made, indemnification for the losses and damages by reason of the delay cannot exceed the
current price which the goods would have on the day and at the place they are to be delivered.
The value of the goods which the carrier must pay in case of loss or misplacement shall be that what is declared in
the bill of lading.
Consignee must not defer the payment of the expenses and transportation charges of the goods otherwise carrier
may demand the judicial sale of the goods.
(2) Rights of Passengers in Case of Delay
As to the rights and duties of the parties strictly arising out of delay, the Civil Code is silent. However, the Code of
Commerce provides for such a situation:
ARTICLE 698. In case a voyage already begun should be interrupted, the passengers shall be obliged to pay the
fare in proportion to the distance covered, without Right to recover for losses and damages if the interruption is
due to fortuitous event of force majeure, but with a right to indemnity if the interruption should have been caused
by the captain exclusively. If the interruption should be caused by the disability of the vessel and a passenger
should agree to await the repairs, he may not be required to pay any increased price of passage, but his living
expenses during the stay shall be for his own account.
In case the vessel is not able to depart on time and the delay is unreasonable, the passenger may opt to have
his/her ticket immediately refunded without any refund service fee from the authorized issuing/ticketing office.
C. WHERE AND TO WHOM DELIVERED
a. Place
Goods should be delivered to the consignee in the place agreed upon by the parties.
The shipper may change the consignment of the goods provided that at the time of ordering the change of the
consignee the bill of lading signed by the carrier be returned to him, in exchange for another wherein the novation
of the contract appears. The expenses occasioned by the change shall be for the account of the shipper.
b. Consignee
Delivery must generally be made to the owner or consignee or to someone lawfully authorized by him to receive
the goods for his account or to the holder of the negotiable instrument.
c. Delay to Transport Passengers
Effects of delayed and unfinished voyage in inter-
island vessels:
vessel can not continue or complete
her voyage for any cause carrier is
under obligation to transport the
passenger to his/her destination at the
expense of the carrier including free
meals and lodging before the
passenger is transported to his/her
destination; the passenger may opt to
have his/her ticket refunded in full if
the cause of the unfinished voyage is
due to the negligence of the carrier or
to an amount that will suffice to defray
transportation cost at the shortest
possible route if the cause of the
unfinished voyage is fortuitous event.
vessel is delayed in arrival at the port
of destination free meals during
mealtime
delay in departure at the point of origin
due to carriers negligence; fortuitous
event - free meals during mealtime;
carrier not obliged to serve free meals
carrier is not obliged to inform
passengers of sailing schedule of the
vessel
B.DUTY TO EXERCISE EXTRAORDINARY DELIGENCE
Goods should be delivered in the same
condition that they were received and to transport
the passengers without encountering any harm or
loss.
ARTICLE 1755. A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all
the circumstances. (Civil Code)
a. Presumption of Negligence
Two conditions for the birth of the presumption of
negligence:
1. there exists a contract between the
passenger or the shipper and the
common carrier
2. the loss, deterioration, injury or death
took place during the existence of the
contract
Doctrine of Proximate Cause there is
presumption of negligence
If the goods are lost, destroyed or deteriorated,
common carriers are presumed to have acted
negligently, unless they prove that they observed
extraordinary diligence. In case of death of or
injuries to passengers, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence.
b. Duration of Duty
(1) Carriage of Goods
ARTICLE 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
ARTICLE 1737. The common carriers duty to
observe extraordinary diligence over the goods
remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless
the shipper or owner has made use of the right of stoppage in transitu. (common carrier becomes a
warehouseman ordinary diligence)
ARTICLE 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 if 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.
(2) Carriage of Passengers
By trains the extraordinary responsibility of common carrier commences the moment the person who purchases
the ticket (or a token or card) from the carrier presents himself at the proper place and in a proper manner to
be transported with a bona fide intent to ride the coach.
* Mere purchase of a ticket does not of itself create the relation of carrier and passenger but it is an element in
the inception of the relation.
* A proper person who enters upon the carriers premises (station, ticketing office, or waiting room) with the
intention of becoming a passenger will ordinarily be viewed as assuming the status of a passenger.
* One who goes to the railroad station to inquire as to the possibility of securing passage on a freight train, which
he knows, by the rules of the company, is not allowed to carry passengers, and to secure passage thereon if
possible, is not entitled to the rights of a passenger but is a mere trespasser.
* One who rides upon any part of the vehicle or conveyance which is unsuitable or dangerous, or which he knows
is not intended for passengers, is not presumed to be a passenger.
* One who secures free passage by fraud or stealth is precluded from recovery for injuries sustained through the
negligence of the carrier, for he has not assumed the status of a passenger.
* A person riding on a freight train, on a drivers pass or similar arrangement, to look after livestock being
transported and as incident to such transportation is, generally regarded as a passenger for hire.
* Motor vehicles like jeepneys and buses are duty bound to stop their conveyances for a reasonable length of time
in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up or jerking of their conveyances while they do so. Once
a public utility bus or jeepney stops, it is making a continuous offer to bus riders.
Duty to exercise utmost diligence with respect to passengers will not ordinarily terminate until the passenger has,
after reaching his destination, safely alighted from the carriers conveyance or had a reasonable opportunity to
leave the carriers premises.
E. DEFENSES OF COMMON CARRIERS
1. Flood, storm, earthquake, lightning, or other natural disaster or calamity
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packing or in the containers
5. Order or act of competent public authority
6. Exercise of extraordinary diligence
Fortuitous Event to be a valid defense must be established to be the proximate cause of the loss
Requisites:
1. The cause of the unforeseen and the unexpected occurrence, or of the failure of the debtor to comply with his
obligation,
must be independent of the human will
2. It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must
be impossible
to avoid
3. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal
manner
4. The obligor (debtor) must be free from any participation in or the aggravation of the injury resulting to the
creditor
In order for the common carrier to be exempted from responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or
minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the
common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods.
Fire not considered as a natural calamity or disaster
Fire caused by lightning a natural calamity
Hijacking does not fall under the categories of exempting causes; the common carrier is presumed to be at fault
or to have acted negligently unless there is a proof of extraordinary diligence on its part
Mechanical defects damage or injury resulting
from mechanical defects is not a damage or injury
that was caused by fortuitous event; carrier is
liable to its passengers for damages caused by
mechanical defects of the conveyance (breakage
of a faulty drag-link spring, fracture of the vehicles
right steering knuckle, defective breaks)
Pages 123-190
Juntilla v. Fontanar
Tire-blowouts was not considered as fortuitous
event although it was alleged that the tires were
in good condition; no evidence was presented to
show that the evidence were due to adverse road
conditions the carrier must prove all angles.
