A. DEFINITION OF COMMON CARRIER
EXAMPLES OF COMMON CARRIER
Q: What is transportation?
A: The movement by:
1. Carrier of goods; or
2. Persons from one place to another
Q: What is a contract of transportation?
A: A contract whereby a person, natural or juridical, obligates
to transport persons, goods or both, from one place to
another, by land, air or water, for a price or compensation.
Q: What are the kinds of transportation/carriers?
A:
1. Common (public) or private (special) carriers;
2. Carriers of goods or of passengers;
3. Carriers for a fee (for hire) or for free (gratuitous);
4. Land, water (maritime), or air carriers; and
5. Domestic (inter-island or coastwise) or international
(foreign) carriers
Q: What does a common carrier bound to do? How?
A: It is bound to carry persons, goods, or both with
extraordinary diligence with regard to all other circumstances.
Q: What is a common carrier?
A: Article 1732. Common carriers are persons, corporations,
firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public.
Q: “engaged in the business of carrying or transporting” What
does that mean? Does it imply that the business of
transportation must be its principal business?
A: No distinction whether it is the principal business or not. If
that is the intention, it will be provided.
Q: If ancillary, can it still be considered a common carrier?
Cite a case.
A: A.F. Sanchez Case (pero hinahanap ni Ma’am De Guzman
Case)
Q: What are the elements of a common carrier?
A:
1. A common carrier is a person, corporation, firm
or association;
2. It is engaged in the business of carrying or
transporting passengers, goods or both;
3. It does the carriage or transportation by land,
water or air;
4. It carries or transports passengers and/or goods
for compensation; and
5. It offers its services to the public without any
distinction whatsoever.
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B.
First Philippine Industrial Corporation vs. Court of Appeals
• It is engaged in the business of transporting or
carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who
choose to employ its services, and transports the
goods by land and for compensation. The fact that
petitioner has a limited clientele does not exclude it
from the definition of a common carrier.
A.F. Sanchez Brokerage Inc. vs. Court of Appeals
• Article 1732 does not distinguish between one whose
principal business activity is the carrying of goods and
one who does such carrying only as an ancillary
activity. The contention, therefore, of petitioner that
it is not a common carrier but a customs broker
whose principal function is to prepare the correct
customs declaration and proper shipping documents
as required by law is bereft of merit. It suffices that
petitioner undertakes to deliver the goods for
pecuniary consideration.
Loadmasters Customs Services, Inc. vs. Glodel Brokerage
Corporation
• Loadmasters is a common carrier because it is
engaged in the business of transporting goods by
land, through its trucking service. It is a common
carrier as distinguished from a private carrier wherein
the carriage is generally undertaken by special
agreement and it does not hold itself out to carry
goods for the general public. The distinction is
significant in the sense that "the rights and
obligations of the parties to a contract of private
carriage are governed principally by their stipulations,
not by the law on common carriers.
Unsworth Transport International vs. Court of Appeals
• Freight forwarder refers to a firm holding itself out to
the general public (other than as a pipeline, rail,
motor, or water carrier) to provide transportation of
property for compensation and, in the ordinary
course of its business, (1) to assemble and
consolidate, or to provide for assembling and
consolidating, shipments, and to perform or provide
for break-bulk and distribution operations of the
shipments; (2) to assume responsibility for the
transportation of goods from the place of receipt to
the place of destination; and (3) to use for any part of
the transportation a carrier subject to the federal law
pertaining to common carriers.
• A freight forwarder’s liability is limited to damages
arising from its own negligence, including negligence
in choosing the carrier; however, where the
forwarder contracts to deliver goods to their
 destination instead of merely arranging for their
transportation, it becomes liable as a common carrier
for loss or damage to goods. A freight forwarder
assumes the responsibility of a carrier, which actually
executes the transport, even though the forwarder
does not carry the merchandise itself.
Spouses Perena vs. Spouses Zarate
• The Pereñas as the operators of a school bus service
were: (a) engaged in transporting passengers
generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over
established roads by the method by which the
business was conducted; and (c) transporting
students for a fee. Despite catering to a limited
clientèle, the Pereñas operated as a common carrier
because they held themselves out as a ready
transportation indiscriminately to the students of a
particular school living within or near where they
operated the service and for a fee.
C. DISTINCTIONS BETWEEN COMMON CARRIER AND PRIVATE
CARRIER
COMMON CARRIER PRIVATE CARRIER
As to liability
Holds himself/itself out for Contracts with particular
all people indiscriminately. individuals or groups only.
As to the required diligence
It is required to exercise It is required to exercise
extraordinary diligence in ordinary diligence in the
the carriage. carriage.
As to regulation by the State
It is subject to State It is not subject to State
regulation. regulation.
As to stipulation limiting its liability
It cannot stipulate It may stipulate limitations
limitations on its liability on its liability and/or those
and/or those of the other of the other party, provided
party, except when provided the same is not contrary to
for by law. law, morals or good
customs.
As to exempting circumstances/defense
May present proof of May claim causo fortuito
extraordinary diligence or under Article 1174 of the
Article 1733 of the Civil Code Civil Code as a valid defense.
as a defense.
As to presumption of negligence
It is presumed to be at fault It is not presumed to be at
or negligent. fault or negligent.
As to applicable provisions of law
It is governed by the law on It is governed by the law on
common carriers and other obligations and contracts
special laws. and other laws.
