Quick Look (Transpo)

Commercial Law
Quick Look (Transportation)
V. Transportation Laws
Common Common Definition It is a person, corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, for compensation
carriers carrier (Art 1732) offering their services to the public by land, water or air.
Implications 1. Extraordinary diligence is a must.
2. In case of damage, there is a presumption of negligence on the party of the common carrier. It is the activity of the carrier tha tis
controlling.
Common Common carriers Private carriers
carriers vs. Availability He holds himself out for all people indiscriminately. He contracts with particular individuals or groups only.
Private Required diligence Extraordinary Ordinary
carriers Regulation Subject to state regulation Not subject
Stipulation limiting Party may not agree on limiting the carrier’s liability Parties may limit carrier’s liability, provided it is not contrary
liability except when provided by law to law, morals or good customs.
Exempting Prove extraordinary diligence + Art 1734 Caso fortuito, Art 1174
circumstance
Presumption of There is presumption of negligence or fault. No presumption.
negligence
Governing law Law on common carriers Law on obligations and contracts.
Notes 1. Carrier must hold themselves out as ready 1. If the undertaking is a single or isolated
to engage in carrying goods or transporting transaction, not a part of general business or
passengers or both for compensation as occupation, even if he is paid.
public employment and not as causal 2. He does not hold himself out for the general public
occupation. or limited clientele.
2. He must hold himself out to all persons who 3. He is not bound to carry for any reason, unless he
choose to employ him. enters a special agreement to do so.
Tests for Whether the undertaking is part of the business of the carrier held out to the general public as his occupation
determining 1. He must be engaged in the business of carrying goods for others as public employment.
whether a 2. It should not be a casual occupation.
party is a 3. He must carry goods of the kind to which the business is confined.
common 4. He must carry it in the method by which his business is conducted and over his established raods.
carrier or not 5. He must be for hire.
6. He must have space for all who opt to avail his services.
7. Quantity or extent of business is not material.
8. It does not matter if it is done irregularly rather than a scheduled manner.
9. It does not matter if it is only with limited clientele.
Cases on 1. A school bus is a common carrier.

carriage of a. Even though it has limited clientele, they held themselves as a ready transportation indiscriminately to students of a particular
passengers school and for a fee.
2. When ferry business is so intertwined with its main business as to be properly concerned ancillary to it, it is a common carrier.
a. Constancy of its services in its resort operations is underscored by having its own boats.
b. These services are available to the public.
3. Even if there is no fixed and publicly known route, maintains no terminals and issues no tickets, or it is not obligated to carry the
business to any person, it is a common carrier when it offers its services to the public for compensation.
a. It is considered a common carrier whether carrying goods is done on an irregular basis rather than a scheduled manner or with
limited clientele.
VIP Notes, Bedan Red Book, Legal Edge Handouts, Chair’s Cases, Additional Notes by Lee Anne Yabut 1
b. It does not need to have a fixed and publicly known route, nor does it have to maintain terminals and issue tickets.
4. A travel agency is not a common carrier.
a. It is not an entity engaged in the business of transporting passengers or goods.
b. Its services include procuring tickets and facilitating travel permits or visas as well as booking customers for tours.
Cases on 1. Pipelines are considered common carriers.

carriage of a. Civil Code does not make a distinction as to the means of transporting, as long as it is by land, water or air. It does not provide
goods that transportation of passengers or goods should be by motor vehicle.
b. The corporation is engaged in the business of transporting oil through its pips.
2. Charter party may transform a common carrier into a private carrier. However, it must be a bareboat or demise charter where the
charterer mans the vessel with his own people.
a. In effect, he becomes the owner for the voyage or service stipulated.
b. Charter does not transform a common carrier into a private carrier if it is a contract of affreightment, like a voyage charter
or a time charter.
3. If the customs broker enters into a contract to transfer paper and kraft board from port area to warehouse, it is a common carrier
because it offers the sale to selected parties whom he may contract in the conduct of his business.
a. He is a common carrier even if he does not hold his services to any person.
b. As a common carrier, he must exercise extraordinary diligence in transporting goods.
4. The owner of the delivery truck contracted to transport cargoes from port to warehouse is a common carrier when there is no
indication that it solely and exclusively rendered services to the customs broker.
5. If the main business is brokerage but it also offers delivery or transportation of goods, he may be sued as a common carrier because
Art 1732 does not distinguish on whose principal business activity is the carrying of goods and one who does such carrying only as an
ancillary activity.
a. It is enough that the petitioner undertakes to delivery the goods for pecuniary consideration.
6. Transportation of bags of cement with the barge being towed by a tug boat is a common carrier.
a. Regularity of its activities show that it is not a casual activity.
7. A freight forwarder’s liability is limited to damages arising from its own negligence, including negligence in choosing the carrier.
However, if forwarder contracts to deliver goods to their destination and not only arranging their transportation, it becomes liable as a
common carrier for loss or damage to goods.
a. A freight forwarder assumes the liability of a carrier, who actually executes the transport even if he himself does not carry the
merchandise.
8. One can be a common carrier even if he does not own the vehicle used, as long as an entity holds itself to the public for transport of
goods as a business, it is considered a common carrier regardless of whether it owns the vehicle used or has to actually hire one.
EF and his wife were owners of a minibus used as a bus service for children. YES. Art 1732 does not distinguish if it is a principal business activity or an
A non-stock, non-profit corporation engaged EF to transport their members for ancillary activity. It does not distinguish if an enterprise is offering transportation
a fee. Is EF a common carrier? on a regular or scheduled basis or in an occasional, episodic and unscheduled
basis. It does not distinguish between offering it to the general community or only
for a narrow segment of the general population.
EC, a junk dealer, was engaged in buying up used bottles and scrap metal. He YES.
would bring it to Manila for resale. When he returns from the trip, he would
loan his vehicles for various merchants who wanted to deliver and charged
freight rates commonly lower than regular commercial rates. Is he a common
carrier?
A charters a vessel from a shipping company for transporting two tractors. The NO, if the charter is a demise or a bareboat charter.
crane operator of the shipping company negligently puts the tractors in a place YES, if it is a Contract of Affreightment.
where they would tilt each other. When damages were incurred, the common
carrier cites a stipulation exempting it from liability arising from its agents’ Demise or bareboat charter Voyage or time charter
negligence. Is the shipping company liable? Charterer mans the vessel and its Carrier remains to be the common
own people and becomes the owner carrier. Stipulation is void being
for the voyage or service stipulated. against public policy.
Thus, the carrier becomes a private
carrier. Stipulation is valid.
Diligence Kind of Extraordinary diligence

Required of diligence
Common required
Carriers Extraordinary It is the rendition of service with greatest skill and utmost foresight.
diligence
How Carriage of goods Carriage of passengers
extraordinary How It requires the common carrier to know and to follow the required precaution for avoiding It is bound to carry
diligence is extraordinary damage to, or destruction of goods entrusted to it for sale, carriage, and delivery. passengers safely as far as
applied diligence is human care and foresight
applied It requires them to render service with the greatest skill and foresight and to use all can provide, using the
reasonable means to ascertain the nature and characteristic of goods tendered for shipment utmost diligence of very
and to exercise due care in handling and stowage, including such methods as their nature cautious persons, with due
requires. regard for all circumstances.
Extraordinary Common carries require extraordinary diligence for benefit of third persons. They shall simultaneously benefit pedestrians and owners and
diligence for passengers of other vehicles who are equally entitled to safe and convenient use of our roads and highways.
benefit of
third persons
Extraordinary At the Carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:
diligence in beginning of 1. Make the ship seaworthy
COGSA the voyage 2. Properly man, equip and supply the ship
3. Make the holds, refrigerating chambers and all parts of the ship in which goods are carried, fit and safe for their
reception, carriage and preservation.
4. Carefully load, handle, stow, carry, keep, care and discharge the goods carried
Qualifications Captains, masters or patrons of vessels must be:

of the captain 1. Filipinos
etc. 2. Have legal capacity to contract
3. Prove the skill, capacity and qualifications necessary to command and direct the vessel
4. Limit himself to the financial administration of the vessel
5. Entrust the navigation to a person with qualifications required by ordinances and regulations
Seaworthiness 1. Ship must be seaworthy and cargoworthy.

2. Shippers of goods are not expected to inquire into the vessel’s seaworthiness and compliance with maritime laws.
3. Unseaworthiness can be established by the fact that it did not withstand the natural and inevitable action of the
sea.
4. Passengers and cargo must be within carrying capacity of the vessel.
5. If crew and captain are negligence and really incompetent, Limited Liability Rule cannot be invoked because the
shipowner is deemed negligent (Revert to Limited Liability Rule)
Notes:
1. First step in exercising vigilance is proving that the ship is seaworthy.
2. Presentation of certificates of seaworthiness is not sufficient to overcome the presumption of negligence.
Deviation and Deviation Transshipment
transshipment Rules 1. If route is stipulated by shipper and 1. It is the act of taking cargo from one ship to
carrier, carrier cannot change unless another.
due to force majeure. 2. If done without excuse, there is a violation in the
2. Carrier shall be liable for all losses from contract and infringement of right of shipper.
any other cause, besides the sum a. This subjects carrier to liability if freight
stipulated for each case. is lost even by excepted cause.
3. If he took another route because of b. This violation is incurred no matter how
force majeure, he shall be reimbursed competent and safe the vessel is.
for expenses upon formal proof
Extraordinary 1. Owners are required to make sure that vehicles are in good order and condition.
diligence by 2. In cases of breach of contract of carriage, proof of violation of traffic rules confirms that the carrier failed to exercise extraordinary
land diligence.
3. In overland transportation, common carrier is not bound to examine the contents of the package and bags, especially those hand-carried.
Airlines are required to inspect each and every cargo brought into the aircraft.
Extraordinary 1. Airworthiness
diligence by 2. Competent and well-trained crew
air 3. Required and prescribed route
4. Adverse weather conditions or extreme climactic changes are expected perils
5. Acts punishable:
a. Compel a change in course or destination of aircraft
b. Seize or usurp control of aircraft while in flight
Liabilities of Constitutional Nationality of 1. Corporation must be a domestic corporation and 60% of its capital must be owned by Filipinos.
Common limitations on public utility 2. Franchise, certificate or other forms of authorization for operation of public utility shall only be granted to
Carriers operation of Philippines or corporations and associations organized under Philippine laws where at least 60% of its capital is
public utilities owned by Filipinos.
3. Limit imposed on foreign equity applies only to the operation of the public utility and not to ownership of facilities.
Right to operate may exist independently from ownership of facilities. Ownership of assets only do not require
60% of Filipino equity.
Life of 50 years at a time.
franchise,
certificate or
authorization
Conditions It shall be subject to amendment, alteration or repeal by Congress when common good requires.
Participation 1. They shall be limited to their proportionate share in its capital.
of foreign 2. All executive and managing officers must be Filipino citizens.
investors
Prerogative of State may transfer vital industries to public ownership utilities and other private enterprises to be operated by the
the State Government. There must be just compensation.
Franchise Certificate of public convenience Certificate of public convenience and necessity