The explosion could have been caused by too
much air pressure injected into the tires and the
fact that the jeepney was overloaded and
speeding at the time of the accident.
b. OTHER INVALID DEFENSES
1. Damage to cargo due to EXPLOSION of another
cargo not attributable to peril of the seas or
accidents of navigation.
2. Damage by WORMS and RATS resulting to
damage to cargoes cant be cited as an excuse by
the carrier.
3. Damage by WATER through a port which had
been left open or insufficiently fastened on sailing.
4. Carrier cannot escape liabilities to third persons
if damage was caused by BARRATRY where the
master or crew of the ship committed unlawful
acts contrary to their duties includes theft and
fraudulently running the ship ashore.
Cases:
1. Problem: A carrier bus on its way to its
destination encountered an engine
failure, thus, it has to be repaired for 2
days. And while in the repair shop, a
typhoon came resulting to the spoilage
of cargoes.
Answer: A typhoon although a natural
disaster, is not a valid defense if it is
shown that it was not the only cause of
the loss. Especially when the facts
indicate that the typhoon was
foreseeable and could have been
detected through the exercise of
reasonable care. Cargoes should have
been secured while the bus was being
repaired for 2 days.
2. Problem: A passenger told the driver
that he has valuable items in his bag
which was placed under his feet and he
asked the driver (to which he is seated
near) to watch for the bag while he is
asleep.
(a) There have been incidents of
throwing of stones at passing
vehicles in the North Express
Way. While the bus was
traversing the super highway, a
stone hurled from the overpass
and hit the passenger resulting to
injuries. Can the passenger hold
the bus liable for damages?
Answer: Yes. The incident was
foreseeable due the prior
incidents of stone hurling. The
bus should have exercised utmost
diligence and employed adequate precautionary measures to secure safety of passengers since
the incident was foreseeable. .
HOWEVER, if the stone throwing was entirely unforeseeable and the carrier exercised the utmost
diligence, then, the bus cant be held liable.
Nonetheless, the burden of proof Is on the carrier to prove such exercise of diligence. It is up to
the carrier to overthrow the presumption of negligence.
If the passenger decides to file a case, al the passenger has to do is to prove that she was a
passenger of the bus and that she suffered injuries while on board the bus.
(b) Supposing that there were armed men who staged a hold-up while the bus was speeding along
the highway. One of them stole the passengers bag and wallet while pointing a gun him. Is the
bus liable?
Answer: No. Hand-carried luggages are governed by necessary deposit. Besides, theft with use of
arms or through irresistible force is a force majeure which exempts carriers from liability.
3. Hi-jacking cannot exculpate the carrier from liability if it is shown that the employees of the carrier
were not overwhelmed by the hijackers and that there was no showing of irresistible force. Since, there
were 4 employers while there were only 2 hijackers and only one of them was armed with bladed
weapon.
ON THE OTHER HAND, a hijacking by 3 armed men is an event which is considered to be beyond the
control of the carrier. Thus, the carrier may be adjudged from liability if it can be proven that the
hijacking was unforeseeable.
c. PUBLIC ENEMY
- presupposes a state of war and refers to the government of a foreign nation at war with the country to which the
carrier belongs, though not necessarily with that to which the owner of the gods owes allegiance.
- Thieves, rioter, and insurrectionists are not included. They are merely private depredators for whose acts a
carrier is answerable.
- Rebels in insurrection against their own government are generally not embraced in the definition of public
enemy. However, if the rebels hold a portion of territory, they have declared their impendence, cast off their
allegiance and has organized armed hostility to the government, and the authority of the latter is at the time
overthrown, such an uprising may take on the dignity of a civil war, and so matured and magnified, the parties are
belligerent and are entitled to belligerent rights.
- Depredation by pirates (which are enemy of all civilized nation) excuses the carrier from liability.
- Common carriers may be exempted from responsibility only if the act of the public enemy has been the
proximate and only cause of the loss. Moreover, due diligence must be exercised to prevent or at least minimize
the loss before, during and after the performance of the act of the public enemy in order that the carrier may be
exempted from liability for the loss, destruction, or deterioration of the goods.
d. IMPROPER PACKING
Character of the goods and defects in the packaging or in the containers are defenses available to the common
carrier. Similarly, the Carriage of Good b Sea Act provides that carrier shall not liable for: (1) wastage in bulk or
weight or any damages arising form the inherent defect, quality or vice of goods; (2) insufficiency of packing; (3)
insufficiency or inadequacy of the marks, or (4) latent defects no discoverable by due diligence.
However, NCC likewise provides:
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 the containers, the common carrier must exercise due diligence to
forestall or lessen the loss.
Thus, if the carrier accepted the goods knowing the fact of improper packing or even if the carrier does not know
but the defect was nonetheless apparent upon ordinary observation, it is not relived form liability for loss or
injury to goods resulting therefrom.
Cases:
1. Problem: A carrier knowing that some of a cargo of sacks of rice had big holes and others had openings
just loosely tied with strings resulting to the spillage of rice during the trip. Thus, there was shortage in
the delivery of the cargoes. When sued due to the shortage, the carrier interposed a defense that it
was not liable since the shortage was due to the defective condition of the sacks. Decide.
Answer: Carrier must still exercise extraordinary diligence if the fact of improper packing is known to
the carrier or its servants, or apparent upon ordinary observation. If the carrier accepted the cargo
despite such defects, the carriers becomes liable for the damage resulting therefrom. Apply Article
1742.
e. ORDER OF PUBLIC AUTHORITY
Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not
responsible, provided said public authority had power to issue order.
Cases:
1. Carrier was not excused from liability since the order of an acting mayor was not considered as a valid
order of a public authority. It is required that public authority who issued the order must be duly
authorized to issue the order.
 2. Carriage of Goods by Sea Act
provides that carrier shall not
responsible for loss or damage
resulting from arrest or restraint of
princes, rulers, or people, or seizure
under legal process and from
quarantine restrictions.
F. DEFENSES IN CARRIAGE OF PASSENGERS
- Primary defense of carrier is exercise of
extraordinary diligence in transporting
passengers. Even if there is a fortuitous event, the
carriers must also present proof of exercise of
extraordinary diligence.
Art. 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or willful acts of the carriers
employees, although such employees may have
acted beyond the scope of their authority or in
violation of the orders of the common carriers.
The liability does not cease even upon proof that
they exercised diligence in the selection and
supervision of their employees.