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D. DILIGENCE REQUIRED OF COMMON CARRIERS
Standard of Diligence
Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence, according to all the circumstances of each case:
1. In the vigilance over the goods; and
2. For the safety of the passengers transported by them.
Extraordinary diligence:
Requires carrying passengers safely:
• As far as human care and foresight can provide,
• Using the utmost diligence of very cautious persons,
• With a due regard for all the circumstances [Art. 1755,
NCC].
Note: A common carrier is not an insurer of the safety of its
passengers and is not bound absolutely and at all events to
carry them safely and without injury
Presumption of Negligence
The following gives rise to a presumption of negligence against
the carrier:
For carriage of goods
i. Proof of delivery of goods in good order to a carrier
and
ii. Proof their arrival at the place of destination in bad
order
Note: While delay in the delivery of goods is a breach of
contract of carriage, it does not raise the presumption of
negligence because the goods are not lost, deteriorated, or
destroyed. [Art. 1735, NCC].
For carriage of passengers
i. Death of passenger/s, or
ii. Injury to passenger/s
Note: Mere failure to reach one’s destination, without injury
or death, does not raise the presumption of negligence
because it does not involve safety of the passengers.
Effects of Presumption
• Makes out a prima facie case against the carrier
• Makes it incumbent upon the carrier to prove that the
loss/death/injury was due to some other
circumstance inconsistent with its liability, or that it
observed extraordinary diligence
E. LIABILITIES OF COMMON CARRIERS
The obligation of the common carrier consists in the
transportation of passengers or goods or both [Art. 1732,
NCC].
Principles governing the liability of common carriers:
• The liability of a carrier is contractual and arises upon
breach of its obligation. There is breach if it fails to
exert extraordinary diligence according to all
circumstances of each case;
• A carrier is obliged to carry its passenger with the
utmost diligence of a very cautious person, having
due regard for all the circumstances;
• A carrier is presumed to be at fault or to have acted
negligently in case of death of, or injury to,
passengers, it being its duty to prove that it exercised
extraordinary diligence; and
• The carrier is not an insurer against all risks of travel
Registered owner rule
The person who is the registered owner of a vehicle is liable for
any damage caused by the negligent operation of the vehicle
although the same was already sold.
Kabit system
It is an arrangement whereby a person who has been granted
a certificate of convenience allows another person who owns
motor vehicles to operate under such franchise for a fee.
It is invariably recognized as being contrary to public policy and
therefore void and inexistent under Art. 1409. Thus, for the
safety of passengers and the public, the registered owner of
the vehicle is not allowed to prove that another person has
become the owner so that he may be thereby relieved of
responsibility.
One of the primary factors considered in the granting of a
certificate of public convenience for the business of public
transportation is the financial capacity of the holder of the
license, so that liabilities arising from accidents may be duly
compensated. The kabit system renders illusory such purpose
and, worse, may still be availed of by the grantee to escape civil
liability caused by a negligent use of a vehicle owned by
another and operated under his license.
However, one who has availed of the kabit system is not
precluded from filing for damages against another who caused
the injury, as the policy against the kabit system will not be
defeated by giving such person standing to sue.
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F. VIGILANCE OVER GOODS
The liability of the common carrier with respect to vigilance
over goods, in general, are as follows:
a. Common carriers are responsible for the loss,
destruction, or deterioration of the goods [Art. 1734,
NCC]. In fact, they are liable even in those cases
where the cause of the loss or damage is unknown
b. If the goods are lost, destroyed, or deteriorated,
common carriers are presumed to have been at fault
or to have acted negligently [Art. 1735, NCC].
Note: Two-pronged analysis in determining liability:
a. Whether or not the cause of the loss, destruction, or
deterioration is included under Art. 1734;
b. If not, whether or not the common carrier exercised
extraordinary diligence.
Presumption of Negligence
General rule: Common carriers are responsible for the loss,
destruction, or deterioration of the goods.
Exception: Common carriers are not liable when such loss,
destruction, or deterioration is due to any of the following
causes only:
1. Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
2. Act of the public enemy in war, whether
international or civil;
3. Act of omission of the shipper or owner of the
goods;
4. The character of the goods or defects in the packing
or in the containers;
5. Order or act of competent public authority [Art.
1734, NCC].
In all other cases of loss, destruction, or deterioration, the
common carrier is presumed to have been at fault or to have
acted negligently, unless they prove that they observed
extraordinary diligence [Art. 1735, NCC].
Exempting Causes
Natural disaster or calamity
Requisites
1. The natural disaster must have been the proximate
and only cause of the loss;
2. The common carrier must exercise due diligence to
prevent or minimize the loss before, during and after
the occurrence of the flood, storm, or natural disaster
[Art. 1739, NCC]; and
3. The common carrier must not have negligently
incurred delay [Art. 1740, NCC].
 Fire may not be considered a natural disaster or calamity
because it arises almost invariably from some act of man
or by human means. It does not fall within the category of
an act of God unless caused by lightning or by other
natural disaster or calamity
Act of public enemy
Requisites
1. The act of the public enemy was committed either in
an international or civil war [Art. 1734 (2), NCC];
2. The act of the public enemy must have been the
proximate and only cause; and
3. The common carrier must exercise due diligence to
prevent or minimize the loss before, during and after
the act of the public enemy causing the loss,
destruction or deterioration of the goods [Art. 1739,
NCC].
Thieves, rioters, robbers, and insurrectionists, though at war
with social order, are not in a legal sense classed as public
enemies, butare merely private depredators for whose acts a
carrier is answerable. Pirates on the high seas, however, stand
as an exception to this rule. They are considered the enemies
of all civilized nations, and indeed of the human race, and
consequently their depredations on a common carrier will
excuse him from liability [Aquino].