Definition Grant or privilege from Authorization to operate public service. It requires a franchise from legislative
sovereign power. Franchise is not required. department.
Notes on Franchise:
1. GR: It is not required before a public utility can be allowed to secure a certificate of public convenience.
a. : If there is a pertinent law requiring it such as franchise for opration of radio and television stations.
2. Franchise issued to a public utility cannot be exclusive.
Cases:
1. LTFRB can suspend operation of 186 buses covered by its 28 Certificate of Public Convenience, eve n if only one bus unit was
involved in the incident.
a. Suspension is not only because of the findings of LTFRB that the ill-fated bus was not roadworthy. Suspension was brought
about by respondent’s wanton disregard and obstinate defiance of the regulations issued by the petitioner, tantamount to
willful refusal to comply with requirements of law or of orders issued by the LTFRB. Under the law, this is punishable by
suspension or revocation of its CPCs.
b. Power to suspend depends on assessed of gravity of violation, potential and actual harm to the public and policy impact of
its own actions. In this regard, Court gives due deference to LTFRC’s administration discretion in application special
knowledge, experience and expertise to resolve respondent’s case.
2. Holder does not acquire vested right in the route covered by its franchise.
a. A CPC is neither a franchise nor a contract. It does not confer any property right. It is only a mere license or privilege.
b. It does not acquire property right in the route covered, or proprietary right or interest of franchise in public highways.
c. Revocation of CPC does not deprive him of any right.
Principles 1. Liability of common carrier is contractual. It arises upon breach of its obligation.
governing a. There is a breach if it fails to exert extraordinary diligence according to all circumstances of each case.
liabilities 2. It is obliged to carry its passenger with utmost diligence of a very cautious person, having due regard for all circumstances.
3. It is presumed to be at fault or to have acted negligently in case of death or injury. It has the duty to prove that it exercised
extraordinary diligence.
4. Carrier is not an insurer against all risks of travel.
Obligations in Carriage of goods Carriage of passengers

carriage of Obligations 1. Deliver goods to the proper person. 1. Observe utmost diligence to passengers
goods 2. Accept the goods 2. Accept passengers without discrimination
3. Seasonably deliver goods to the destination 3. Take care of their baggage
4. Transport goods safely to the agreed destination 4. Seasonably deliver passengers to the destination
5. Exercise extraordinary diligence 5. Transport passengers safely to the agreed destination
Duty to 1. Merchandise shall be transported at the risk of 1. There are claims that are not focused on death,
observe the shipper, if there is no contrary stipulation. injuries, loss or damage on goods but concentrates on
2. Carrier has obligation to deliver goods in the moral damages.
same condition indicated in the bill of lading at 2. These claims shall still prosper because there is still a
the time it was received. breach in contract of carriage.
3. If effect of damage is only a diminution of value 3. Behavior of employees towards passengers is also a
of goods, carrier’s liability shall be reduced to factor to rule against common carriers.
payment of difference of value.
4. If effect of damage is uselessness of thing for sale
or purpose designated, consignee does not have
to receive them. Instead, he may demand
shipper to pay the value at the current price that
day.
Outside Non-acceptance of goods for transportation: The following are not passengers:
coverage 1. Dangerous objects, substances including 1. One who has boarded by fraud, stealth or deceit
dynamites and other explosives 2. Rides any party of vehicle unsuitable or dangerous, or
2. Contrabands or illegal goods which he knows is not designated or intended for
3. Injurious to health passengers
4. Goods will be exposed to untoward danger like 3. Remains on a carrier for an unreasonable length of
flood, capture by enemies time after he has been afforded every safe
5. Goods like livestock will be exposed to diseases opportunity to alight.
6. Goods are unfit for transportation
7. Acceptance would result to overloading
8. Failure to tender goods on time
Notes on Duty to Observe Extraordinary Diligence for Goods:

Deliver goods to the Carrier is deemed to have delivered the goods when possession is received or taken to by customs or other
proper person authorities, or by any operator of any lighter, craft or other facilities.
Customs, other authorities or any operation are considered to be agents of the consignee in this transaction.
If the consignee does not take possession or delivery of goods as soon as these are at his disposal for removal
Accept the goods Carriers may refuse packages which are unfit for transportation.
If the carriage is to be made by railway, and shipment is insisted upon, company shall be exempt from all
responsibility if objections are made to appear in the bill of lading.
Grounds for refusal to accept goods:

1. Dangerous objects, substances including dynamites and other explosives
2. Contrabands or illegal goods
3. Injurious to health
4. Goods will be exposed to untoward danger like flood, capture by enemies
5. Goods like livestock will be exposed to diseases
6. Goods are unfit for transportation
7. Acceptance would result to overloading
8. Failure to tender goods on time
Seasonably deliver goods to the destination
Transport goods safely to the agreed destination
Exercise extraordinary diligence
Notes on Duty to Observe Extraordinary Diligence for Goods:

Merchandise shall be transported 1. All loses and deterioration of goods due to fortuitous event, force majeure or inherent
at the risk of the shipper, if there is nature and defect of goods shall be accounted to the shipper.
no contrary stipulation. 2. Carrier has the burden to prove to these accidents.
Carrier has obligation to deliver 1. In case of failure, carrier shall pay the value of goods not delivered at the point and time
goods in the same condition delivery should have been made.
indicated in the bill of lading at the 2. If part of the goods is not delivered, consignee may refuse to receive them if the other part
time it was received. cannot be used independently.
If effect of damage is only a diminution of value of goods, carrier’s liability shall be reduced to payment of difference of value.
If effect of damage is uselessness If some pieces are in good condition and without defect, Art 365 COGSA shall apply to those damaged
of thing for sale or purpose and consignee must receive those which are sound.
designated, consignee does not Segregation shall be made by distinct and separate pieces and without dividing a single objection,
have to receive them. Instead, he unless it is impossible to use them conveniently in such form.
may demand shipper to pay the Same rule applies to merchandise in bales or pacakages.
value at the current price that day.
Presumption of In case of loss, death, injuries or deterioration, common carrier is presumed to be at fault or have acted negligently unless it had observed
negligence extraordinary diligence.
Carriage of goods Carriage of passengers
Presumption Common carriers are responsible for loss, destruction, or Common carriers are responsible for death or injuries to
of negligence deterioration of goods. passengers.
Exceptions If these are due to the following causes only: It proves that they observed extraordinary diligence.
1. Flood, storm, earthquake, lightning, or other
natural disaster or calamity
2. Act of public enemy in ware, whether
international or civil
3. Act or omission of shipper or owner of goods
4. Character of goods or defects in the packing or
in containers
5. Order or act of competent public authority
Notes:
1. Mere proof of delivery of goods in bad order at their destination or failure to transport passengers safely is prima facie case of fault or
negligence against the common carrier.
2. Doctrine of Proximate Cause is not applicable to contract of carriage.
a. The injured passenger or owner does not need to establish proximate cause. Presumption of negligence arises by mere
happening of the incident.
Vigilance Responsibility Presumption of Common carriers are responsible for loss, destruction, or deterioration of goods, unless they prove that they observed extraordinary
over Goods with respect to negligence diligence.
carriage of Exceptions If these are due to the following causes only:
goods (Art 1. Flood, storm, earthquake, lightning, or other natural disaster or calamity
1734) 2. Act of public enemy in ware, whether international or civil
3. Act or omission of shipper or owner of goods
4. Character of goods or defects in the packing or in containers
5. Order or act of competent public authority
Notes:
1. Carrier is not liable where goods were lost as:
a. A result from a robbery attended by grave or irresistible threat, violation or force.
b. Carrier’s failure to install window grills on its buses to protect passengers from injuries caused by rocks hurled at the bus by lawless elements
(Pilapil Case)
2. List is exclusive.
a. Seizure by armed men is not a fortuitous even when there was already a report for police agents that a certain group will attack the buses and
the carrier did not take steps to safeguard the lives and properties of passengers. This is different from the Pilapil Case where the injury was
not foreseeable.
b. Extraordinary diligence does not require the carrier to vouch for correctness in the travel papers of a passenger.
i. Though it is the duty to check that travel documents are with passengers, it does not have the obligation to check the veracity of the
information in the travel document. Carrier is limited to indorsing and not influencing.
ii. The issue of whether an alien can be admitted entrance to a country is a sovereign act and it cannot be interfered by the carrier.
3. First step in exercising vigilance is proving that the ship is seaworthy.
4. However, presentation of certificates of seaworthiness is not sufficient to overcome the presumption of negligence.
5. Not all instances of bad weather may be categoraized as “storms” or “perils of the sea” within Civil Code and COGSA.
a. Bad weather conditions must reach a certain threshold of severity.
b. Strong winds and waves are not automatically deemed perils of the sea, if conditions are not unusual for that particular sea area at that specific
time, or if they could have been reasonably anticipated or foreseen.
Notes on grounds:
Fortuitous event Natural disaster must have been the proximate cause and the only cause of loss.
EXCEPTIONS to Fortuitous Event:
1. Cases expressly specified by law
2. When it is otherwise declared by stipulation
3. When nature of obligation requires the assumption of risk
Requisites of Fortuitous Event:

1. Cause must be independent of human will.
2. It must be impossible to foresee or impossible to avoid if foreseeable.
3. Occurrence must render it impossible for the debtor to fulfill his obligation in a normal manner.
4. Obligor must be free from any participation in or aggravation of injury resulting to the creditor.
Notes:
1. Fire is not a natural disaster or calamity.
2. Mechanical defect is not a natural disaster. It is within the control of the common carrier.
3. Thunderstorm is a calamity.
4. Sinking of a barge that was being towed by a tug boat was the result of a fortuitous event which resulted because the barge was
suddenly tossed by waves of extraordinary height and buffeted by strong winds resulting in the entry of water into the barge’s
hatches.
5. The Principle of Act of God Doctrine strictly requires that the act must be occasioned solely by the violence of nature.
a. Human intervention is to be excluded from creating or entering into the cause of mischief. When there is a human
participation, whether active or due to neglect, the whole occurrence is humanized and removed from the rules
application to Acts of God.
b. Thus if there was human intervention, in the form of contributory negligence which resulting to loss of cargoes, such as
unloading outside the breakwater instead of inside while the storm signal was up, it was concluded that ht eproximate
cause of loss was the carrier’s negligence in deciding to unload the cargoes in an unsafe place and while a typhoon was
approaching.
Public enemy This includes pirates because they are enemies of all civilized nations. Existence of an actual war is imperative.
1. It does not include robbery and theft.
2. It does not include rebellion and insurrection, unless they are cast off and took allegiance in a hostile manner.
Act or omission of There must be no fault or contributory negligence on part of the carrier.
shipper or owner of
goods Note: A carrier must conduct its own weigh in and not rely solely on the statement of the shipper.
Improper packing If improper packing is known to the carrier or his employees, or is apparent upon ordinary observation but carrier still accepts without
protest or exception, he is not relieved of liability for the resulting damage.
1. If the defect is apparent, carrier may refuse to accept the goods.
a. If shipper insists, remedy is to make a protestation and a foul bill of lading. A Foul Bill of Lading preserves the right of the
carrier to use the instances of Art 1734.
2. If the carrier issued a pro forma bill of lading stating that it accepted the goods in good condition but the goods arrived defective,
the carrier is not exempted from liability because it accepted goods without protest.
Order of public The most important requisites is that the public authority has power to issue an order.
authority
Off-Repeated In the absence of a special contract, a carrier is not an insurer against delay of transportation of goods.
Rule regarding If there was no agreement as to the time of delivery If there is a specified time
delay Common carrier undertakes to The law implies a contract that they shall be delivered to It is bound to fulfill its contract and is liable for any delay, no matter
convey goods its destination within a reasonable time from what cause
Basis of 1. Expected date of arrival reflected in the bill of lading may be considered.
determining 2. It may also depend upon nature of goods, whether perishable or not.
whether
delivery is
within
reasonable time
Consequences In case of excusable delay Inexcusable delay
of delay Consequences 1. It only suspends but does not terminate the contract of 1. Carrier remains duty bound to exercise extraordinary
carriage. When cause is removed, master must proceed diligence.
with voyage and make delivery. 2. Carrier is still liable even if a natural disaster causes damage.
2. During detention or delay, vessel continues to be liable as 3. Stipulation limiting liability of common carrier cannot be
common carrier, not a warehouseman, and remains duty availed of.
bound to exercise extraordinary diligence. 4. Carrier is liable for damages caused by the delay.
5. Consignee may exercise his right to abandon.
Exempting Requirement of Defense of fortuitous event to escape liability Defense of natural disaster for loss,
Causes Absence of destruction or deterioration of goods
Negligence When can It must be established that the fortuitous event was the proximate cause of the 1. Natural disaster must have
common loss. been the proximate and only
carrier raise cause of loss, destruction or
defense Requisites before fortuitous event can be invoked: deterioration.
1. Cause of unforeseen occurrence or failure to comply with obligation 2. Common carrier must
must be independent of human will exercise due diligence to
2. Occurrence must render it impossible for debtor to fulfill his obligation prevent or minimize loss
on a normal manner. before, during and after
3. It must be impossible to foresee the caso fortuito, or inevitable if occurrence of flood, storm
foreseen. or other natural disaster.
4. Debtor must be free from any participation in aggravating the injury
Absence of Effect of absence of If there is an absence of delay, contract limiting the liability of the common carrier can be invoked.
Delay delay
Effect of negligently 1. If common carrier negligently incurs delay in transporting goods, a natural disaster shall not free it from
incurring delay responsibility.
2. If delay is without cause, contract limiting the liability cannot be availed of in case of loss or deterioration of
goods.
Due Diligence 1. Even if there was a fortuitous event, common carrier must still exercise due diligence to prevent or minimize loss.
to Prevent or a. In order to be exempt from liability, it must exercise due diligence before, during and after the occurrence of flood, storm or
Lessen the Loss other natural disaster.
b. Same duty is incumbent in case of an act of public enemy.
2. Even if there was loss of goods caused by its character or faulty nature of packing or containers, common carrier should still exercise
due diligence to prevent or minimize loss.
Contributory Carriage of goods Carriage of passengers
Negligence Duty Shipper is obliged to exercise due diligence in avoiding damage or injury. Passengers are bound to observe due diligence of good
father of family in avoiding injury.
Effect of 1. If shipper or owner merely contributed to the loss, destruction or deterioration Contributory negligence of passengers is not a defense
contributory but proximate cause was the carrier’s negligence, the latter shall be liable in to excuse to bar recover from death or injuries, but it
negligence damages but these are equitably reduced. mitigates it provided that proximate cause is carrier’s
2. Failure of shipper to check if goods are properly packed mitigates liability of negligence.
carrier.
Notes on When carrier should not be made liable:

When it is able to prove extraordinary diligence + only cause of loss is any of the acts of the shipper:
1. Shipper fails to disclose nature of goods
2. Improper marking or direction as to destination
3. Improper loading when he assumed such responsibility
Duration of Carriage of goods Carriage of passengers

Liability Start From time goods are unconditionally placed in the possession of the From the time the person who purchases the ticket or token from
carrier and it has received it for transportation. the carrier and presents himself at the proper place and in a proper
manner to be transported.
End At the time the goods are actually or constructively delivered by the carrier When the passenger reaches his destination, safely alighted from
to the consignee, or to a person entitled to receive the goods. the carrier’s conveyance or has had reasonable opportunity to leave
the carrier’s premises.
Notes for Carriage of Goods:

Actual or Delivery of goods to carrier Delivery of goods to consignee Constructive delivery of goods
Constructive shipped to the consignee
Delivery When When goods are ready for and have been placed in the When there has been actual or When there has been notice of arrival
exclusive possession, custody and control of the constructive delivery of cargoes of goods and consignee fails to claim
carrier for the purpose of immediate transportation to the: them after the lapse of a reasonable
and the carrier has accepted them. 1. Consignee, or period.
2. Person who has the
When delivery has been accepted by the carrier, his right to receive
liability commences instantly. them.
Temporary 1. Duty of the common carrier does not cease upon temporary unloading or storage.
Unloading or a. : Shipper or owner has used Right of Stoppage in Transitu (no need to observe extraordinary diligence)
Storage 2. Duty of common carrier does not cease upon storage of goods in a warehouse of carrier at the place of destination.
a. : Until consignee has been advised of the arrival of goods and has had reasonable opportunity to remove them or dispose
of them.
Notes for Carriage of Persons:

When they are 1. They must have a bona fide intention to sue the facilities of the carrier.
deemed 2. They must have sufficient fare to pay for their passage and they must present themselves tot eh carrier in the place and manner
passengers provided.
Opportunity to 1. Carrier must give passengers the opportunity to board and enter.
board 2. They are liable for injuries suffered by boarding passengers resulting from sudden starting up or jerking of their conveyances.
a. A victim was considered a passenger by stepping and standing on the platform of the bus. While the bus is not in motion, it is
a not necessary for a person to signal his intention to board. Once a public utility bus stops, it is making a continuous offer
to bus riders.
b. A victim was considered a passenger because he entered the LRT station after purchasing a token and he fell while waiting
on the platform. Thus, he was where he was supposed to be with the intention of boarding a train.
Termination All persons who remain on the premises within a reasonable time after leaving the conveyance are deemed to be passengers.
1. “Reasonable time” includes time to look for his baggage and prepare for his departure.
2. A person who walks along the station platform after alighting from a train is still a passenger
Opportunity to 1. Passengers who are reasonably near the bus after alighting are still considered as passengers and are protected under the contract of
alight carriage.
2. A passenger who alighted at his destination and proceeded to the usual way of leaving the premises, but was necessarily delayed from
leaving continues to be a passenger entitle dot the protection of the carrier.
Stipulations Reduction of Carriage of goods Carriage of passengers

Limiting diligence Liability 1. Liability can be limited but not totally Liability cannot be limited or exempted with by stipulation, posting of
Liability exempted. notices, statements on tickets or otherwise.
2. They cannot stipulate that carrier will : When a passenger is carried gratuitously, a stipulation limiting
exercise diligence less than ordinary liability for negligence is valid.
diligence or diligence of a good father of the : Willful acts or gross negligence.
family.
3. It must be in writing to be enforceable.
Amount Reduction of carrier fare is considered a “valuable Reduction of amount requires that:
or fare consideration” in exchange for limitation of liability. 1. It is reasonable and just under circumstances.
2. It is fairly and freely agreed upon
3. Reduction of fair (especially applicable to gratuitous
passengers) is not a justification for any limitation of
liability.
Notes on Stipulations Limiting Liability for Carriage of Goods:

Purpose of limiting It is for the protection of the common carrier. This obliges the shipper or consignee to notify the common carrier of the amount that the
stipulations carrier may be liable for in case of loss of goods.
Unscrupulous (dishonest) shippers may undervalue the goods in order to avail the lower rate of freight at the expense of the carrier
and claim the real value of goods if these goods are damages.
When it is considered Stipulation between carrier and shipper/owner limiting the liability of the carrier for loss, destruction or deterioration of goods to less
valid than extraordinary diligence are valid as long as:
1. In writing, signed by the shipper or owner
2. Supported by valuable consideration other than service rendered by the common carrier
3. Reasonable, just and not contrary to public policy.
Note: “Valuable consideration” is reduction of fare.
Other valid stipulations 1. An agreement limiting liability for delay on account of strikes or riots is valid.
2. An agreement that carrier’s liability shall be limited to value of goods appearing in bill of lading is valid.
3. A contract fixing the sum that may be recovered by the shipper or owner in case of loss, destruction or deterioration of goods
is valid.
Void stipulations 1. Carrier shall exercise less than ordinary diligence (diligence of good father of family, or of man or ordinary produce) in vigilance
of movables transported.
2. Goods are transported at risk of shipper or owner.
3. It will not be liable for any loss, destruction or deterioration of goods.
4. It shall not be responsible for acts or omissions of his employees
5. Its 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
6. It shall not be responsible for acts or omissions of his employees
7. It does not need to observe any diligence in custody of goods.
8. It is not responsible for loss, destruction or deterioration of goods on account of defective condition of car, vehicle, ship,
airplane or other equipment used in the contract of carriage.
Note:
1. Liability cannot be limited in case of robbers or thieves who did not use grave or irresistible threats.
a. : In case there were grave or irresistible threats, liability can be limited because this concern the outcome of the
case.
b. However, presumption of negligence still stands. Stipulation only affects the outcome of the case.
2. Stipulation limiting carrier’s liability for acts of third perions who do not act with grave or irresistible threat, violence or
force is void.
a. Nevertheless, carrier may absolve itself from liability for resulting loss:
i. If it proves that it exercised extraordinary diligence in transporting and safekeeping goods
ii. If it stipulated with shipper or owner of goods to limit its liability for loss, destruction or deterioration of
goods to degree less than extraordinary diligence.
Limitation of Liability to Stipulation limiting liability to a fixed amount is valid if it is reasonable and just under circumstances, and has been fairly and freely
Fixed Amount agreed upon a contract.
Notes:
1. Fact that carrier has no competitor along the line or route may be considered in determining the limitation of liability.
a. This shall be taken into consideration on the question of whether or not the stipulation is reasonable, just and in
consonance with public policy.
2. Limitation on liability does not remove the presumption of negligence.
3. Agreement limiting liability may be annulled by the shipper or owner if the carrier refuses to carry the goods unless the shipper
or owner agreed to such stipulations.
Limitation of Liability in Carrier may still limit its liability to the value of goods appearing in the bill of lading, unless the shipper or owner declares a greater
Absence of Declaration value.
of Greater Value
Effect of delay or If the common carrier delays the transportation of goods or changes the stipulated or usual route without just cause, contract limitning
deviation liability cannot be availed of.
Liability for Checked-In Art 1733, 1734 and 1736 shall govern over responsibility of carrier with respect to checked-in baggage of a passenger.
Baggage of Baggage Baggage that are checked-in or delivered to the carrier are governed by rules requiring extraordinary diligence.
Passengers Baggage in Art 1998 and 2000-2003 concerning responsibility of hotel-keepers apply to baggage in possession of a passenger. Thus, hand-carried baggage
Possession of are not considered as goods but as a necessary deposit.
Passengers or
their employees Notes:
1. In case of loss due to the fault of the passenger, the carrier will not be liable.
a. The act of the thief or robber, who has entered the carrier’s vehicle is not deemed force majeure unless there was use of
arms or irresistible force.
2. (Art 1998) Deposit are regarded as necessary deposits.
a. Keepers are responsible for them as depositaries as long as notice was given to them, or to their employees, while the
passengers must take precautions relative to their care and vigilance.
b. They are not absolutely responsible as depositary because the law requires notice. It is also required to declare the value
of the baggage.
3. (Art 2002) Keepers are not liable if the loss was due to acts of the guests, his family, servants or vistors, or if loss arises from
character of things
Checked-in baggage Hand-carried

Rules applicable Art 1733-1736 Art 1998 and 2000-20003
Legal nature of baggage Goods Necessary deposit
Diligence required Extraordinary diligence Ordinary diligence (asked of a depositary)
Safety of Safety of Responsibility Carrier is bound to carry passengers safely as far as human care and foresight can provide, using utmost diligence of very cautious persons with a
Passengers Passengers of common due regard for all circumstances.
carrier
Presumption of In case of death or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove
negligence that they observed extraordinary diligence.
Void GR: Stipulations, posting of notices, statements on tickets or otherwise lessening or dispensing extraordinary diligence is not valid.
Stipulations : When a passenger is carried gratuitously, a stipulation limiting liability for negligence is valid.
: Stipulation limiting liability for willful acts or gross negligence is not valid.
Reduction of fare does not justify any limitation of liability.