Art. 1763. Carrier is responsible for injuries
suffered by a passenger on account of the willful
acts or negligence of other passengers or of
strangers, if the common carriers employees
through the exercise of the diligence of a good
father of a family could have prevented or
stopped the act or omission.
a. Employees
- Carrier is liable for the acts of its
employees. It cant escape liability by
claiming that it exercised due diligence
in supervision and selection of its
employees (unlike in quasi-delicts).
Reasons for the rule:
1. Undertaking of the carrier requires that
its passenger that full measure of
protection afforded by the exercise of
high degree of care prescribed by law,
inter alia from violence and insults at
the hands of strangers and other
passengers, but above all, from the acts
of the carriers own servants.
2. The liability of the carrier for the
servants violation of duty to
performance of his contract to safely
transport the passenger, delegating
therewith the duty of protecting the
passenger with utmost care prescribed
by law.
3. As between the carrier and the
passenger, the former must bear the
risk of wrongful acts or negligence of
the carriers employees against
passenger, since it, and not the
passenger, has the power to select and
remove them.
b. Other Passengers and Third Persons
With respect to acts of strangers and other
passengers resulting in injury to apassenger,
the availability of such defense is also
subject to the exercise of a carrier of due
diligence to prevent or stop the act or
omission.
Negligence of the carrier need not be the
sole cause of the damage or injury to the
passenger or the goods. The carrier would still be liable even if the contractual breach concurs with the
negligent act or omission of another person.
G. PASSENGERS BAGGAGES
Rules that are applicable to goods that are being shipped are also applicable to baggage delivered to the custody
of the carrier. Arts. 1733. 1734 and 1736 of Civil Code are applicable.
However, if the luggage was hand-carried, Arts. 1998, 2000-2003 shall apply.
Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The
keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them,
or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the
precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their
effects. (1783)
Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the
personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to
rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care
required of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done
with the use of arms or through an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family,
servants or visitors, or if the loss arises from the character of the things brought into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not
liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby
the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void.
(n)
Cases:
1. Despite the fact that the carrier gave notice that it shall not be liable for baggage brought in by
passengers, the carrier is still liable for lost hand-carried luggage since it is governed by rules on
necessary deposits. Under Art. 20000, the responsibility of the depositary includes the loss of property
of the guest caused by strangers but not that which may proceed from force majeure. Moreover, article
2001 considers theft as force majeure if it is done with use of arms or through irresistible force.
2. Even if the passenger did not declare his baggage nor pay its charges contrary to the regulations of the
bus company, the carrier is still liable in case of loss of the baggage. Since, it has the duty to exercise
extraordinary diligence over the baggage that was turned over to the carrier or placed in the baggage
compartment of the bus. The non-payment of the charges is immaterial as long as the baggage was
received by the carrier for transportation.
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER.
A. Negligence of Shipper or Passenger
The obligation to exercise due diligence is not limited to the carrier. The shipper is obliged to exercise due
diligence in avoiding damage or injury. Nevertheless, contributory negligence on the part of the shipper/
passenger would only mitigate the carriers liability; it is not a total excuse.
However, if the negligence of the shipper/ passenger is the proximate and only cause of the loss, then, the
carrier shall not be liable. The carrier may overcome the presumption of negligence and any be able to
prove that it exercised extraordinary diligence in handling the goods or in transporting the passenger.
The carrier may be able to prove that the only cause of the loss of the goods is any of the following:
1. Failure of the shipper to disclose the nature of the goods;
2. Improper marking or direction as to the destination;
3. Improper loading when he assumes such responsibility.
The shipper must likewise see to it that the goods are properly packed; otherwise, liability of the carrier may
either be mitigated or barred depending on the circumstances.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the
goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.
Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages
shall be equitably reduced.
a. Last Clear Chance
A negligent carrier is liable to a negligent
passenger in placing himself in peril, if the carrier
was aware of the passengers peril, or should have
been aware of it in the reasonable exercise of due
care, had in fact an opportunity later than that of
the passenger to avoid an accident.
Last clear chance applies in a suit between the
owners and drivers of colliding vehicles. It does no
tarise 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 carrier and its owner on
the ground that the other driver was likewise
guilty of negligence.
b. Assumption of Risk
Carriers are not insurers of the lives of their
passengers. Thus, in air travel, adverse weather
conditions or extreme climatic changes are some
of the perils involved in air travel, the
consequence of which the passenger must assume
or expect.
However, there is no assumption of risk in a case
wherein a passenger boarded a carrier that was
filled to capacity. The act of the passenger in
taking the extension chair does not amount to
implied assumption of risk.
Case:
Although, there is a sign in the bus that says: do
not talk to the driver while the bus is in motion,
otherwise, the company would not assume
responsibility for any accident:. Nonetheless, the
passengers dared the driver to race with another
bus, as the bus speeds up in the attempt to
overtake the other bus, it failed to slow down. As a
result, the bus turns turtle causing the death and
injuries to passengers. Is the bus company liable?
Answer: Yes. The bus company is obligated to
exercise utmost diligence in carrying passengers.
This liability cannot be eliminated or limited by
simply posting notices. The passenger cannot be
said to have assumed the risk of being injured
when he urged the driver to accept the dare. At
most, the passengers can only be said to be guilty
of contributory negligence which would mitigate
the liability of the driver, since the proximate
cause of the accident was the drivers willful and
reckless act in running the race with the other bus.
B. FREIGHT
a. Amount to be Paid
Common carriers are subject to heavy regulations
with respect to rates that they are charging to the
public. The regulation of rates is founded upon the
valid exercise of the Police Power of the state in
order to protect the public from arbitrary and
excessive rates while maintaining the efficiency
and quality of services rendered. The fixing of just
and reasonable rates involves a balancing of
investor and the consumer interest.
Although the consideration that should be paid to
the carrier is still subject to the agreement
between parties, what can be agreed upon should
not be beyond the maximum amount fixed by
appropriate government agency.
b. Who will pay.
Although either of the shipper or the consignor
may pay the freight before or at time the goods
are delivered to the carrier for shipment,
nonetheless, it is the consignor (whom the
contract of carriage is made) who is primarily liable for the payment of freight whether or not he is the owner of
the goods. The obligation to pay is implied from the mere fact that the consignor has placed the goods with the
carrier for the purpose of transportation.
c. Time to pay.
Code of Commerce provides that payment should be made within 24-hours from the time of delivery in the
absence of any agreement between the parties.
ARTICLE 374. The consignees to whom the shipment was made may not defer the payment of the expenses and
transportation charges of the goods they receive after the lapse of twenty-four hours following their delivery; and
in case of delay in this payment, the carrier may demand the judicial sale of the goods transported in an amount
necessary to cover the cost of transportation and the expenses incurred.