Act or omission of shipper or owner
The act or omission of the shipper must have been the
proximate and only cause of the loss, destruction, or
deterioration of the goods.
If the shipper or owner merely contributed to the loss,
destruction or deterioration of the goods, the proximate cause
being the negligence of the common carrier, the latter shall be
liable for the damages, which shall, however, be equitably
reduced [Art. 1741, NCC].
Character of the goods
Requisites
1. The loss, destruction, or deterioration of the
goods is due to the character of the goods or
defects in the packing or in the containers [Art.
1734 (4), NCC]; and
2. The common carrier must exercise due diligence
to forestall or lessen the loss [Art. 1742, NCC].
If the fact of improper packing is known to the carrier or its
servants or apparent upon ordinary observation, but it accepts
the goods notwithstanding such condition, it is not relieved of
liability for loss or injury resulting therefrom.
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Order of competent authority
Requisites
1. There must be an order or act of competent
public authority through which the goods are
seized or destroyed [Art. 1734 (5), NCC]; and
2. The said public authority must have had the
power to issue the order [Art. 1743, NCC].
To be exempted from liability, the intervention of the
competent public authority must be of a character that would
render impossible the fulfillment by the carrier of the
obligation.
Force majeure
Force majeure – in general, has also been invoked as an
exempting cause based on Art. 1174, which states that no
person shall be responsible for a fortuitous event which could
not be foreseen, or which, though foreseen, was inevitable.
A fortuitous event has the following characteristics:
a. The cause of the unforeseen and
b. unexpected occurrence, or the failure of the debtor
to comply with his obligations, must be independent
of human will;
c. It must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen,
it must be impossible to avoid;
d. The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a
normal manner; and
e. The obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.
A common carrier may not be absolved from liability in case of
force majeure or fortuitous event alone. The common carrier
must still prove:
• That it was not negligent in causing the death or injury
resulting from an accident;
• That the loss or destruction of the merchandise was
due to accident and force majeure and not fraud,
fault, or negligence on the part of the captain or
owner of the ship
Requirement of Absence of Negligence
If the common carrier is found to have acted negligently, it is
precluded from invoking the exempting causes under Art.
1734, and will be liable for damages suffered by the goods it
carried if such damages arise from its negligence.
The exempting circumstance should be the proximate and only
cause of the loss, destruction, or deterioration of the goods for
the common carrier to be exempted from liability on any of the
following grounds:
 1. Natural Disaster/Calamity
2. Act of Public Enemy
3. Character of the Goods [Art. 1739, 1742, NCC]
When the common carrier’s negligence is the proximate cause
of the loss, destruction, or deterioration of the goods, the act
or omission of the shipper will only mitigate the carrier’s
liability [Art. 1741, NCC].
Absence of Delay
In order to be free from responsibility on the ground of natural
disaster/calamity, the common carrier should not have
negligently incurred in delay [Art. 1740, NCC].
Due Diligence to prevent or lessen the loss
The common carrier should have exercised due diligence to
prevent, forestall or lessen the loss, destruction, or
deterioration of the goods, in order to be exempted from
liability on any of the ff. grounds:
a. Natural Disaster/Calamity
b. Act of Public Enemy
c. Character of the Goods [Art. 1739, 1742, NCC]
Meeting a typhoon head-on falls short of due diligence
required from a common carrier.
Contributory Negligence
The liability of the common carrier shall be equitably reduced
when the loss, destruction, or deterioration of the goods
when:
a. The negligence of the common carrier was the
proximate cause thereof; and
b. The shipper or owner merely contributed to such loss,
destruction, or deterioration [Art. 1741, NCC].
Duration of Liability
Instances when carrier has responsibility to exercise
extraordinary diligence:
a. From the time the goods are unconditionally placed
in the possession of, and received by the carrier [Art
1736, NCC] or its authorized agent until the same are
delivered actually and constructively by the carrier to
the consignee or to the person who has a right to
receive them;
b. When goods are temporarily unloaded or stored in
transit, unless the shipper or owner has made use of
the right of stoppage in transitu [Art 1737, NCC];
c. During storage in a warehouse of the carrier at the
place of destination, until consignee has been advised
of the arrival of the goods and has had reasonable
opportunity to remove or dispose them [Art 1738,
NCC].
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In dealing with the contract of common carriage of passengers,
for purpose of accuracy, there are two (2) aspects of the same,
namely:
(a) Contract ‘to carry (at some future time), which
contract is consensual and is necessarily perfected by
mere consent; and
(b) Contract ‘of carriage’ or ‘of common carriage,’ which
should be considered as a real contract for not until
the carrier is actually used can the carrier be said to
have already assumed the obligation of a carrier
Note: The distinction is important in determining when the
common carrier is required to exercise extraordinary
responsibility. The birth of the contract is not necessarily the
birth of the duty to exercise extraordinary responsibility.
Delivery of Goods to Common Carriers
Delivery means unconditionally placing the goods in the
possession of the carrier and the carrier receiving them for
transportation [Art. 1736].
Unconditionally placing the goods in the possession of the
carrier means the shipper cannot get them back from the
common carrier at will.
Thus, the liability of the carrier as common carrier and its duty
of extraordinary diligence begins with the actual delivery of the
goods, NOT:
• When the common carrier received the goods not for
transportation but only for safekeeping; or
• When a receipt or bill of lading is executed, since the
issuance of a bill of lading is not necessary to
complete delivery and acceptance
Actual or Constructive Delivery
The extraordinary responsibility of the common carrier ends
when, subject to Art. 1738, the goods are delivered actually or
constructively by the carrier to:
a. The consignee; or
b. The person who has a right to receive them, such as
agents, brokers, and the like.