Duration of Waiting for Who is A person who has purchased the ticket or token, who presents himself at the proper place and in a proper manner to be
Liability Carrier or considered a transported, having a bona fide intention to use the facilities of the carrier.
Boarding of passenger
Carrier When does Carriage by train Carriage by sea Carriage by land
duty to exercise When The moment the person As soon as a person Passenger jeepneys and buses have the duty to
utmost extraordinary who purchases the with bona fide stop their conveyances for a reasonable length of
diligence begin diligence ticket from the carrier, intention of taking time in order to allow passengers an opportunity to
begins presents himself at the passage places board and enter.
proper place and in a himself in the care
proper manner to be of the carrier or its They are liable for injuries suffered by boarding
transported with a bona employees, and is passegners resulting from sudden starting up or
fide intent to ride the accepted as a jerking of their conveyances while they do so.
coach. passenger.
Rule: Once a public utility vehicle stops, it is making
a continuous offer to riding public.
Arrival at Extraordinary Extraordinary diligence continues until the passenger has safely alighted from the carrier’s conveyance or has had a
Destination diligence even reasonable opportunity to leave the carrier’s premises and to look after his baggage and prepare for his departure, even after
after reaching reaching his destination.
the destination
Extraordinary Extraordinary diligence applies not only during the trip, but for so long as the passengers are within its premises and where
diligence when they ought to be in pursuance to the contract to carriage. Thus, it exists when the passenger is in the premises of the carrier.
passenger is in
the premises
Cases:
Under Art 1736, extraordinary responsibility over shipper’s goods lasts from the time these goods are unconditionally paced in the possession of, and received, the
carrier for transportation, until they are actually or constructively delivered by carrier to consignee.
Liability for Acts of its employees Acts of other passengers or strangers

Acts of Required diligence Extraordinary diligence Ordinary diligence
Others Nature of liability Tort; however employee Not absolute, limited by Art 1763 (a common carrier is responsible for injuries on account of willful acts or
must be on duty at the negligence of other passengers or of strangers, if carrier’s employees could have prevented or stopped the
time of the act act or omission through ordinary diligence)
Employees Common carriers are liable for death or injuries due to negligent or willful acts of the carrier’s employees, even if the employees have acted
beyond the scope of their authority or in violation of the carrier’s orders.
Carrier’s liability does not cease upon proof that they exercise of diligence of good father in the family in the selection and supervision of its
employees.
Notes:
1. The following are not defenses:
a. Proof of exercise of diligence of good father of a family in selection and supervision of employees.
i. Diligence in selection and supervision cannot be used to prevent damages because carriers’ liability arises from the
breach of contract of carriage. This defense (Art 2180) applies only to negligence in quasi-delicts.
b. Any stipulation eliminating or limiting liability, either through posting of notices, statements on tickets or otherwise.
2. LIability for acts of employees cannot be eliminated or limited by stipulation.
3. Liability for personal violence of its employees and agents upon passengers extends only to acts the carrier could foresee or avoid
through exercise of diligence required.
4. Carrier is not liable for acts of employees not on duty. However, Rule of Strangers apply to them.
5. Carrier’s only recourse after paying damages due to negligent and willful acts of its employees is to recover what it has paid from such
employee.
AA brought first class roundtrip tickets from Manila to YES. Neglect or malfeasance of carrier’s employees could give ground for an action
Japan. While on board, he was forced by BB employee to for damages. Passengers entitled to be protected against personal misconduct,
vacate the first-class seat because there was a white injurious language, indignities and abuses from such employees.
man who has better right to such seat. This caused
embarrassment and inconvenience on the part of AA. Any rule or discourteous conduct on the party of the employees towards a
AA filed damages. Is the airline liable? passenger gives the latter an action for damages against the carrier.
Other RULE OF STRANGERS: A common carrier is responsible for injuries on account of willful acts or negligence of other passengers or of strangers, if
Passengers and the carrier’s employees, through exercise of diligence of good father of family (not extraordinary diligence), could have prevented or stopped the
Strangers act or omission.
Notes:
1. Carrier is responsible for injuries suffered by a passenger on account of willful acts or negligence of other passengers or of strangers, if
the employees could have prevented or stopped the act through exercise of ordinary diligence.
2. Carrier is liable when its personnel allowed a passenger to drive the vehicle, causing it to collide with another.
BBC is a bus company. Its bus had an accident with a YES. Despite the warning by the Philippine Constabulary, BBC did nothing to protect
jeepney keeping several passengers. It was found out the safety of its passengers. Had BBC and its employees been vigilant, they would
that the owner of the jeepney was Maranao. not have failed to see that the malefactors shad a large quantity of gasoline with
them.
The Maranaos took revenge on BCC by burning its buses.
Three of them pretended to be passengers and shot one Under circumstances, simple precautionary measures could have been used such as
of the passengers. The passenger’s wife sued BBC for frisking passengers and inspecting their baggage before allowing them on board.
breach of contract of carriage. Can she claim damages? These could have been done without violating passengers’ constitutional rights.
Jose was on board a bus when he was hit above his eye NO. A common carrier does not give its consent to be an insurer for any and all risks
by a stone hurled by an unidentified bystander. The bus to passengers and goods.
company wasted no time in bringing him to the hospital.
Sadly, he lost his vision and sustained a scar. Can he A tort committed by a stranger which causes injury to passenger does not accord
recover from the bus company? the latter a cause of action against the carrier.
Negligence for which a common carrier is responsible for is the negligent omission
of its employees to prevent the tort from being committed when it could have been
foreseen or prevented.
In this case, degree of care essential to be exercised for protection of its passenger
is only of a good father of a family.
Extent of Breaches of Although relation of passenger and carrier is contractual both in origin and nature, the act that breaks the contract may also be a tort. Passengers do
Liability for contract can not contract merely for transportation. They have a right to be treated by the carrier’s employees with kindness, respect, courtesy and due
Damages be considered consideration.
as tort or
quasi-delict
Extent of Carrier and driver are solidarily liable as tortfeasors.
liability of
carrier and Passenger and shipper Passenger against driver Passenger against third person
driver against common carrier
Liability Culpa contractual Culpa delicto or culpa acquiliana. If negligence of third persons concurs with breach (like
He has no contractual relationship when a passenger was injured when a carrier collided with
with the passenger because he is an another vehicle), the third person driving the vehicle
employee of the owner. However, and/or his employer may be liable on Quasi-Delict.
the same act or omission may give
rise to both causes of action. Tort The driver alone can be held criminally and civilly liable
may be a mode of breach of contract based on delict. In case of civil liability based on delict,
of carriage. employer shall be subsidiarily liable.
Implicatoin Only the carrier is Culpa delicto Culpa
primarily liable and not the aquiliana
driver because ther eis no Driver is primarily Carrier and
privity of contract liable. driver are
betweent he driver and Carrier is solidarily
the passenger. substantially liable liable as
only if driver is joint
convicted and tortfeasors
declared
insolvent.
X rode the bus of Y driven by Z. During Either or both the bus and jeep.
the course of the trip, the bus collided In the case of injury to a passenger due to the bus driver’s negligence in which the passenger was
with a jeep of A. X suffered injuries. riding, and of the driver of another vehicle, drivers and owners of the two vehicles are jointly and
Against whom should X file a complaint severally liable for damages.
for damages?
It should not make any difference that the liability of the bus owner springs from a contract while
that of the driver springs from quasi-delict.
Notes:
1. Acquittal of driver in the criminal case for reckless imprudence does not excuse the carrier from liability.
a. Action for recovery of damages arising from breach of contract of carriage is an independent civil action arising from a contract.
This is separate from the criminal action for reckless imprudence resulting in homicide by reason of the same incident. Hence,
regardless of the driver’s acquittal or conviction in the same criminal case, it has no bearing in a case for damages.
2. Basis of carrier’s liability for assaults on passengers committed by its drivers rests on Doctrine of Respondeat Superior and Principle that
it is the carrier’s implied duty to transport passengers safely.
a. In Implied Duty (majority view), it is enough that assault happens while the driver is on duty. It is not a defense for the carrier
that the act was done in excess of authority or in disobedience of carrier’s order.
i. Carrier requires that it furnishes the passengers full measure of degree of care prescribed by law from violence and
insults at the hands of other strangers and passengers, but also from the acts of the carrier’s own servants.
ii. Carrier’s liability is the breach of contract to transport them safely and delegating the duty to protect the passengers
with utmost care.
iii. As between carrier and passenger, carrier must bear the risk of wrongful acts or negligence of carrier’s employees
against passengers since it has the power to select and remove them.
Registered Definition Liability

Owner Rule Registered Person who is the registered owned is liable GR: Registered owner is liable for damages. He has a right of recourse against
and Kabit Owner Rule for damages caused by the negligence use of the transferee or buyer.
System the vehicle even if the vehicle was already This applies to:
sold or transferred to another person at the 1. Vehicles sold or transferred to another.
time of the accident. 2. Vehicles leased to another.
: In case of stolen vehicle, registered owner is not liable.
He has a right of recourse against the
transferee or buyer.
Kabit System A person, who has a certificate of public Liabilities:
convenience, allows other persons to operate 1. Registered owner is primarily liable for consequences of operation of
their vehicles under his license for a fee or carrier.
percentage of earnings. This arrangement is 2. Registered owner cannot recover from the actual owner and the
in circumvention of the requirement for actual owner cannot transfer the vehicle to himself because both of
license. It is contrary to public policy. them are in pari delicto.
3. Both registered owner and actual owner are solidarily liable with the
drawer.
4. Transfer, sale lease or assignment of privilege granted is valid between
the contracting parties but no tot the public or third persons.
5. A jeepney under Kabit System may be levied for creditors of the
registered operator. Levy is proper and in contemplate of law as
regards the public and third persons. The vehicle should be considered
property of the registered owner under the Registered Owner Rule.
Exceptions to the Kabit System:
1. Neither of parties are being held liable for damages.
2. When case arose from negligence of another vehicle in using the
public road to whom no representation or misrepresentation as
regards ownership and operation of passenger jeepney was made.
3. When riding public was not bothered or inconvenienced at the very
lease by the illegal arrangement.
Boundary Driver pays for the gasoline and does not 1. Owner is subsidiarily liable as employer under Art 103 RPC.
System receive a fixed wage, but gets only the excess 2. From viewpoint of labor laws, there is an employer-employee
of fares collected over the amount he has relationship.
agreed to pay the owner of the vehicle. 3. From viewpoint of civil laws, driver is a lessee because he pays a fixed
amount of rental for his use of the vehicle.
4. From viewpoint of law on common carriers, driver is an employee of
operator for purpose of operator’s liability to passengers.
Arraster Relationship between consignee and arrastre Both arrastre and common carrier are liable in solidum for proper delivery of
Operator operator is akin to a depositor and goods to consignee.
warehouseman. 1. Arrastre operator must take care of goods that are in its custody and
deliver them in good condition.
Relationship between consignee and common 2. Similar duty upon the common carrier.
carrier is akin to a consignee and the arrastre
operator.
Notes on Registered Owner Rule:

1. Registered owner is the operator of the vehicle with respect to the public and third persons, regardless of who the actual owner of the
motor vehicle might be.
a. As such, he is directly and primarily responsible for the consequences of its operations.
b. In contemplation of the law, the owner or operator of record is the employer of the driver while the actual operator or employer
is only his agent.
2. Whether the person driving the vehicle at the time of the incident is duly authorized by the actual owner or not is irrelevant in
determining the liability of the registered owner who the law primarily holds responsible. This does not excuse the registered owner from
liability.
3. A registered owner can be solidarily liable for injuries and damages caused by the driver’s negligence (action based on quasi-delict)
despite the fact that the vehicle may have already been subject to an unregistered Deed of Sale in favor of another person.
a. Unless registered with LTO, the sale does not affect 3rd parties (especially the victims of accident) while valid and binding
between parties of the contract of sale.
Note on Boundary System:

Owner of vehicle being operated under Boundary System remains liable as a common carrier. He cannot escape liability on the ground that he is
only a mere lessor of the vehicle.
Contributory Contributory negligence of passenger does not bar recovery of damages for his death or injuries if the proximate cause is the negligence of the
negligence of common carrier. However, amount of damages shall be equitably reduced.
passenger
Doctrine of This applies to owners and drivers of colliding vehicles and not where a passenger demands liability based on the contract of carriage. It states that
Last Clear where both parties are negligent but negligence of one is appreciably later than that of another, or where it is impossible to determine whose fault or
Chance negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so shall be liable for the loss.
Bill of Bill of It is a written acknowledgement, signed by the master of a vessel or agent of the carrier, that he has received the described goods from the shipper, to be transported on
Lading Lading the expressed terms, to the described place of destination and to be delivered there to the designated consignee or parties.
Three-Fold 1. Receipt for goods shipped
Character 2. Evidence of contract between parties since its contents shall decide all disputes which may arise in regard to their execution and fulfillment.
3. Contract wherein three parties (shipper, carrier and consignee) take specific responsibilities and assume stipulated obligations.
Note: In case the entire vessel is charted, the bill of lading issued by the master to the charterer as shipper, is merely a receipt and a document of title and not a contract
because the contract is the charter party.
Delivery of Period of It depends on whether there has been a stipulation in the contract or bill of lading, or if there was no stipulation.
Goods Delivery
Period of delivery is stipulated Period of delivery is not stipulated
Actions Carrier is bound to fulfill the contract and is Delivery must be within reasonable time. Reasonable time depends on the:
of carrier liable for any delay, not matter what the cause. 1. Expected date of arrival in the bill of lading
2. In the nature of goods.
It is presumed that the carrier has provided a
contingency for such delay. Carrier is bound to forward them in the first shipment of same or similar goods,
which he may make at the point of delivery.
Notes on consignee:
Consignee He may be a shipper or any third person, natural or juridical to whom the goods are to be delivered.
When consignee is bound by A bill of lading is often drawn up by the shipper or consignor and the carrier without the consignee’s
agreement between shipper and intervention. However, the consignee may be bound by stipulations of the bill of lading when:
carrier 1. There is agency between the shipper or consignor and consignee.
2. Consignee demands fulfillment of stipulation of bill of landing which was drawn up in his favor.
When consignee is deemed to accept Once the consignee receives it and does not object to the terms or stipulations in it, he is deemed to have
stipulations of bill of lading accepted the contract and all its terms and conditions because he already has actual or constructive notice.
Delivery If the legitimate holder of the bill fails to present it to the captain, he is responsible for expenses for of warehousing and other expenses arising from it.
Without
Surrender
of Bill of
Lading
Refusal of Why consignee still becomes 1. Agency between the consignee and the shipper’s consignor
Consignee a party even if he is not a 2. Unequivocal acceptance of the bill of lading delivered to the consignee with his full knowledge of its
to Take signatory to the contract of contents.
Delivery carriage between shipper 3. Availment of stipulation pour autrui (when consignee, a third party, demands fulfillment of stipulation
and carrier made by consignor/shipper in consignee’s favor specifically the delivery of goods or cargoes shipped,
from the carrier).
Effect of refusal of consignee If there was already a notice of arrival and consignee fails to claim the goods after lapse of reasonable period, there
to take delivery will be constructive delivery.
If consignee still fails to take delivery, the contract between carrier and consignee will no longer be a contract of
carriage from that point on but a contract of deposit.
Period for It depends on whether Code of Commerce or COGSA is applicable.

Filing
Claims Code of Commerce COGSA
When 1. Domestic, inter-islanad or coastwise transportation. 1. International, overseas or foreign (foreign country to Philippines)
applicable 2. Land, water and air transportation. 2. Water or maritime transportation
Apparent damage If the damage can be ascertained from outside part of the Immediately upon delivery
package, claim shall only be admitted at the time of receipt. 1. Given to the carrier or is agent at the port of discharge, or
2. At the time of removal of goods into the custody of persion entitled
to its delivery.
Latent damage As long indications of damage or average cannot be ascertained 3 days from time of delivery
from the outside part of the packages, within 24 hours
following receipt of merchandise
Failure of filing If all periods have lapsed or transportation charges have been It will be prima facie evidence that the goods have been delivered by the
claims within paid, no claim shall be admitted against the carrier based on the carrier as described in the bill of lading.
period prescribed conditions of goods delivered. : Notice of loss or damage and its general nature in writing has been given to
the carrier or his agent.
Is filing of a claim YES. The 24-hour claim requirement is a condition precedent to NO. Fact of failure to give notice of loss or damage shall not affect the shipper’s
a condition the accrual of a right of action against a carrier for loss or right to bring suit within 1 year after delivery of the goods, or date when the
precedent in bring damage. goods should have been delivered.
suit against
carrier Shipper must allege and prove the fulfillment of the condition. If In the case of any actual or apprehended loss or damage, carrier and receiver
not, he has no right of action against the carrier. shall give all reasonable facilities to each other for inspecting and tallying the
goods.
Notes:
1. Prior notice of claim does not apply to misdelivery Note: COGSA only covers damage and loss claims. It does not apply to cases
of goods of delay and misdelivery.
2. If an insurance claim is filed, instead of a notice of
claim, the indemnity payment by the insurer does
not end the claim because subrogation applies.
Notes on 24-hour notice of claim as condition precedent:

1. The purpose of the notice of claim is not just to relieve the carrier from liability but also to give the carrier the opportunity to examine the nature and extent
of injury.
2. For domestic carriage of goods, notice of claim must be made within 24 hours from receipt of cargo if the damage is not apparent from outside the package. If
it is visible from outside, claim must be made immediately.
a. When goods are delivered, necessary clearance must be made before the package is opened. Upon opening and discovery of damaged condition of
goods, a report must pass to the proper channels before it could be finalized and indorsed by the institution to the claims department of the shipping
company.
3. In one case, a call was made to the shipping company after 2 days. SC ruled that it is a reasonable period considering that goods could not have corroded
instantly overnight such that it could only have sustained damage during transit.
a. Shipping company was able to immediately inspect the damage while the matter was still fresh. In doing so, the main objective of the prescribed
period was fulfilled. There was substantial compliance with the notice requirement.
Period for Code of Commerce COGSA

Filing Period for filing Provisions of Civil Code shall apply. 1 year after goods are delivered or date these should have been delivered.
Actions suit against If there is a bill of lading, prescriptive 1-year period runs from the delivery of the last package.
carrier period is 10 years.
If no bill of lading, 6 years.
Extrajudicial Extrajudicial demand tolls the It does not toll the prescriptive period.
demand prescriptive period, provided it is Note: An extrajudicial claim does not suspend the 1-year period because such period applies to the
written. shipper, assignee, insurer, subrogees and successors-in-interest.
Stipulation of a Under Code of Commerce, parties can Parties cannot stipulate on a shorter prescriptive period but they can stipulate on suspending it.
shorter stipulate on a shorter prescriptive Following actions suspend the prescriptive period.
prescriptive period. 1. An express agreement.
period 2. Filing of an action in court, in which case the prescriptive period is suspended until he action
is dismissed.
Note: 1-year prescription still applies to the subrogee insurance company and to other beneficiaries.
It is not suspended by the subrogation.
Maritime Maritime or It is the system of laws which particularly relates to the affairs and business of the sea, to the ships, their crews and navigation, and to maritime conveyances of
Commerce Admiralty Law persons and property.
Vessel Those engaged in navigation, whether coastwise or on high seas. This includes floating docks, pontoons, dredges, scows and any other floating apparatus for maritime
commerce.
Those not included:

1. Local and foreign vessels
2. Bancas and other watercrafts of less than 3 tons gross capacity
3. Small watercrafts engaged in river and bay traffic
Notes:
1. A ship or vessel is any kind, class or type of craft or artificial contrivance capable of floating on water, designed to be used as a means for water transport
for carriage of passengers or cargo, utilizing its own motive power or that of another.
2. Vessel conveyances, transfers or mortgages are registered with Maritime Industry Authority (MARINA)
a. An unregistered transfer shall not affect third persons but is binding upon parties.
3. Philippine flag vessel or watercraft is one that is registered under Philippine laws. It entitles the vessel to protection of authorities and flag of Philippines in
all ports and on high seas.
Charter Parties Charter party Definition A contract by which an entire ship, or some of its principal parts is let by the ship owner to another person called
charterer for a specified time or use.
Charter parties are of two types:
1. Demise or bareboat charter
2. Contract of affreightment
Requisites 1. Consent of contracting parties
2. Existing vessel which should be placed at disposition of shipper
3. Freight
4. Compliance of Art 652:
a. It must be drawn in du plicate and signed by contracting parties.
b. When either does not know how or is not able to do so, by two witnesses at his request.
Causes that Jason Clause Clause Paramount
may be In case of maritime accident, ship owner is not COGSA shall apply, even though transportation is
included responsible by law, contract or otherwise. Cargo domestic, subject to the extent that if any term of bill of
shippers, consignees or owners shall contribute with lading is repugnant to COGSA or applicable laws,
ship owner in general average. provision is void.
Notes:
1. A captain can enter into a charter contract if he is authorized.
2. A charterer can enter into a sub-charter contract if it is not prohibited. It has a similar rule in Lease.
Bareboat or Definition It is a contract by which the ship owner leases to the charterer the entire vessel. It transfers the entire command,
Demise Charter possession and control over the vessel’s navigation to the charterer, which includes the master and crew who
become the charterer’s servants.
Implications The charterer becomes an owner pro hac vice.
1. Charterer is liable for damages arising from negligence.
2. Master of the vessel becomes the agent of the charterer.
3. Character of common carrier is converted into a private carrier.
4. Charterer is also liable for expenses of the voyage including the seamen’s wages.
5. Ship owner is not liable for any loss that may occur during the voyage.
Liability GR: Charterer is liable to third persons. Ship owner is not liable.
: Ship owner may be liable if the injury was caused by unseaworthiness or negligence of ship owner before the
demise or bareboat took over.
Contract of Contract of Owner of the vessel leases part of all its space to haul goods for others.
Affreightment Affreightment
Kinds Time charter Voyage or Trip Charter
Definition Leased for a fixed period of time The vessel is leased for one or series of voyages
usually for purposes of transporting goods for
charterer.
Implications Charterer hires the vessel only and the master and crew remain to be under the ship owner’s employment.
Ship owner shall be liable for expenses of the voyage, and for any loss or injury during voyage.
Liability Ship owner is liable to third persons.
Liability of Ship Liabilities Ship agent He is the person entrusted with provisioning or representing the vessel in the port in which it may be found. This applies to a co
Owners and of the ship Hence, one will be considered as ship agent as long as he is the one who represents the vessel, whether acting as agent of the
Shipping Agents owner or owner of the vessel or as agent of the charterer.
ship agent
Notes: The term is broad enough to include the ship owner.
Liabilities 1. Substitute another vessel if load is less than 3/5 of its capacity.
2. Observe represented capacity
3. If vessel is chartered wholly, not to accept cargo from others
4. Unload cargo clandestinely (illicitly) placed
5. Place the vessel in a condition to navigate
6. Leave the port if the charterer does not bring the cargo within the lay days and extra lay days allowed
7. Bring cargo to nearest neutral port in case of ware or blockade
Liabilities for 1. Both ship owner and ship agent are civilly and directly liable for indemnities in favor of third person, which may
third persons arise from conduct of captain. However, this direct liability is limited by the ship agent’s or owner’s right of
abandonment.
2. Ship agents can be directly sued by third persons. Only agents can be sued directly.
Note:
1. A ship agent is different from an agent of the ship owner.
a. An agent is not personally liable to the party with whom be contracts, unless he expressly binds himself or exceeds the limits
of his authority without give such party sufficient notice of his powers.
b. If a person is limited to informing the consignee of the arrival of the vessel, he is only an agent of the ship owner.
2. If person had a hand in provisioning the vessel or that it represented the carrier, its charterers or the vessel at any time during the
unloading of the goods, he is a ship agent.
a. His liability shall be solidary with the carrier.
Liability of 1. Pay freightage on unboarded cargo

charterer 2. Pay agreed charter price
3. Pay losses to others for loading uncontracted cargo and illicit cargo
4. Wait if vessel needs repair
5. Pay expenses for deviation
Liability for Ship agent Part owners of the vessel
Acts of Liability Agent shall be civilly liable for indemnities in favor of Part owners shall be civilly liable in proportion of their
Captain third persons which arise from the conduct of the contribution to the common fund.
captain, in the care of goods which the vessel carried.
Exemption He may exempt himself by abandoning the vessel with all Each part owner may exempt himself from this liability by
from her equipment and freight he may have earned during abandonment of party of the vessel belonging to him, before a
liability the trip. notary.
Limited Definition Liabilty of the shipowner is limited to the value of the vessel, earned freightage and proceeds of insurance.
Liability “No Vessel, No Liability” means the total destruction of the vessel extinguishes the maritime lien as there is no longer any
Rule res to which it can attach.
If the vessel, equipment or freightage were completely lost or destroyed, the ship owner shall not be liable anymore.
Who can Ship owner. He is the person for whom the rule has been conceived.
invoke the Charterer cannot invoke it as a defense especially against the shipowner.
Rule
Extent Interest of the ship owner and ship agent extends to:
1. Freightage
2. Insurance proceeds
3. Vessel itself
4. Equipment
When This only applies to those maritime in nature—marine transactions connected with maritime law, maritime trade and
applicable commerce.
1. Civil liability for indemnities in favor of third persons which arise from the conduct of the captain in case of goods
which the vessel carried.
2. Civil liability arising from collisions
3. Unpaid wages of captain and crew if the vessel and cargo are totally lost due to the shipwreck
How are All claims should be collated before they can be satisfied from what remains of the insurance proceeds and freightage at the
claims time of loss.
satisfied
No claimant should be given preference over the others by simple expedience of having filed or completed its action earlier
than the rest. Thus, the execution of judgment in earlier completed cases, even those already final and executory, must be
stayed pending completion of all cases occasioned by the subject sinking. Then and only then can such claims be
simultaneously settled, either completely or pro rate should the insurance proceeds and freightage not be enough to satisfy
the claim.
Notes:
1. The rule applies to handling passengers.
2. Ship owner cannot invoke the Limited Liability Rule if he himself was also negligent.
a. Thus, when the vessel sank because of the ship captain and his crew’s fault or negligence (such as improper stowage of
cargo), rule does not apply. Had the ship owner made a closer inspection, he could have prevented the miscalculation. As
such, ship owner was equally negligent.
3. Charterer or sub-charterer of vessel cannot avail of the Limited Liability Rule.
a. Code of Commerce was clear on which indemnities may be confined or restricted to the value of the vessel (i.e. indemnities
in favor of 3rd persons which may arise from conduct of captain in the care of goods he loaded on the vessel). Thus, what is
contemplated is the liability of third persons who may have dealt with the ship owner, agent or even charterer in case of
demise or bareboat charter.
b. Charterer cannot use the Rule because he does not completely and absolutely step into the shoes of the ship owner or ship
agent because there are still conflicting rights between the charterer and the real ship owner derived from their charter
agreement. Even if possession, free administration and navigation are temporarily surrendered to the charterer, dominion
over vessel remains with the ship owner. Ergo, charterer of sub-charterer can never set up the rule against the owner of the
vessel because the rights of the sub-charterer cannot rise above that of the charterer.
Exceptions 1. No total loss and the vessel is not abandoned.

to the 2. Vessel is insured.
Limited a. Insurance is an exception because there is no loss. Loss is compensated by the insurance company.
Liability 3. Injury or damage, or injury of death of passenger was because of the ship owner’s fault or to concurring negligence of ship owner and
Rule captain.
4. There are expenses for repair and provisioning of the ship before its loss
5. There are claims under Workmen’s Compensation.
a. Workmen’s compensation is not maritime in nature.
Accidents and Average Average includes:

Damages in 1. All extraordinary or accidental expenses incurred during the voyage to preserve the vessel, cargo or both.
Maritime 2. All damages to the vessel and cargo from time of loading and commencement of voyage until end of voyage and unloading of cargo
Commerce 3. Any damage or deterioration which the vessel may suffer from the time it puts to sea from port of departure until it casts anchor in the
port of destination.
4. Those suffered by merchandise from the time they are loaded in the port of shipment until they are unloaded in the port of their
consignment.
General General average Particular average

and Definition 1. All expenses and damages deliberately 1. All expenses and damages caused to the vessel or its
Particular caused to save the vessel, its cargo or cargo which did not inure to common benefit and
Averages both from real and known risk. profit of all persons interested in the vessel and her
2. Where both vessel and cargo are saved, it cargo.
is general average. 2. If only the vessel or cargo is saved, it is particular
average.
Requisites 1. Common danger to vessel or cargo 1. Danger is not common to all.
2. Part of vessel or cargo had to be sacrificed 2. Part of the vessel or cargo had to be sacrificed
deliberately. deliberately.
3. This sacrifice will benefit all for everyone’s 3. The sacrifice did not inure to the common benefit and
common safety. profit of all persons interested in the vessel and cargo.
4. It must be successful. 4. It must be successful.
5. It is necessary.
Principle GR: Sacrifice must be in the course of voyage. GR: The principle here is “loss will lie where it falls”.
: General average can exist even if there is no : If there is insurance
voyage yet. : There is a stipulation in the insurance policy stating that
1. Fire in port insurer shall have no liability on particular averages.
2. Transfer of cargo to another vessel for
necessity to enter another port.
Consequences 1. Person whose property has been saved 1. Owner of goods who caused the expense or who
must contribute to reimburse the damage suffered the damage shall bear this average.
caused or expense incurred. 2. Owner of goods whose cargoes where lost or
2. All persons having interest in the vessel destroyed because of the particular average shall bear
and cargo at the time of occurrence of the expenses on their own. They shall not receive any
average shall contribute to satisfy the reimbursement from other owners of goods whose
general average. cargoes were not affected by the particular average.
3. Those, whose cargoes were saved, must 3. Lender on bottomry and respondentia shall contribute
contribute in proportion to the value of in proportion to their respective interest should it not
the owner’s property saved. belong to the kind of risks excepted, in the absence of
4. Insurers and lenders on bottomry and express agreement of parties.
repondentia must also contribute in
proportion to their interests.
Notes:
Bottomry Loan Respondentia Loan
Definition Loan secured by ship owner or ship agent guaranteed by the vessel itself Loan secured by cargo owner payable upon
and payable only upon arrival of vessel at destination. safe arrival of cargo or destination.
Notes on Requisites of General Average:

Common danger 1. Both the ship and loaded cargo are subject to the same danger, whether during voyage or in port of loading
or unloading.
2. Danger was due to accidents of the sea, dispositions of authority or faults of men, as long as circumstances
producing the peril should be ascertained and imminent or may rationally be said to be certain and
imminent.
Deliberate sacrifice GR: Sacrifice is made through jettison of cargo or part of ship thrown overboard during the voyage.
EXCEPTIONS:
1. If the sinking of the vessel was needed to extinguish the fire in the port, roadsteads, creek or bay
2. If cargo is transferred to lighten the ship because of a storm to facilitate entry into a port
Proper formalities 1. Procedure for recovery
and legal steps 2. Assembly and deliberation
3. Resolution of the captain
4. Entry of the resolution in the logbook
5. Detained minutes
6. Delivery of minutes to the maritime judicial authority of the first port, within 24 hours from arrival.
7. Ratification by captain under oath.
Success in saving Purpose: To be able to demand general contribution
the vessel and cargo
Notes on General Average:

1. York-Antwerp Rules (liability for contribution on averages):
a. Deck cargo is allowed in coastwise shipping but prohibited in overseas shipping.
b. In overseas trade, cargo owner must always contribute to general average but if the goods are jettisoned, it would not be
entitled to reimbursement because there is a violation of York-Antwerp Rules.
c. In coastwise shipping, cargo owner must always contribute to general average and if jettisoned, would be entitled to
reimbursement.
2. Expenses incurred to refloat a vessel, which accidentally ran aground is not general average.
a. There is no marine peril, common safety factor and deliberateness in this case.
b. It is the safety of property, and not the voyage, which constituted the foundation of General Average.
3. If cargoes should be transferred to barges because of a storm, and these cargoes are lost, owner of such part shall be entitled to
indemnity as if the loss was from a General Average. Its amount shall be distributed between the vessel and cargo from which it came.
a. If cargoes transferred were saved but the vessel was lost, cargo owner cannot demand liability.
4. If despite jettison of merchandise, vessel still sinks due to breakage of masts, ropes and equipment, there is no General Average.
a. Owner of goods saved shall not be liable for indemnification.
5. If after the vessel has been saved from the risk, but lost to another accident during voyage, goods saved and existing in the first risk
shall continue to be liable under General Average in the condition they may be found, deducting the expenses incurred in saving
them.
A vessel owned by AA left for Manila to Batanes with general cargo belonging to NO. Facts do not disclose that expenses were incurred to
different shippers, including B. After a day’s stopover in that port, it weighed save the vessel and cargo from common danger. Vessel
anchor. While in port, it ran agroud in the mouth of the river. was refloated to enable it to proceed to its port of
destination. Hence, there was no general average because
Attempts to refloat it failed. Plaintiff had to refloat it by another company at an it is the safety of the property and not of the voyage that
agreed compensation. Once afloat, the vessel returned to Manila to refuse and constitutes the true foundation of a general average.
then proceeded to Batanes.
It appears that cargoes could have been unloaded by
It was established that the stranding of the vessel was due to the sudden owners if they have been required to do so without need
shifting of the sandbars at the mouth of the river which the port pilot did not of expensive refloating operations.
anticipate. Are expenses for refloating the vessel considered general averages?
Collisions Collision Collision Allision

Definition Impact or sudden contact of a vessel with another If one vessel is moving while the other is
whether both are in motion or one is stationary. stationary, it is called allision.
Different First zone Second zone Third zone

zones of time Definition It covers all the time up to the moment Risk of collision begins and Time when collision is
in collision of when risk of collision begins moment it becomes a practical certain and time of
vessels certainty impact
Actions of Each vessel is free to direct its course as Vessels must strictly observe An error in this zone
vessel it deems best without reference to the nautical rules, unless departure would not longer be
movements of the other vessel. from it is necessary to avoid legally consequential
imminent danger.
Error in It is the sudden movement made by a faultless vessel during the third zone of collision with another vessel which is at fault
Extremis during the 2nd zone.
Even if such sudden movement is wrong, the faultless vessel will incur no liability for it.
Cases covered One vessel at He is liable for damages caused to:
by rules on fault 1. Innocent vessel
collision and 2. Cargo owners of both innocent and faulty vessel
allision Both vessels at Each vessel must bear its own loss. Doctrine of Inscrutale Fault applies.
fault But shippers of both vessels may go against the ship owners who will be solidarily liable.
Vessel at fault Same as vessels at fault. Doctrine of Inscrutale Fault applies.
not known
Third vessel at Same as one vessel at fault.
fault
Fortuitous Each vessel must bear its own loss.
event or force This is subject to provisions of Civil Code on fortuitous events, duty to exercise due diligence before,
majeure during and after the collision, provided there is no delay.
EX: Vessel properly anchored collides to another because of storm
Doctrine of In case of collision where it cannot be determined which of the two vessels are at fault, both vessels bear their respective
Inscrutable damage but they should also be solidarily liable. For damage to cargo of both vessels.
Fault
Notes:
1. Defense of due diligence in selection and supervision of employees in an action against the shipper of the other
colliding vessel does not apply, compared to ordinary rule in liabilities for Culpa Aquiliana.
2. Under the Doctrine, where fault is established but it cannot be determined which fo the two vessels were at
fault, both shall be deemed to be at fault.
Carriage of Goods Application COGSA is applicable when the following are present:
by Sea Act 1. Water or maritime transportation
2. For carriage of goods
3. Overseas/international/foreign (from foreign port to Philippine port)
Liability under COGSA:

1. Maximum of $500 per package or per customary freight unit.
2. Nature and value of goods may be declared by shipper and inserted in the bill of lading—this declaration is prima facie and not
conclusive on the carrier.
3. Shipper and carrier may agree on another maximum amount, but not more than the amout of damages actually sustained.
Notes:
1. COGSA applies suppletorily when goods are shipped from a foreign port to the Philippines.
a. Under it, liability of the carrier is $500 per package if shipper did not declare a higher value in the bill of lading.
b. If the goods are shipped in cartons, each carton is considered a package even if these are stored in container vans.
c. If the packages are shipped in a container supplied by the carrier, and the number of units are disclosed in the shipping
documents, each unit is the one considered as “package”, not the container.
i. In a case where there were 242 coils of steel sheets shipped inside containers provided by the carrier and the
LOC stated “per metric ton price of coils”, each coil is considered a package. This packaged served as the
basis for liability under COGSA and not the value stated in the LOC.
2. COGSA does not apply to conversions, misdelivery and delayed delivery. It only applies to non-delivery and damages goods.
3. COGSA does not apply when the shipper fails to declare the value fo goods in the bill of lading, or if the amount exceeds $500
per package.
Notice of Loss Period for filing Apparent damage Latent damage (loss or damage
or Damage claims against the not apparent)
carrier Period Notice of loss and damage and general nature of such loss Notice must be given 3 days from
and damage must be given is given in writing to the carrier time of delivery.
or his agent:
1. At the port of discharge, or
2. At the time of removal of goods into custody of
the person entitled to its delivery
Notes:
 Patent damage: immediately upon delivery
 Latent damage: 3 days
Effect of failure to It will be prima facie evidence that the goods have been delivered by the carrier as described in the bill of lading.
file claims within : Notice of loss or damage and its general nature in writing has been given to the carrier or his agent.
period prescribed
Filing a claim is not Filing a claim is not a condition precedent in bringing a suit against the carrier.
a condition If a notice of loss or damage (apparent or concealed) is not given, fact shall not affect or prejudice the shipper’s
precedent in bring a right to bring suit within 1 year after delivery of the goods, or date when the goods should have been delivered.
suit against the
carrier In the case of any actual or apprehended loss or damage, carrier and receiver shall give all reasonable facilities to
each other for inspecting and tallying the goods.
Start of prescriptive Prescriptive period shall run from delivery to the arrastre operator and not to the consignee.
period
Period of Period for filing suit Within 1 year after goods are delivered or date when goods should have been delivered.
Prescription against carrier Otherwise, carrier and ship shall be discharged from all liability in respect of loss or damage.
Extrajudicial Extrajudicial demand does not suspend the prescriptive period in bring a suit.
demand 1-year period shall run from the delivery of the last package.
Parties cannot Prescriptive period cannot be shorted by stipulation. However, it can be suspended by stipulation.
shorted the The following suspend the prescriptive period:
prescriptive period 1. Express agreement of parties
2. Filing of an action in court until it is dismissed.
Notes:
1. Notice of claim is not a condition for filing a legal action for damaged goods under COGSA.
a. Notice in writing does not need to be given if the state of goods has been the subject of a joint survey or inspection at
the time of their receipt. In any event, the carrier and ship shall be discharged from all liability, unless a suit is brought 1
year after delivery of goods or from date when these goods are delivered.
2. The purpose of the 1-year limitation is to meet the exigencies of maritime hazards.
a. Situation is different if the goods shipped where neither lost nor damaged in transit but were delivered to port. Once
these are delivered to port, the need for a short period of limitation does not apply.
3. Rule applies to collision cases, but period starts from the date the goods should have arrived had these been saved, not from
date of collision.
4. 1-year prescriptive period does not apply to the claims of an arrastre operator.
a. COGSA does not mention that an arrastre operator may invoke the prescriptive period of 1 year. It only mentioned
carrier and shipper.
5. Filing of an amended pleading which impleads another party does not retroact to the date of filing of original.
a. Even though an amendment relates to the commencement of the action and is not barred by Statute of Limitations if it
expires after the service of the original complaint, this rule does not apply to the party impleaded for the first time after
service of the amended complaint.
b. Thus, if a defendant was not impleaded in the original complaint, and such complaint was amended beyond the 1-year
prescriptive period impleading him, the suit against the impleaded defendant is beyond the prescriptive period under
COGSA.
6. Notwithstanding the fact that the case was filed beyond 1-year prescriptive period, the suit against the insurer will not be
dismissed if the delay was not due the claimant’s fault.
a. Had the insurer processed and examined the claim promptly, the claimant or insurer itself as subrogee could have taken
judicial action in time. By making an unreasonable demand for an itemized list of damages which caused delay, insurer
should bear the loss with interest. 1-year limitation is designed to meet the exigencies of maritime hazards.
Limitation of Limitation on Liability is limited to the vessel, its freight and insurance. It is premised on the condition that the death or injury to
Liability liability of the the passenger occurred by reason of the captain’s fault or negligence only.
carrier The doctrine does not apply if death or injury was due to the owner’s fault and negligence. Abandonment of vessel
does not absolve him of liability.
Loss or damage due Carrier or other person claiming exception has the burden of proving the exercise due diligence whenever loss or
to unseaworthiness damage has resulting from unseaworthiness.
Carrier not liable Loss or damage arising from:
for loss or damage 1. Saving or attempting to save life or property at sea
under COGSA 2. Fire, unless caused by actual fault or privity of the carrier.
3. Arrest or restraint of princes, rulers or people, or seizure under legal process
4. Insufficiency or packing
5. Insufficiency or inadequacy of marks
6. Latent defects not discoverable by due diligence
7. Act of God
8. Act of War
9. Act of public enemies
10. Act or omission of shipper or owner of goods, his agent or representative
11. Act, neglect, or default of master, mariner, pilot or servants of carrier in the navigation or in
management of ship
12. Riots and civil commotions
13. Perils, dangers and accidents of the sea or other navigable water
14. Strikes, lockouts or stoppage or restraint of labor from whatever cause, whether partial or general as
long as this shall not relieve the carrier for its own acts.
15. Quarantine restrictions
16. Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of
goods.
17. Any other cause arising without actual fault and privity of the carrier and without the fault or neglect of
agents, or servants of the carrier,
a. Burden of proof shall be on the person claiming the exception to show that neither the
actual fault or privity of the carrier nor the fault or neglect of the agents or servants of
carrier contributed to the loss or damage.
Limitation of He shall not be accountable for loss or damage sustained by the carrier from any cause, without act or neglect of
liability of shipper the shipper, his agents or servants.
Rule on attempts to GR: Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shall not be
salve life or deemed to be an infringement or breach of COGSA or contract of carriage. The carrier shall not be liable for any
property at sea loss or damage resulting from it.
: If the deviation is for loading or unloading cargo or passengers, it shall be prima facie unreasonable.
Value of limited GR: If the shipper fails to declare the value of goods in the bill of lading, the carrier and the ship cannot become
liability of the liable for ayy loss or damage in an amount exceed $500 per package, or in case of goods not shipped in
carrier packages, per customary freight unit, or equivalent of that sum in other currency.
: Nature and value of goods have been declared by the shipper before the shipment and inserted in the bill of
lading.
1. If declaration is embodied in a bill of lading, it shall be prima facie evidence but it shall not be conclusive
on the carrier.
2. The bill of lading is the formal express of parties’ rights, duties and obligations.
3. It is the best intention of parties from the language used in the contract and not from assertions of
either party.
4. When terms of an agreement have been reduced into writing, it is deemed to contain all terms agreed
upon between parties and their successors-in-interest. No evidence of other terms outside the contents
of written agreement should be entertained.
Note:
1. If there is loss or damage to goods covered by contracts of carriage from a foreign port to a Philippine
port and shipper did not declare the value of goods, Rule on Package Limitation Liability of $500 per
package shall apply.
2. In one case, a carrier was found liable for the entire amount of damages sustained when all needed
details were in the invoice. The invoice contained the itemized list of goods shipped to the buyer. There
was compliance with COGSA requirement when the invoice was incorporated, referencing the bill o
flading showing the description of value and payment of freight charges.
Maximum value of Maximum value of limited liability of carrier can be fixed by parties.
limited liability of 1. By agreement of the carrier, master or agent of the carrier, and the shipper, another maximum amount
carrier fixed by may be fixed, as long as:
parties a. It shall not be less than $500 per package, customary freight unit, or equivalent of that sum
in another currency, unless the nature and value of goods have been declared by the shipper
and inserted in the bill of lading.
2. Carrier shall not be liable for more than the amount of damage actually sustained.
3. Carrier or ship shall not be liable for loss or damage if nature or value of goods has been knowingly and
fraudulently misstated by the shipper in the bill of lading.
Goods of If the carrier, master or agent of the carrier has not consented with knowledge of their nature and character, they
inflammable, may be landed at any place, destroyed or render innocuous (not harmful) by the carrier at any time before
explosive or discharge and without compensation to the shipper.
dangerous nature
If goods are shipped with knowledge and consent but it becomes a danger to the ship or cargo, they may also be
landed at any place, destroyed or rendered innocuous (not harmful) by the carrier without liability, except to
general average if any.
Warsaw Warsaw It is an agreement among sovereign countries concerning the regulation in a uniform manner of conditions of international transportation by air in respect to
Convention Convention documents used for such transportation and the liability of the carrier. It was signed on October 12, 1929 Warsaw, Poland.
Applicability Instances 1. International transportation
2. Air transportation
3. Carriage of passengers, baggage or goods
Other instances 1. Fortuitous events affecting transportation by aircraft performed by air transportation enterprise.
2. Air transportation by legal entities constituted under public law of High Contracting Parties
“International 1. Where place of departure and place of destination are within territories of two contracting countries, regardless of whether there
transportation was a break in the transportation or transshipment.
by air” 2. Where place of departure and place of destination are within territory of a single contracting party, if there is an agreed stopping
place within a territory subject to sovereignty, mandate or authority of another power, even though the power is not a party to the
convention (“round trip”).
When not 1. If there is willful misconduct on part of carrier’s employees.
applicable 2. When it contradicts public policy
3. If requirements under Warsaw Convention are not complied with.
Liability of air 1. Death or injury of a passenger if the accident took place on board the aircraft or during its operations.
carriers a. On board the aircraft
b. In the course of any operations of embarking
c. In the course of embarking
d. Whenthere was or because of delay
2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage
3. Delay in transportation of passengers, luggage or goods
Notes:
1. Warsaw Convention prevails over the Civil Code, Rules of Court and all laws in the Philippines since an international law prevails over general law.
2. If there is no agreement concerning stopping place, transportation is not deemed international for purposes of Warsaw Convention.
3. Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage, it can
exculpate itself completely.
Transportation by It is the period during which the barrage of goods are in charge of the carrier, whether in an airport, or on board the aircraft, or in the case of a landing outside
air airport, in any place whatsoever.
1. It does not cover any transportation by land, sea or river performed outside the airport.
2. If transportation takes place in a transportation by air, for loading, delivery or transshipment, any damage is presumed to have beent he result of an event
which took place during the transportation by air, subject to contrary proof.
Limitation of Liability to Passengers Liability for Checked Baggage Liability for Goods Shipped Liability for Hand carried
Liability Baggage
General Rule 125,000 francs per passenger. 250 francs per kilogram $20 per kilogram 5000 francs per passenger
Exception 1. When there has been an When there is a special declaration of value and payment of a
agreement to increase supplementary sum by the consignor, the carrier is liable to pay not
the liability of the more than the declared sum, unless it proves that the sum is greater
carrier. than the actual value.
2. Limit for passenger
death or injury is 75,000 GR: In determining the amount of the carrier’s delivery, only the
inclusive if legal fees and total weight of the package shall be considered.
costs where the US is : Value of other packages covered by the same baggage check or
the origin, destination or same airway bill shall be effected—in this case, total weight of other
stopping place. packages shall also be considered.
Willful Quasi-Delict Warsaw Convention does not provide for an exclusive enumeration of instances when carrier is liable. It does not provide for an absolute
Misconduct or limit of liability and it does not preclude the application of the Civil Code and other local laws. Hence, a complaint for Quasi-Delict can still be
Tort Liability filed even beyond the filing period under the Convention as long as it is within the prescriptive period under the Civil Code (4 years).
Denial to carrier Carrier cannot limit its liability of the damage was caused by the willful misconduct of any of its agents.
of any provision Warsaw Convention denies the carrier of any “availment of provisions which exclude or limit its liability, if the damage is caused by his
limiting liability willful misconduct or by such default on his part, as in accordance with law of the court seized of the case. This is considered equivalent to
on willful willful misconduct or if damage is (similarly) caused by any agent of the carrier acting within the scope of its employment”.
misconduct
Action for Notice of claim or This is mandatory or condition precedent to an action for damages. It must be filed with international carrier.
damages Protest Damage to baggage Damage to goods Delay of delivery
Period for filing 3 days from receipt 7 days from 14 days from time the baggage was placed at the disposal of the
the Protest receipt passenger.
Prescriptive Damage to passenger baggage Action for tort including humiliation at the hands of airline employees
period of action Period 2 years from receipt 4 years
for damages
Jurisdiction Governed by domestic law
Venue At the option of the plaintiff:
1. Court of domicile of carrier
2. Its principal place of business
3. Where it has a place of business through which the contract has been made
4. Place of destination
Notes:
1. This enumeration cannot be waived because these jurisdictional in nature.
a. In a case, respondent is a British corporation domiciled in UK with London as its principal place of business. Hence,
under #1 and #2, petitioner may bring her case before courts of London.
b. In the passenger ticket and baggage check, it appears that ticket was issued in Rome, Italy. Hence, under #3, petitioner
has the option to bring her case before Rome.
c. Finally, both petitioner and respondent avert that place of destination is Rome, properly designated given the routing
presented in the ticket and baggage check. Petitioner may bring her action before Rome.
d. RTC Makati ruled that it did not have jurisdiction over the case even though it was based on tort and not on breach of
contract.
2. Warsaw Convention does not give an exclusive enumeration of cases that may be filed against the airline.
a. While it has force and effect of law in the Philippines as a treaty, it does not operate as an exclusive enumeration of
instances when a carrier shall be liable for breach f contract or as an absolute limit of extent of liability, nor does it
preclude operation of Civil Code or other pertinent laws.
3. A claim covered by Warsaw Convention can no longer be recovered under local law, if the statute of limitations of 2 years has
lapsed.
a. Nevertheless, jurisprudence in Philippines and US also recognizes that Warsaw Convention does not exclusively
regulate relationship between passenger and carrier on an international flight.
b. In one case, acceptance in due course by PAL of Mejia’s cargo as packed and its advice against the need for
declaration of actual value operated as an assurance to Mejia that there was no need for such declaration. Mejia
cannot be faulted for relying on PAL’s representations.
c. Even if the claims for damages was conditioned on timely filing of a formal claim, Art 1178 states that such condition is
deemed fulfilled considering that collective action of PAL;s personnel in tossing around the claim and leaving it
unresolved for an indefinite period of time was tantamount to voluntarily preventing its fulfillment. On the grounds of
equity, filing of baggage freight claim constituted substantial compliance with requirement in the contract for filing a
claim.
Overbooking and 1. Overbooking is not prohibited per se. However, expense, consequence and inconvenience caused by passenger should be
denied boarding shouldered by the carrier.
2. Passenger must be given meals and accommodations, and must be carried in the next available flight.
3. Carrier must first look for passengers who are willing to give up their seats in favor of other passengers.
4. Passenger may also refund the value of ticket plus liquidated damages of 3,000 for domestic flights and 5,000 for international
flights.
Special rules on 1. In case of flight diversion due to bad weather and other circumstances beyond the pilot’s control, relation between carrier and passenger continues until
liabilities of airline the latter has bene landed at the port of destination and has left the carrier’s premises. Carrier should exercise extraordinary diligence in safeguarding the
carriers safety of its stranded passengers until they have reached their final destination.
2. Even if overbooking is allowed, carrier may still be guilty of bad faith and still be liable for damages if it did not inform the passenger that it could breach
the contract of carriage even if they were confirmed passengers.
3. An open-dated ticket constitutes a complete contract between the carrier and passenger. Hence, the airline company is liable if it refused to confirm a
passenger’s flight reservation.
4. An airline company which issued a confirmed ticket to a passenger covering successive trips on different airlines can be held liable for tortious conduct of
the other carrier. A printed provision in the ticket limiting liability only to its own conduct is not enough to rebut that liability.
Cases:
1. When an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises. Passenger has every right to expect that he would fly
on that flight and on that date.
a. If that does not happen, carrier opens itself to a suit for breach of contract. In an action based on breach of contract, aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All he has to prove is the existence of the contract and the fact of its nonperformance by the carrier, through the latter’s
failure to carry the passenger to its destination.
2. Issuance of two-way tickets with itineraries indicating date and time of return flight are binding contracts of carriage.
a. It was only after petitioners went through all required check-in procedures that they were informed that they were only chance passengers. As a practice airlines do not
accept pieces of luggage from passengers without confirmed reservations.

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Commercial Law

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Cases on 1. A school bus is a common carrier.

Cases on 1. Pipelines are considered common carriers.

Diligence Kind of Extraordinary diligence

Qualifications Captains, masters or patrons of vessels must be:

Seaworthiness 1. Ship must be seaworthy and cargoworthy.

Franchise Certificate of public convenience Certificate of public convenience and necessity

Obligations in Carriage of goods Carriage of passengers

Notes on Duty to Observe Extraordinary Diligence for Goods:

Grounds for refusal to accept goods:

Notes on Duty to Observe Extraordinary Diligence for Goods:

Requisites of Fortuitous Event:

Notes on When carrier should not be made liable:

Duration of Carriage of goods Carriage of passengers

Notes for Carriage of Goods:

Notes for Carriage of Persons:

Stipulations Reduction of Carriage of goods Carriage of passengers

Notes on Stipulations Limiting Liability for Carriage of Goods:

Note: “Valuable consideration” is reduction of fare.

Checked-in baggage Hand-carried

Reduction of fare does not justify any limitation of liability.

Liability for Acts of its employees Acts of other passengers or strangers

Registered Definition Liability

Notes on Registered Owner Rule:

Note on Boundary System:

Period for It depends on whether Code of Commerce or COGSA is applicable.

Notes on 24-hour notice of claim as condition precedent:

Period for Code of Commerce COGSA

Those not included:

Liability of 1. Pay freightage on unboarded cargo

Exceptions 1. No total loss and the vessel is not abandoned.

Accidents and Average Average includes:

General General average Particular average

Notes on Requisites of General Average:

Notes on General Average:

Collisions Collision Collision Allision

Different First zone Second zone Third zone

Liability under COGSA:

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