(1) Carriage of Passengers by Sea
With respect to carriage of goods by sea, the tickets are purchased in advance. Carriers are not supposed to allow
passengers without tickets. The carrier shall collect/ inspect the passengers ticket within one hour from vessels
departure as not to disrupt resting or sleeping passengers.
If the vessel is not able to depart on time and the delay is unreasonable, the passenger may opt to have his/ her
ticket refunded without refund service fee.
Delayed voyage means late departure of the vessel from its port of origin and/ or late arrival of the vessel to its
port of destination. Unreasonable delay means the period of time that has lapsed without just cause and is
solely attributable to the carrier which has prejudiced the transportation of the passenger and/ or cargoes to their
port of destination.
A passenger who failed ot board the vessel can refund or revalidate the ticket subject to surcharges. Revalidation
means the accreditation of the ticket that is not used and intended to be used for another voyage.
(2) Carriers Lien
If consignor or the consignee fails to pay the consideration for the transportation of goods, the carrier may
exercise his lien in accordance with Art. 375 of Code of Commerce:
ARTICLE 375. The goods transported shall be especially bound to answer for the cost of transportation and for
the expenses and fees incurred for them during their conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and once prescribed, the carrier shall
have no other action than that corresponding to him as an ordinary creditor.
C. DEMURRAGE
Demurrage is the compensation provided for the contract of affreightment for the detention of the vessel beyond
the time agreed on for loading and unloading. It is the claim for damages for failure to accept delivery. In broad
sense, very improper detention of a vessel may be considered a demurrage. Technically, liability for demurrage
exists only when expressly stipulated in the contract.
Using the term in broader sense, damages in the nature of demurrage are recoverable for a breach of the implied
obligation to load or unload the cargo with reasonable dispatch, but only by the party to whom the duty is owed
and only against on who is a party to the shipping contract. Notice of arrival of vessels or conveyances, or their
placement for purposes of unloading is often a condition precedent to the right to collect demurrage charges.
CHAPTER 3: EXTRAORDINARY DILIGENCE
I. RATIONALE
A common carrier is bound to carry the passengers safely as far a human care and foresight provide, using the
utmost diligence of very cautious persons, with due regard for all circumstances.
Extraordinary diligence: Calculated to protect the passengers from the tragic mishaps that frequently occur in
connection with rapid modern transportation.
II. HOW DUTY IS COMPLIED WITH
Common carrier binds itself to carry the passengers safely as far as human care and foresight can provide, using
the utmost diligence of a very cautious person, with due regard for all the circumstances.
- The duty even extends to the members of the crew or complement operating the carrier.
A reasonable man or a good father of a family in the position of the carrier must exercise extraordinary diligence in
the performance of his contractual obligation.
- Whether or not a reasonable man, exercising extraordinary diligence, could have foreseen and
prevented the damage or loss that occurred.
III. EFFECT OF STIPULATION
A. GOODS
The law allows a stipulation whereby the carrier will exercise a degree of diligence which is less than extraordinary
with respect to goods.
Art. 1744. A stipulation between the common carrier and the shipper owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
1. In writing, signed by the shipper/owner;
2. Supported by a valuable consideration other than the service rendered by the common carrier (Note:
Typically fare/freight); and
 3. Reasonable, just and contrary to
public policy.
B. PASSENGERS
There can be no stipulation lessening the utmost
diligence that is owed to passengers.
Art. 1757. The responsibility of a
common carrier for the safety of
passengers as required in Arts. 1733
and 1755 cannot be dispensed with or
lessened by stipulation, by the posting
of notices, by statements on tickets, or
otherwise. (Note: Absolute;
extraordinary at all times.)
Gratuitous passenger A stipulation limiting the
common carriers liability for negligence is valid,
but not for willful acts of gross negligence. The
reduction of fare does not justify any limitation.
IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY
SEA
A. SEAWORTHINESS
a.) Warranty of Seaworthiness of Ship
Extraordinary diligence requires that
the ship which will transport the
passengers and goods is seaworthy.
Seaworthiness of the vessel is impliedly
warranted.
The carrier shall be bound before and
at the beginning of the voyage to
exercise due diligence to make the ship
seaworthy.
b.) No duty to inquire Because of the
implied warranty of seaworthiness,
shippers of goods, when transacting
with common carriers, are not
expected to inquire into the vessels
seaworthiness, genuineness of its
licenses and compliance with all
maritime laws. Passengers cannot be
expected to inquire everytime they
board a common carrier, whether the
carrier possesses the necessary papers
or that all the carriers employees are
qualified.
It is the carrier that carries such burden
of proving that the ship is seaworthy.
Presentation of certificates of
seaworthiness is not sufficient to
overcome the presumption of
negligence.
c.) Meaning of Seaworthiness A
vessel must have such degree of fitness
which an owner who is exercising
extraordinary diligence would require
his vessel to have at the
commencement of the voyage, having
regard to all the probable
circumstances of it. This includes
fitness of the vessel itself to withstand
the rigors of voyage, fitness of the
vessel to store the cargoes and
accommodate passengers to be
transported and that it is adequately
equipped and properly manned.
General Test of Seaworthiness: Whether the ship and its appurtenances are reasonably fit to perform
the service undertaken.
Example: The carrier was able to establish that the ship itself was seaworthy because the
records reveal that the vessel was drydocked and inspected by the Phil. Coast Guard before
its first destination.
A warranty of seaworthiness requires that it be properly laden, and provided with a competent master,
a sufficient number of competent officers and seamen, and the requisite appurtenances and
equipment.
The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:
1. Make the ship seaworthy;
2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are carried, fit and safe for their reception,
carriage, and preservation.
The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods
carried.
The ship must be cargoworthy. The ship must be efficiently strong and equipped to carry the particular
kind of cargo which she has contracted to carry and her cargo must be so loaded that it is safe for her
to proceed on her voyage.
The vessel must be adequately equipped and properly manned. On top of regular maintenance and
inspection, Captains, masters or patrons of vessels must prove the skill, capacity, and qualifications
necessary to command and direct the vessel. If the owner of a vessel desires to be the captain without
having the legal qualifications, he shall limit himself to the financial administration of the vessel and
shall entrust the navigation to a qualified person.
It is not an excuse that the carrier cannot afford the salaries of competent and licensed crew or that
latter is unavailable.
B. OVERLOADING
Duty to exercise due diligence likewise includes the duty to take passengers or cargoes that are within the carrying
capacity of the vessel.
C. PROPER STORAGE
The vessel itself may be suitable for the cargo but this is not enough because the cargo must also be properly
stored.
Cargo must generally not be placed on deck. The carrying of deck cargo raises the presumption of
unseaworthiness unless it can be shown that the deck cargo will not interfere with the proper management of the
ship.