Art. 1738 provides that the extraordinary liability of the
common carrier continues to be operative even during the
time the goods are stored in a warehouse of the carrier at the
place of destination, until the consignee has:
1. Been advised of the arrival of the goods;
2. and
3. Had reasonable opportunity thereafter to remove
them or otherwise dispose of them.
Delivery of the cargo to the customs authorities is not delivery
to the consignee or “to the person who has a right to receive
them” as contemplated in Art. 1736 because in such case the
goods are still in the hands of the government and the owner
cannot exercise dominion over them. However, the
partiesmay agree to limit the liability of the carrier considering
that the goods still have to go through the inspection of the
customs authorities before they are actually turned over to the
consignee. It is unfair that the carrier be made responsible for
what may happen during the interregnum.
It is settled in maritime law jurisprudence that cargoes while
being unloaded generally remain under the custody of the
carrier.
Temporary Unloading or Storage
General rule: Extraordinary diligence over the goods remains
even when the goods are temporarily unloaded or stored in
transit.
Exception: The duty to observe such diligence ceases when
shipper or owner makes use of the right of stoppage in transitu
[Art 1737, NCC].
Stoppage in transitu is the act by which the unpaid vendor of
goods stops their progress and resumes possession of them
constructively, while they are in the course of transit from him
to the purchaser and not yet actually delivered to the latter
Basis: Under Art. 1530, when the buyer of the goods becomes
insolvent, the unpaid seller who has parted with the
possession of the goods, at any time while they are in transit,
may resume the possession of the goods as he would have had
if he had never parted with the possession.
When the right of stoppage in transitu is exercised, the
common carrier holds the goods in the capacity of an ordinary
bailee or warehouseman upon the theory that the exercise of
the right of stoppage in transitu terminates the contract of
carriage. Hence, only ordinary diligence is required.
Stipulation for Limitation of Liability
There are two possible stipulations limiting the liability of the
common carrier:
(a) Stipulation limiting the common carrier’s liability as to
the diligence required;
(b) Stipulation limiting the common carrier’s liability as to
the amount of liability.
G. SAFETY OF PASSENGERS
The liability of the common carrier with respect to the safety
of passengers, in general, are as follows:
1. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons,
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with a due regard for all the circumstances [Art. 1755,
NCC];
2. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they
observed extraordinary diligence [Art. 1756, NCC].
Void Stipulations
General rule: The responsibility of a common carrier for the
safety of passengers cannot be dispensed with or lessened by
stipulation by the posting of notices, by statements on tickets,
or otherwise [Art. 1757, NCC].
Exception: When a passenger is carried gratuitously, a
stipulation limiting the common carrier’s liability for
negligence is valid [Art 1758, NCC].
Exception to the exception: Even when a passenger is carried
gratuitously, a stipulation limiting the common carrier’s
liability for willful acts or gross negligence is invalid [Art 1758,
NCC].
The reduction of fare does not justify any limitation of the
common carrier’s liability [Art. 1758, NCC].
Duration of Liability
As in the contract of carriage of goods, the perfection of the
contract of carriage of passengers does not necessarily
coincide with the commencement of the duty of extraordinary
diligence. It may occur at the same time or later.
Waiting for Carrier or Boarding of Carrier
The duty that the carrier of passengers owes to its patrons
extends to persons boarding the cars as well as to those
alighting therefrom.
It is the duty of common carriers of passengers to stop their
conveyances at a reasonable length of time in order to afford
passengers an opportunity to board and enter:
1. Carriers are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or
jerking of their conveyances while they are doing so.
2. However, a person boarding a moving car must be
taken to assume the risk of injury from boarding the
car under the conditions open to his view.
Nonetheless, he cannot fairly be held to assume the
risk that the motorman, having the situation in view,
will increase the peril by accelerating the speed of the
car before he is planted safely on the platform
The extraordinary responsibility of common carriers
commences:
 • With respect to carriage of passengers by trains: The
moment the person who purchases the ticket from
the carrier presents himself at the proper place and in
a proper manner to be transported with a bona fide
intent to ride the coach
• With respect to carriage of passengers by sea: As soon
as the person with bona fide intention of taking
passage places himself in the care of the carrier or its
employees and is accepted as passenger
Arrival at Destination
The relation of carrier and passenger does not cease at the
moment the passenger alights from the carrier's vehicle at a
place selected by the carrier at the point of destination, but
continues until the passenger has had a reasonable time or a
reasonable opportunity to leave the carrier's premises.
What is a reasonable time or a reasonable delay within this
rule is to be determined from all the circumstances such as the
kind of common carrier, the nature of its business, the customs
of the place, and so forth, and therefore precludes a
consideration of the time element per se without taking into
account such other factors.
The primary factor to be considered is the existence of a
reasonable cause as will justify the presence of the victim on
or near the petitioner's vessel.
Liability for Acts of Others
Employees
General rule: Common carriers are liable for the death of or
injuries to passengers through the negligence or willful acts of
the former’s employees, although such employees may have
acted beyond the scope of their authority or in violation of the
orders of the common carriers.
This liability does not cease:
• Even upon proof that they exercised all the diligence
of a good father of a family in the selection and
supervision of their employees [Art. 1759, NCC];
• By stipulation, by the posting of notices, nor by
statements on the tickets eliminating or limiting said
liability [Art. 1760, NCC].
Ratio: The servant is clothed with delegated authority and
charged with the duty to execute the carrier’s undertaking to
carry the passenger safely [Agbayani]. Also, the defense of
diligence in the selection and supervision of employees does
not obtain because the liability is not based on quasi-delict, but
on culpa contractual. However, there must be a reasonable
connection between the act and the contract of carriage.
Note: The employee must be on duty at the time of the act.
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It is enough that the assault happens within the course of the
employee’s duty. It is no defense for the carrier that the act
was done in excess of authority or in disobedience of the
carrier’s orders.
Exception: A common carrier is not responsible for acts falling
under force majeure. When a party is unable to fulfill his
obligation because of force majeure, he cannot be held liable
for damages for non- performance.
Note: In order to be exempted from liability due to a fortuitous
event, a common carrier must still prove a complete exclusion
of human agency from the cause of injury or death. Hence, it
was held that the explosion of the new tire may not be
considered a fortuitous event as there are human factors
involved in the situation
Other Passengers and Strangers
General Rule: A common carrier is not liable for injuries
inflicted by strangers or co- passengers.
Exception: A common carrier is responsible for injuries
suffered by a passenger on account of the willful acts or
negligence of other passengers or of strangers, if the common
carrier's employees, through the exercise of the diligence of a
good father of a family, could have prevented or stopped the
act or omission [Art. 1763, NCC].
Under Art. 1763, a tort committed by a stranger which causes
injury to a passenger does not accord the latter a cause of
action against the carrier. The negligence for which a common
carrier is held responsible is the negligent omission by the
carrier’s employees to prevent the tort from being committed
when the same could have been foreseen and prevented by
them through the exercise of the diligence of a good father of
a family.
Contributory Negligence
The passenger must observe the diligence of a good father of
a family to avoid injury to himself [Art. 1761, NCC].
The contributory negligence of the passenger does not bar
recovery of damages for his death or injuries, if the proximate
cause thereof is the negligence of the common carrier, but the
amount of damages shall be equitably reduced [Art. 1762,
NCC].
However, when the negligence of the passenger was the
proximate cause of the injury, the passenger is barred from
recovery, and the common carrier is exempted from liability.
Extent of Liability for Damages
Art. 2206, on liability, in case of death, for loss of earning
capacity, support, and moral damages for mental anguish,
shall also apply to the death of a passenger caused by the
breach of contract by a common carrier [Art. 1764, NCC].
Thus, the damages recoverable are:
• Actual or compensatory damages;
• Moral damages;
• Exemplary damages;
• Nominal, temperate, and liquidated damages;
• Attorney’s fees.
H. BILL OF LADING
DEFINITION
Bill of lading
It is a written acknowledgment of:
1. the receipt of the goods; and
2. an agreement to transport and to deliver them at a
specified place to a person named or on his order.
Note: The designation is not material, and neither is the form
of the instrument. If it contains an acknowledgment by the
carrier of the receipt of goods for transportation, it is, in legal
effect, a bill of lading.
Three-fold character of a bill of lading
A bill of lading operates both as:
1. receipt of the goods shipped; and
It recites the date and place of shipment, describes the goods
as to quantity, weight, dimensions, identification marks and
condition, quality and value.
2. contract to transport and deliver the goods as
stipulated therein
It names the contracting parties and stipulates the rights and
obligations assumed by the parties.
3. document of title, which makes it a symbol of the
goods
GR: The bill of lading constitutes the legal evidence of contract
of transportation, and all disputes between the parties
regarding the execution and performance of the contract shall
be decided by the contents of the bill of lading issued by the
carrier.
XPN: The contents of the BOL are not controlling
when there is falsity and material error in its drafting.
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Functions of a bill of lading (RED)
1. It serves as a receipt for the goods shipped;
2. It is an evidence of the contract of carriage; and
3. It serves as document of title to the goods.
Kinds of bills of lading
1. On board – issued when the goods have been actually
placed aboard the ship with very reasonable
expectation that the shipment is as good as on its way
2. Received for shipment – it is stated that the goods
have been received for shipment with or without
specifying the vessel by which the goods are to be
shipped
3. Negotiable – It transfers control of the goods to the
order of the entity named on the document
4. Non-negotiable/Straight bill of lading – It states that
the goods are consigned to a named person
5. Clean – It declares that the goods have been received
in an appropriate condition, without the presence of
defects.
6. Foul/Claused – It shows a shortfall or damage in the
delivered goods.
7. Spent – It covers goods the delivery of which is made
by the carrier without surrendering a signed copy of
such bill.
8. Through – It allows the transportation of goods both
within domestic borders and through international
shipment.
9. Custody – It states that goods are already received by
the carrier but the vessel indicated therein has not yet
arrived at the port.
10. Port to port/ocean bill of lading – It states the that the
carrier’s responsibility begins at the port of loading
and ends at the port of discharge.
DELIVERY OF GOODS
The goods should be delivered to the consignee or any other
person to whom the bill of lading was validly transferred or
negotiated.
The carrier is duty bound to deliver the goods in the same
condition in which, according to the bill of lading, they were at
the time of their receipt, without damage or impairment [Art.
363, COC].
The liability of the carrier as a common carrier begins with the
actual delivery of the goods for transportation and not merely
with the formal execution of a receipt or bill of lading.
Note: The issuance of a bill of lading is not necessary to
complete delivery and acceptance.