D. NEGLIGENCE OF CAPTAIN AND CREW
Failure on the part of the carrier to provide competent captain and crew should be distinguished from the
negligence of the said captain and crew, because the latter is covered by the Limited Liability Rule (liability of the
shipowner may be limited to the value of the vessel). If the negligence of the captain and crew can be traced to
the fact that they are really incompetent, the Limited Liability Rule cannot be invoked because the shipowner may
be deemed negligent.
a.) Rules on passenger safety (Read Memorandum Circular No. 114: p. 204)
E. DEVIATION AND TRANSSHIPMENT
a.) Deviation If there is an agreement between the shipper and the carrier as to the road over which
the conveyance is to be made (subject to the approval by the Maritime Industry Authority), the carrier
may not change the route, unless it be by reason of force majeure. Without this cause, he shall be
liable for all the losses which the goods may suffer, aside from paying the sum stipulated for that case.
When on account of the force majeure, the carrier had to take another route which resulted to an
increase in transportation charges, he shall be reimbursed upon formal proof.
b.) Transshipment The act of taking cargo out of one ship and loading it into another; to transfer
goods from the vessel stipulated in the contract of affreightment to another vessel before the place of
destination named in the contract has been reached.
Transshipment of freight without legal excuse is a violation of the contract and subjects the carrier to
liability if the freight is lost even by a cause otherwise excepted.
V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND
A. CONDITION OF VEHICLE
Common carriers that offer transportation by land are similarly required to make sure that the vehicles that they
are using are in good order and condition.
Rule on Mechanical Defects If the carriers will
replace certain parts of the motor vehicle, they
are duty bound to make sure that the parts that
they are purchasing are not defective. Hence, it is
a long-standing rule that a carrier cannot escape
liability by claiming that the accident that resulted
because of a defective break or tire is due to a
fortuitous event. This is true even if it can be
established that the tire that was subject of a
blow-out is brand new. The duty to exercise
extraordinary diligence requires the carrier to
purchase and use vehicle parts that are not
defective.
B. TRAFFIC RULES
The carrier fails to exercise extraordinary diligence
if it will not comply with basic traffic rules. The
Civil Code provides for a presumption of
negligence in case the accident occurs while the
operator of the motor vehicle is violating traffic
rules.
In cases involving breach of contract of carriage,
proof of violation of traffic rules confirms that the
carrier failed to exercise extraordinary diligence.
C. DUTY TO INSPECT
There is no unbending duty to inspect each and
every package or baggage that is being brought
inside the bus or jeepney. The carrier is duty
bound to conduct such inspection depending on
the circumstances.
VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY
AIR
The aircraft must be in such a condition that it
must be able to withstand the rigors of flight.
Airworthiness 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.
Proof of airworthiness is not by itself sufficient to
prove exercise of extraordinary diligence.
The fact that the flight was cancelled due to
fortuitous event does not mean that the carriers
duty already ended. The carrier is still obligated to
look after the convenience and comfort of the
passenger.
A. INSPECTION
Is the duty of the carrier to make inquiry as to the
general nature of the articles shipped and of their
value before it consents to carry them; and its
failure to do so cannot defeat the shippers right
to recovery of full value of the package if lost, in
the absence of showing of fraud or deceit on the
part of the shipper.
Where a common carrier has reasonable ground
to suspect that the offered goods are of a
dangerous character, the carrier has the right to
know the character of such goods and to insist
inspection, if reasonable and practical under the
circumstances, as a condition of receiving and
transporting such goods. To be subjected to
unusual search, other than the routinary
inspection procedure customarily undertaken,
there must exist proof that would justify cause for
apprehension that the baggage is dangerous as to warrant exhaustive inspection, or even refusal to accept
carriage of the same.
CHAPTER 4
BILL OF LADING
I. CONCEPTS, DEFINITION AND KINDS
Bill of Lading (BOL)- a written acknowledgement, signed by the master of a vessel or other authorized agent of the
carrier, that he has received the described goods from the shipper, to be transported on the expressed terms to be
described the place of destination, and to be delivered to the designated consignees of the parties. It operates as
a (1) RECEIPT (2) as a CONTRACT (3) as a DOCUMENT OF TITLE.
A BOL is not necessary for the perfection of a contract of carriage. Thus, the obligation to exercise extraordinary
diligence by the carrier is still required even if there is no bill of lading. In the absence of the bill of lading, disputes
shall be determined on the basis of the provisions in the New Civil Code and suppletorily by the Code of
Commerce.
KINDS of BILL of LADING
1. Clean Bill of Does not contain any notation indicating any defect
Lading in the goods.
2. Foul Bill of One that contains the abovementioned notation.
Lading
3. Spent Bill of The goods are already delivered but the bill of
Lading lading was not yet returned (upon delivery, the
carrier is supposed to retrieve the covering bill of the
goods)
4. Through Bill of Issued by a carrier who is obliged to use the facilities
Lading of other carriers as well as his own facilities for the
purpose of transporting the goods from the city of
the seller to the city of the buyer, which BOL is
honored by the second and other interested carriers
who dont issue their own BOL.
5. On Board Bill -states that the goods have been received on board
the vessel which is to carry the goods.
-apparently guarantees the certainty of shipping as
well as the seaworthiness of the vessel to carry the
goods.
6. Received for -states that the goods have been received for
Shipment Bill shipment with or without specifying the vessel by
which the goods are to be shipped.
-issued when conditions are not normal and there is
insufficiency of shipping space.
7. Custody Bill of The goods are already received by the carrier but the
Lading vessel indicated therein has not yet arrived in the
port.
8. Port Bill of The vessel indicated in the BOL that will transport
Lading the goods is already in the port.
EFFECTIVITY of BOL- upon its delivery to and acceptance by the shipper. The acceptance of the bill without dissent
raises the presumption that all the terms therein were brought to the knowledge of the shipper and agreed to by
him, and in the absence of fraud or mistake, he is stopped thereafter from denying that he assented to such
claims.
THE 3-FOLD NATURE OF THE BILL OF LADING
I. RECEIPT- as comprehending all methods of transportation, a BOL may be defined as a written
acknowledgement of the receipt of goods and an agreement to transport an to deliver them at a specified place to
a person named or on his order. Other terms, shipping receipts, forwarders receipts, and receipts for
transportation. (SC) the designation however is not material, and neither is the form of the instrument. If it
contains an acknowledgement by the carrier of the receipt of goods for transportation it is, in legal effect a BOL.
II. CONTRACT - it expresses the terms and conditions of the agreement between the parties; names the parties;
includes consignees etc. It is the law between the parties bound by its terms and conditions.