 Period of delivery
Period for the delivery of goods
If stipulated Delivery must be made
within period fixed (Art. 370,
Code of Commerce)
If not stipulated Delivery must be made
through the first shipment
of the same or similar
merchandise to the point of
delivery. If not made on such
first shipment, delay arises
(Article, 358, COC)
Liability in case of delay in delivering the goods
Indemnity for delay is fixed Liability is limited to the
in the BOL stipulation (Art. 358, COC)
Indemnity for delay not Liable for all damages which
fixed may have been cause by the
delay (Art. 370, COC)
Delivery without Surrender of Bill of Lading
a. Within 24 hours, if the indications of the damage
cannot be ascertained from the exterior of the
packages (i.e., latent damage); or
b. At the time of receipt, if the indications damage
can be so ascertained (i.e.,patent damage) [Art. 366,
COC].
Patent Damage – damage on the goods which is readily
apparent from the examination of the packages in which the
goods are delivered
Latent Damage - damage of such a character that the nature
and extent thereof is not readily apparent until the packages
are opened and the contents are examined
No claim whatsoever shall be admitted against the carrier with
regard to the condition in which the goods transported were
delivered:
a. After the periods mentioned have elapsed; or
b. After the transportation charges have been paid.

After the contract has been complied with:
a. The bill of lading which the carrier has issued shall
be returned to him; and
b. The respective obligations and actions shall be
considered cancelled by virtue of the exchange of this
title with the thing transported.
Unless in the same act, the claim which the parties
may wish to reserve be reduced to writing.
GR: After the contract has been complied with, the bill of
lading which the carrier has issued shall be returned to him.
XPN:
1. In case of loss; or
2. For any other reason
The periods mentioned commence upon delivery of cargo to
the consignee at the place of destination.
The parties to a contract of carriage may fix, by agreement, a
shorter time for the bringing of suit on a claim for the loss of
or damage to the shipment than that provided by the statute
of limitations.
i. In the absence of any statutory limitation;
and
ii. Subject to the requirement on the reasonableness
of the stipulated period.
Ratio: Such stipulation merely affects the shipper’s remedy
and does not affect the liability of the carrier [PHILAMGEN v.
Sweet Lines, Inc., G.R. No. 87434 (1992)].
Rationale

If the consignee CANNOT return the bill of lading subscribed by
the carrier, upon receiving the merchandise, in case of loss or
for any other reason whatsoever: The consignee shall give said
carrier a receipt for the goods delivered.
This receipt produces the same effects as the return of the bill
of lading [Art. 353, par. 3, COC].
REQUIREMENTS/CONDITIONS PRECEDENT FOR FILING
CLAIMS
The fundamental reason of the requirement to give notice of
loss or damage to the goods is not to relieve the carrier from
liability but:
a) To inform it that the shipment has been damaged and
that it is charged with liability therefor; and
b) To give it an opportunity to examine the nature and
extent of the injury.
Period for Filing Actions

Period for Filing Claims A. Over Land Transportation and Coastwise Shipping
The general rules under the Civil Code on extinctive
A claim, on account of damage, must be made against the prescription apply. Thus, action for damages must be filed in
carrier: court:

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 1. Within 6 years, if a bill of lading was not
issued [Art. 1145, NCC];
2. Within 10 years, if a bill of lading was
issued [Art. 1146, NCC].
B. International Carriage of Goods by Sea
Suit must be brought within one year:
1. After delivery of the goods; or
2. From the date when the goods should have been
delivered.
Otherwise, the carrier and the ship shall be discharged from all
liability in respect of loss or damage.
The absence of notice shall not affect or prejudice the right of
the shipper to bring suit within one year after the delivery of
the goods or the date when the goods should have been
delivered [Section 3(6), COGSA].
I. MARITIME COMMERCE
CHARTER PARTIES
Charter party – a contract by which an entire ship or some
principal part thereof is let by the owner to another person for
a specified time or use
Parties to a charter party:
1. The ship owner or ship agent; and
2. The charterer.
Shipowner/proprietario – a person who has possession,
control and management of the vessel and the consequent
right to direct his navigation and receive the freight earned and
paid while his possession continues.
Ship agent/naviero – person entrusted with the provisioning
or representing the vessel in the port in which it may be found
Kinds of charter party:
1. Charter of Demise or bareboat; and
2. Contracts of affreightment
a. Time charter
b. Voyage or Trip Charter
Contract of affreightment
- One in which the owner of the vessel leases part or all
of its space to haul goods for others
- It is a contract for a special service to be rendered by
the owner of the vessel and under such contract the
general owner retains the possession, command and
navigation of the ship, the charterer or freighter
merely having use of the space in the vessel in return
for his payment of the charter hire.
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Note: If the charter is a contract of affreightment, which leaves
the general owner in possession of the ship as owner for the
voyage, the rights, responsibilities of ownership rest on the
owner and the charterer is usually free from liability to third
persons in respect of the ship.
BAREBOAT/DEMISE CHARTER
In a bareboat or demise charter, the ship owner leases to the
charterer the whole vessel. The owner relinquishes,
completely and exclusively, the possession, command and
navigation of the vessel. Anything short of such a complete
transfer is a contract of affreightment or not a charter party at
all.
The master and crew of the vessel thereby become the
charterer’s “servants”. Thus, the charterer, by virtue of a
demise charter, is considered the owner pro hac vice.
He mans and equips the vessel and assumes all responsibility
for navigation, management and operation.
Bareboat vs Contract of Affreightment
Demise or Bareboat Contract of Affreightment
Charterer becomes liable to Owner remains liable as
others for any breach carrier and must answer for
caused by its negligence any breach of duty
Charterer regarded as Charterer is not regarded as
owner pro hac vice for the owner
voyage
Owner of vessel relinquishes The vessel owner retains
possession, command, and possession, command, and
navigation to charterer navigation of the ship
Common carrier is Common carrier is not
converted to private carrier converted to private carrier
TIME CHARTER
It is a contract for the use of a vessel for a specified period of
time or for the duration of one or more specified voyages.
The owner of a time-chartered vessel retains possession and
control through the master and crew, who remain his
employees.
The time charterer acquires the right to:
- Utilize the carrying capacity and facilities of the
vessel; and
- Designate her destinations during the term of the
charter
VOYAGE/TRIP CHARTER
It is a contract for the carriage of goods from one or more ports
of loading to one or more ports of unloading on one or on a
series of voyages.
The master and crew remain in the employ of the owner of the
vessel.
The shipowner retains the possession, command and
navigation of the ship, the charterer or freighter merely having
use of the space in the vessel in return for his payment of
freight. An owner who retains possession of the ship remains
liable as carrier and must answer for loss or non-delivery of the
goods received for transportation.
LIABILITY OF SHIP OWNERS AND SHIPPING AGENTS
The ship owner or ship agent is liable:
1. For the acts of the captain, unless the latter exceeds
his authority [Art. 586, COC];
2. For contracts entered into by the captain to repair,
equip and provision the vessel, provided that the
amount claimed was invested for the benefit of the
vessel [Art.586, COC];
3. For the indemnities in favor of third persons which
may arise from the conduct of the captain in the care
of the goods transported, as well as for the safety of
passengers transported [Art. 587, COC];
4. For damages to third persons for tort or quasi-delict
committed by the captain, except collision with
another vessel [Art. 1759, NCC];
5. For damages in case of collision due to the fault,
negligence, or want of skill of the captain, sailing
mate, or any other member of the complement [Art.
826, COC].
Liability for acts of captain
Three (3) distinct roles of a captain:
1. General agent of the ship owner;
2. Commander and technical director of the vessel;
3. Representative of the country under whose flag he
navigates.
The captain shall be liable to the agent, and the latter to third
persons [Art. 618, COC]:
1. For all damages suffered by the vessel and his cargo
by reason of want of skill or negligence on his part;
2. For all the thefts committed by the crew, reserving his
right of action against the guilty parties;
3. For the losses, fines, and confiscations imposed on
account of violation of the laws and regulations of
customs, police, health, and navigation;
4. For the losses and damages caused by mutinies on
board the vessel, or by reason of faults committed by
the crew in the service and defense of the same, if he
does not prove that he made full use of his authority
5. For those arising by reason of an undue use of powers
and non-fulfillment of the obligations which are his;
6. For those arising by reason of his going out of his
course or taking a course which he should not have
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taken without sufficient cause, in the opinion of the
officers of the vessel at a meeting with the shippers
or supercargoes who may be on board;
7. For those arising by reason of his voluntarily entering
a port other than that of his destination;
8. For those arising by reason of non- observance of the
provisions contained in the regulations on situation of
lights and maneuvers for the purpose of preventing
collisions.
LIMITED LIABILITY RULE/HYPOTHECARY NATURE OF
MARITITME LAW
The real and hypothecary nature of maritime law simply means
that the liability of the carrier in connection with losses related
to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the
guaranty for their settlement.
The liability of the vessel owner and agent arising from the
operation of such vessel is confined to the vessel itself, its
equipment, freight, and insurance, if any.
The Doctrine of limited liability or the limited liability rule in
maritime commerce holding that while the ship agent shall
also be civilly liable for the indemnities in favor of a third
person which may arise from the conduct of the captain in the
care of the goods which he loaded on the vessel, he may
nonetheless exempt himself therefrom by abandoning the
vessel with all the equipment and the freight it may have
earned during the voyage.
Rationale:
- The primary reason is the need to offset against
innumerable hazards and perils in sea voyage;
- to encourage ship building and maritime commerece;
and
- induce capitalists into effectively wagering their
resources against the consideration of the large
profits attainable in the trade
By abandonment, the ship owner and ship agent exempt
themselves from liability, thus avoiding the possibility of
risking his whole fortune in the business.
Specific applications of the docrine of limited liability:
1. Civil liability of the ship agent for indemnitis in favor
of third perons;
2. Civil liability of the co-owners from the negligent acts
of the ship captain;
3. Liability for the wages of the ship captain and crew as
well as for the advances made by the ship agent if the
vessel is totally lost by reason of capture or
shipwreck;
4. Civil liability of the shipowners arising from collision
 EXCEPTIONS TO LIMITED LIABILITY
1. Where the injury or death to a passenger is due either
to the fault of the ship owner, or to the concurring
negligence of the ship owner and the captain;
2. Where the vessel in insured;
3. In workmen’s compensation claims;
4. In case there is no total loss and the vessel is not
abandoned;
5. In the event of a collision between two mutually
negligent vessels;
6. Where the expenses for repairs dine on the vessel
have been completed before the loss
ACCIDENTS AND DAMAGES IN MARITIME COMMERCE
The risks, damages and accidents of maritime commerce
include:
a) Averages;
b) Arrival under stress;
c) Collision; and
d) Shipwreck
AVERAGES
Averages pertain to expenses and damages:
1. Expense – to constitute an average, an expense must
be:
a. Extraordinary or accidental;
b. Incurred during the voyage; and
c. Incurred in order to preserve the vessel, the cargo,
or both.
2. Damages or Deterioration – to constitute an
average, it must:
a. Have been suffered by the vessel from the time the
vessel put to sea from the port of departure until it
casts anchor in the port of destination; and
b. Have been suffered by the merchandise from the
time they are loaded in the port of shipment until
they are unloaded in the port of consignment [Art.
806, COC].