It is to be construed liberally in favor of the shipper who adhered to such bill as it is a contract of adhesion. The
only participation of the party is the signing of his signature or his adhesion thereto.
ART. 24 (NCC). In all contractual property or other
relations, when one of the parties is at a
disadvanatge on account of his moral
dependence, ignorance indigence, mental
weakness, tender age and other handicap, the
court must be vigilant for his protection.
It is covered by the parol evidence rule, that the
terms of the contract are conclusive upon the
parties and evidence aliunde is not admissible to
vary or contradict a complete enforceable
agreement. If mistake was alleged, it must be
timely raised in the pleadings and it must be a
mistake of fact mutual to the parties.
The BOL is the legal evidence of the contract and
the entries thereof constitutes prima facie
evidence of the contract. All the essential
elements of a valid contract (cause, consent,
object) are present when such bill are issued.
BASIC STIPULATIONS (for overland transpo,
maritime commerce and airline transpo of
passengers, please refer to the textbook for the
codal pp. 267-275)
PROHIBITED AND LIMITING STIPULATION
1. Exempting the carrier from any and all liability
for loss or damage occasioned by its own
negligence - INVALID as it is contrary to public
policy.
2. Parties may stipulate that the diligence to be
exercised by the carrier for the carriage of goods
be less than extraordinary diligence if it is (a) in
writing and signed by both parties (b) supported
by a valuable consideration other than the service
rendered by the common carrier ( c ) the
stipulation is just, reasonable and not contrary to
law.
3. Providing an unqualified limitation of such
liability to an agreed valuation - INVALID
4. Limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher
value and pays a higher rate of freight- VALID and
ENFORCEABLE.
III. AS A DOCUMENT OF TITLE
ART 1507 (NCC). A document of title in which it is
stated that the goods referred to therein will be
delivered to the bearer or to the order of any
person named in such document is a negotiable
document of title.
If the document of title contains the required
words of negotiability to make the instrument
negotiable under Article 1507 of the NCC, the
document remains to be negotiable even if the
words not negotiable or non negotiable are
places thereon
a. Bearer document- negotiated by delivery
b. Order document- negotiated by indorsement of
the specified person so named
Effects of negotiation. Negotiation of the
document has the effect of manual delivery so as
to constitute the transferee the owner of the
goods.
RECOVERY OF DAMAGES FROM CARRIER FOR
CARRIAGE OF GOODS:
1. Inter-island - if goods arrived in damaged
condition (Art. 366):
a. If damage is apparent, the shipper must file a claim immediately (it may be oral or written);
b. If damage is not apparent, he should file a claim within 24 hours from delivery.
The filing of claim under either (1) or (2) is a condition precedent for recovery.
If the claim is filed, but the carrier refuses to pay: enforce carriers liability in court by filing a case:
a. within 6 year, if no bill of lading has been issued; or
b. within 10 years, if a bill of lading has been issued.
2. Overseas where goods arrived in a damaged condition from a foreign port to a Philippine port of entry:
(COGSA)
a. upon discharge of goods, if the damage is apparent, claim should be filled immediately;
b. if damage is not apparent, claim should be filled within 3 days from delivery.
Filing of claim is not a condition precedent, but an action must be filed against the carrier within a period of 1 year
from discharge; if there is no delivery, the one-year period starts to run from the day the vessel left port (in case of
undelivered or lost cargo), or from delivery to the arrastre (in case of damaged cargo).
Where there was delivery to the wrong person, the prescriptive period is 10 years because there is a violation of
contract, and the carriage of goods by sea act does not apply to misdelivery. (Ang v. American SS Agencies (19
SCRA 631)
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
F COGSA is applicable in international maritime commerce. It can be applied in domestic sea transportation if
agreed upon by the parties. (paramount clause)
F COGSA is suppletory to the Civil Code and the Code of Commerce in the Carriage of goods from foreign ports to
the Philippines.
F Under the Sec. 4 (5), the liability limit is set at $500 per package unless the nature and value of such goods is
declared by the shipper. This is deemed incorporated in the bill of lading even if not mentioned in it (Eastern
Shipping v. IAC, 150 SCRA 463).
Note that Art. 1749 of the NCC applies to inter-island trade.
Prescriptive periods
F Suit for loss or damage to the cargo should be brought within one year after:
a. delivery of the goods; or
b. the date when the goods should be delivered. (Sec. 3[6])
The one-year prescriptive period is suspended by:
1. express agreement of the parties (Universal Shipping Lines, Inc. v. IAC, 188 SCRA 170)
2. when an action is filed in court until it is dismissed. (Stevens & Co. v. Nordeutscher Lloyd, 6 SCRA 180)
WARSAW CONVENTION of 1929
WHEN APPLICABLE:
Applies to all international transportation of person, baggage or goods performed by aircraft for hire.
International transportation means any transportation in which the place of departure and the place of
destination are situated either:
1. within the territories of two High Contracting Parties regardless of whether or not there be a break in the
transportation or transshipment, or
2. within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory
subject to the sovereignty, mandate or authority of another power, even though that power is not a party to the
Convention.
Transportation to be performed by several successive air carriers shall be deemed to be one undivided
transportation, if it has been regarded by the parties as a single operation, whether it has been agreed upon under
the form of a single contract or of a series of contracts, and it shall not lose its international character merely
because one contract or a series of contracts is to be performed entirely within a territory subject to the
sovereignty, suzerainty, mandate, or authority of the same High Contracting Party. (Art. 1)
NOTE: Warsaw prevails over the Civil Code, Rules of Court and all laws in the Philippines since an
international law prevails over general law.
WHEN NOT APPLICABLE:
1. If there is willful misconduct on the part of the carriers employees. The Convention does not regulate, much
less exempt, carrier from liability for damages for violating the rights of its passengers under the contract of
carriage (PAL v. CA, 257 SCRA 33).
2. when it contradicts public policy;
3. if the requirements under the Convention are not complied with.
LIABILITY OF CARRIER FOR DAMAGES:
1. Death or injury of a passenger if the accident causing it took place on board the aircraft or in the course of its
operations; (Art. 17)
2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage; (Art. 18) and
3. Delay in the transportation of passengers, luggage or goods. (Art. 19)

NOTE: The Hague Protocol amended the Warsaw
Convention by removing the provision that if the
airline took all necessary steps to avoid the
damage, it could exculpate itself completely (Art.
20(1)). (Alitalia v. IAC, 192 SCRA 9)
LIMIT OF LIABILITY
1. passengers
- limited to 250,000 francs
except: agreement to a higher limit
2. Goods and checked-in baggage
- 250 francs/kg
except: consigner declared its value and paid a
supplementary sum, carrier liable to not more
than the declared sum unless it proves the
sum is greater than its actual value.
3. hand-carry baggage - limited to 5,000
francs/passenger
An agreement relieving the carrier from liability or
fixing a lower limit is null and void. (Art. 23)
Carrier not entitled to the foregoing limit if the
damage is caused by willful misconduct or default
on its part. (Art. 25)
ACTION FOR DAMAGES
1. Condition precedent
A written complaint must me made within:
- 3 days from receipt of baggage
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of
baggage/goods
F otherwise the action is barred except in case of
fraud on the part of the carrier. (Art. 26)
2. Jurisdiction - governed by domestic law
3. Venue at the option of the plaintiff:
a. court of domicile of the carrier;
b. court of its principal place of business;
c. court where it has a place of business
through which the contract has been
made;
d. court of the place of destination. (Art. 28)
4. Prescriptive period 2 years from:
a. date of arrival at the destination
b. date of expected arrival
c. date on which the transportation stopped.
(Art. 29)
5. Rule in case of various successive carriers,
a. In case of transportation of passengers
the action is filed only against the carrier
in which the accident or delay occurred
unless there is an agreement whereby the
first carrier assumed liability for the whole
journey.
b. In case of transportation of baggage or
goods
i. the consignor can file an action against
the first carrier and the carrier in
which the damage occurred
ii. the consignee can file an action against
the last carrier and the carrier in
which the damage occurred. These
carriers are jointly and severally liable.
(Art. 30)
Nota Bene: COGSA/WARSAW applies to foreign
vessels or airplane or international travel
Code of Commerce applies to inter-
island or domestic travel.
Bill of Lading as Document of Title (page 341)
Bill of lading is a document of title under the Civil Code. It can be a negotiable document of title.
A. Negotiability
- It is negotiable if it is deliverable to the bearer, or to the order of any person named in such document. (Art.
1507, Civil Code)
a) Effect of Stamp or Notation Non-Negotiable
the document remains to be negotiable even if the words not-negotiable or non-negotiable are
placed thereon. - Art. 1510 (Civil Code)
B. How Negotiated
a) Bearer document (Art. 1508 and 1511)
- may be negotiated be delivery
b) Order document (Sec. 38, NIL and Art. 1509, NCC)
- can only be negotiated through the indorsement of the specified person so named.
- such indorsement may be in blank, to bearer or to a specified person.
Where a negotiable document of title is transferred for value by delivery, and the endorsement of the
transferor is essential for negotiation, the transferee acquires a right against the transferor to compel
him to endorse the document. xxx (Art. 1515, Civil Code)
C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the transferee the owner of the goods
- results in the transfer of ownership because transfer of document likewise transfers control over the goods
- refer to Art. 1513
Chapter 5
Actions and Damages in Case of Breach
Cause of action of a passenger and shipper:
a) against common carrier based on culpa contractual or culpa aquiliana
b) on the part of the driver based on either culpa delictual or culpa aquiliana
If the negligence of third persons concurs with the breach, the liability of the third person who was driving
the vehicle and/or his employer may be based on quasi delict.
Solidary liability
- In case the negligence of the carriers driver and a third person concurs, the liability of the parties
carrier and his driver, third person is joint and several.
I. Notice of Claim and Prescriptive Period
A. Overland Transportation of Goods and Coastwise Shipping
a) When to file a claim with carrier
- Art. 366 constitutes a condition precedent to the accrual of a right of action against a carrier for damage caused
to the merchandise.
Under Art. 366 of the Code of Commerce, an action for damages is barred if the goods arrived in damaged
condition and no claim is filed by the shipper within the following period:
1) immediately if damage is apparent;
2) within twenty four (24) hours from delivery if damage is not apparent
- the period does not begin to run until the consignee has received possession of the merchandise that
he may exercise over it the ordinary control pertinent to ownership.
- This provision applies even to transportation by sea within the Phils. or coastwise shipping.
- does not apply to misdelivery of goods.
But the period prescribed in Art. 366 may be subject to modification by agreement of the parties.
b) Extinctive Prescription
- six (6) years if there is no written contract
- ten (10) years if there is written contract
This rule likewise applies to carriage of passengers for domestic transportation.
B. International Carriage of Goods by Sea
A claim must be filed with the carrier within the following period:
1) if the damage is apparent the claim should be filed immediately upon discharge of the goods; or
2) within 3 days from delivery if damage is not apparent
Filing of claim is not condition precedent. Thus, regardless of whether the notice of loss or damage has
been given, the shipper can still bring an action to recover said loss or damage within one year after the
delivery of the goods.

a) Prescription
Action for damages must be filed within a
period of one (1) year from discharge of
the goods.
The period is not suspended by an extra-
judicial demand.
Does not apply to conversion or
misdelivery.
The one (1) year period refers to loss of
goods and not to misdelivery.
- Damages arising from delay or late
delivery id not the damage or loss
contemplated under the COGSA. The
goods are not actually lost or damaged.
The applicable period is ten (10) years.
This rule applies in collision cases. The
one (1) year period starts not from the
date of the collision but when the goods
should have been delivered, had the
cargoes been saved.
Insurance
The insurer who is exercising its right of
subrogation is also bound by the one (1)
year prescriptive period.
However, it does not apply to the claim
against the insurer for the insurance
proceeds. The claim against the insurer is
based on contract that expires in ten (10)
years.
II. Recoverable Damages
Damages is the pecuniary
compensation, recompense or
satisfaction for an injury sustained, or as
otherwise expressed, the pecuniary
consequences which the law imposes
for the breach of some duty or violation
of some rights.
A. Extent of Recovery (Art. 220, NCC)
Carrier in good faith is liable only to
pay for the damages that are the natural
and probable consequences of the
breach of the obligation and which the
parties have foreseen or could have
reasonably foreseen at the time the
obligation was constituted.
Carrier in bad faith or guilty of gross
negligence liable for all damages,
whether the same can be foreseen or
not.
- The carrier who may be compelled to
pay has the right of recourse against
the employee who committed the
negligent, willful or fraudulent act.
B. Kinds of Damages
a) Actual or Compensatory Damages
only for the pecuniary loss suffered by him as he
has duly proved
2 Kinds:
1. the loss of what a person already possesses
(dao emrgente);
2. the failure to receive as a benefit that would
have pertained to him (lucro cesante).
Damages may be recovered: Art. 2205
(Civil Code)
1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury;
2) For injury to the plaintiffs business standing or commercial credit.
Damages cannot be presumed.
In case of goods the plaintiff is entitled to their value at the time of destruction.
For personal injury and even death the claimant is entitled to all medical expenses as well as other
reasonable expenses that he incurred to treat his or her relatives injuries.
In case of death the plaintiff is entitled to the amount that he spent during the wake and funeral of the
deceased. But, expenses after the burial are not compensable.
- Read Art. 2206 (Civil Code)
The amount of fixed damages is now P50,000.00
1) Loss of earning capacity
Net Earning Capacity = Life Expectancy x [Gross Annual Income less Necessary Living Expenses]
Life expectancy (2/3 x 80 age at death)
Net earnings based on the gross income of the victim minus the necessary incidental living expenses
which the victim would have incurred if he were alive.
Amount of living expenses must be established. In the absence of proof, it is fixed at fifty (50%) of the
gross income.
Rules on loss of earning applies when the breach of the carrier resulted in the plaintiffs permanent
incapacity.
2) Attorneys fees
- refer to Art. 2208 of the Civil Code
- attorneys fees may be awarded in an action for breach of contract of carriage under par. 1,2,4,5,10 and 11 of
Art. 2208.
3) Interests
12% per annum if it constitutes a loan or forbearance of money
6% per annum if it does not constitute loan or forbearance of money
12% - for final judgment
b) Moral Damages
- Includes physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation and similar injury.
- Though incapable of pecuniary computation, moral damages may be recovered if they were the proximate result
of the defendants wrongful act or omission.
- may be recovered when there is death or there is malice or bad faith. (in transportation of passengers)
- Refer to Art. 2219 and 2220
- Generally, no moral damages may be awarded where the breach of contract is not malicious.
c) Nominal Damages
- Refer to Art. 2221-2223 (Civil Code)
- the assessment of nominal damages is left to the discretion of the court
- the award of nominal damages is also justified in the absence of competent proof of the specific amounts of
actual damages suffered.
- cannot co-exist with actual damages
d) Temperate or Moderate Damages
- Art. 2224 provides:
may be recovered when the court finds that some pecuniary loss has been suffered but its amount can
not, from the nature of the case, be provided with certainty.
- cannot co-exist with actual damages
e) Liquidated Damages
those agreed by the parties to a contract, to be paid in case of breach thereof.
Ordinarily, the court cannot change the amount of liquidated damages agreed upon by the parties.
However, Art. 2227 of the Civil Code provides that liquidated damages, whether intended as an indemnity
or a penalty, shall be equitable reduced if they were iniquitous or unconscionable.
f) Exemplary or Corrective Damages
Requisites for the award of exemplary damages:
1. They may be imposed by way of example in addition to compensatory damages, and only after the claimants
right to them has been established.
2. They cannot be recovered as a matter of right, their determination depending upon the amount of
compensatory damages that may be awarded to the claimant.
3. The act must be accompanied by bad faith or done in wanton, fraudulent, oppressive or malevolent manner.
 The award of exemplary damages in
breach of contract of carriage is subject to
the provisions under Art. 2232-2235 of the
Civil Code.
SECTION 4
Common Carriers (n)
SUBSECTION 1
General Provisions
ARTICLE 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.
ARTICLE 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.
Such extraordinary diligence in the vigilance over
the goods is further expressed in articles 1734,
1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the
passengers is further set forth in articles 1755 and
1756.
SUBSECTION 2
Vigilance Over Goods
ARTICLE 1734. Common carriers are responsible
for the loss, destruction, or deterioration of the
goods, unless the same is due to any of the
following causes only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.
ARTICLE 1735. In all cases other than 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 in article 1733.
ARTICLE 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 article 1738.
ARTICLE 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force
and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made
use of the right of stoppage in transitu.
ARTICLE 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.
ARTICLE 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must
have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to
prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order
that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods.
The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in article
1734, No. 2.
ARTICLE 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall
not free such carrier from responsibility.
ARTICLE 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages,
which however, shall be equitably reduced.
ARTICLE 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the
goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to
forestall or lessen the loss.
ARTICLE 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is
not responsible, provided said public authority had power to issue the order.
ARTICLE 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be
valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
ARTICLE 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to
public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a
man of ordinary prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of
the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.
ARTICLE 1746. 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.
ARTICLE 1747. If the common carrier, without just articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by
cause, delays the transportation of the goods or statements on tickets, or otherwise.
changes the stipulated or usual route, the contract
limiting the common carrier's liability cannot be
ARTICLE 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for
availed of in case of the loss, destruction, or
negligence is valid, but not for wilful acts or gross negligence.
deterioration of the goods.

The reduction of fare does not justify any limitation of the common carrier's liability.
ARTICLE 1748. An agreement limiting the common
carrier's liability for delay on account of strikes or
riots is valid. ARTICLE 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
wilful acts of the former's employees, although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
ARTICLE 1749. A stipulation that the common
carrier's liability is limited to the value of the
goods appearing in the bill of lading, unless the This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good
shipper or owner declares a greater value, is father of a family in the selection and supervision of their employees.
binding.
ARTICLE 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or
ARTICLE 1750. A contract fixing the sum that may limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.
be recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, ARTICLE 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.
if it is reasonable and just under the
circumstances, and has been fairly and freely
agreed upon. ARTICLE 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall
be equitably reduced.
ARTICLE 1751. The fact that the common carrier
has no competitor along the line or route, or a
part thereof, to which the contract refers shall be ARTICLE 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or
taken into consideration on the question of negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the
whether or not a stipulation limiting the common diligence of a good father of a family could have prevented or stopped the act or omission.
carrier's liability is reasonable, just and in
consonance with public policy. SUBSECTION 4
Common Provisions
ARTICLE 1752. Even when there is an agreement
limiting the liability of the common carrier in the ARTICLE 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this
vigilance over the goods, the common carrier is Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of
disputably presumed to have been negligent in contract by a common carrier.
case of their loss, destruction or deterioration.
ARTICLE 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after
ARTICLE 1753. The law of the country to which the due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to
goods are to be transported shall govern the comply with his or its duty to observe extraordinary diligence as prescribed in this Section.
liability of the common carrier for their loss,
destruction or deterioration.
ARTICLE 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by special laws.
ARTICLE 1754. 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. As to other baggage, the rules in
articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be applicable.

SUBSECTION 3
Safety of Passengers

ARTICLE 1755. A common carrier is bound to carry

the passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with a due regard for all
the circumstances.

ARTICLE 1756. In case of death of or injuries to

passengers, common carriers are presumed to
have been at fault or to have acted negligently,
unless they prove that they observed
extraordinary diligence as prescribed in articles
1733 and 1755.

ARTICLE 1757. The responsibility of a common

carrier for the safety of passengers as required in