There are two kinds of averages:
1. Particular or simple average; and
2. Gross or general average
PARTICULAR AVERAGE
Particular or simple averages shall include all damages and
expenses caused to the vessel or cargo that did not inure to
the common benefit and profit of all persons interested in the
vessel and her cargo [Art. 809, COC].
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The owner of the goods which gave rise to the expense or
suffered the damage shall bear this average [Art. 810, COC].
GENERAL AVERAGE
General or gross averages shall include all the damages and
expenses which are deliberately caused in order to save the
vessel, her cargo, or both at the same time, from a real and
known risk [Art. 811, COC].
The gross or general average shall be borne by those who
benefited from the sacrifice. These include the ship owner and
the owners of the cargoes that were saved. Contribution may
also be imposed on the insurers of the vessel or cargoes that
were saved, as well as lenders on bottomry or respondentia.
Requisites
1. There must be a common danger;
2. That for the common safety, part of the vessel or of the
cargo or both is sacrificed deliberately;
3. That from the expenses or damages caused follows the
successful saving of the vessel and cargo; and
4. That the expenses or damages should have been incurred or
inflicted after taking proper legal steps and authority
[Magsaysay, Inc. v. Agan, G.R. No. L 6393 (1955)].
Common danger means both the ship and the cargo, after it
has been loaded, are subject to the same danger.
- Whether during the voyage, or in the port of loading
or unloading;
- Whether the danger arises from the accidents of the
sea, dispositions of the authority, or faults of men;
- Provided that the circumstances producing the peril
may rationally be said to be certain and imminent;
- Excludes measures undertaken against a distant peril
[Magsaysay, Inc. v. Agan, G.R. No. L-6393 (1955)].
Jettison – The act of throwing overboard part of a vessel’s
cargo or hull in hopes of saving a ship from sinking.
The captain shall direct the jettison, and shall order the goods
cast overboard in the following order:
1. Goods on deck - beginning with those which
embarrass the maneuver or damage the vessel,
preferring if possible, the heaviest ones with the least
utility and value;
2. Goods below the upper deck - always beginning
with those of the greatest weight and smallest value
to the amount and number absolutely indispensable
[Art. 815, COC].
To include the goods jettisoned in the general or gross average,
the existence of the cargoor goods must be proved:
1. For cargo – by means of bill of lading;
 2. For good belonging to the vessel – by means of the
inventory prepared prior to departure [Art. 816,
COC].
Jason clause
Jason clause is a provision in the contract of carriage that
requires the cargo owners to contribute in the general
average, though the event which gave rise to the sacrifice or
expenditure may have been due to the fault of one of the
parties to the adventure [Rule D, York Antwerp Rules].
Note: This shall not prejudice any remedies or defenses which
may be open against or to that party in respect of such fault.
ARRIVAL UNDER STRESS
Arrival under stress – refers to the arrival of a vessel at the
nearest and most convenient port if during the voyage the
vessel cannot continue the trip to the port of destination due
to any of the following reasons:
a) Lack of provisions;
b) Well-founded fear of seizure, privateers, or pirates; or
c) Any accident of the sea disabling it to navigate
Note: In arrival under stress, the captain must file a protest
which is merely a disclaimer for the shipowner not to be liable.
When arrival deemed unlawful
1. If the lack of provisions arises from the failure to take
the necessary provisions for the voyage according to
usage and customs or if they have been rendered
useless or lost through bad stowage or negligence in
their care;
2. If the risk of enemies, privateers or pirates is not well
known, manifest and based on positive and probable
facts;
3. If the defect of the vessel arises from the fact that it
was not repaired, rigged, equipped and prepared in
a manner suitable for the voyage or from some
erroneous order of the captain; and
4. When malice, negligence, want of foresight or lack of
skill on the part of the captain exists in the act
causing the damage
Who bears the expenses of arrival
The expenses of an arrival under stress shall always be for the
account of the shipowner or agent but they shall not be liable
for the damages which may be caused the shippers by reason
of a legitimate arrival. Otherwise, the ship agent and the
captain shall be jointly liable.
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COLLISION
If a vessel should collide with another, through the fault,
negligence or lack of skill of the captain, sailing mate or any
other member of the complement, the owner of the vessel at
fault shall indemnify the losses and damages suffered, after an
expert appraisal.
Collision - is an instance where two or more moving vessels
come violently into contact with each other
Allision – is an event which a moving vessel dashes or strikes
upon a stationary vessel
Divisions of time or zones in collisions of vessels
a) First division or Zone 1 – covers all the time up to the
moment when the risk of collision may be said to have
begun. Within this zone, no rule is applicable because
none is necessary.
b) Second division or Zone 2 – covers the time between
the moment when the risk of collision begins and the
moment when it has become a practical certainty;
and
c) Third division or Zone 3 – covers the time between the
moment when collision has become a practical
certainty and the moment of actual contact
Classes of Collision
a. Fortuitous - none was at fault;
b. Culpable - one or more vessels were at fault;
c. Inscrutable Fault - it cannot be determined which of
the vessels was at fault.
Fortuitous
When collision is due to a fortuitous event or force majeure,
each vessel and its cargo shall bear its own damages [Art. 830,
COC].
When, by reason of force majeure, a vessel properly anchored
and moored collides with another, the injury occasioned shall
be looked upon as particular average to the vessel run into
[Art. 832, COC].
Culpable
When only one vessel is at fault, the owner of the vessel at
fault shall indemnify the losses and damages suffered, after an
expert appraisal.
When both vessels are at fault, each shall suffer its own
damages, and both shall be solidarily responsible for the losses
and damages occasioned to their cargoes [Art. 826, COC].
Note: The ship owners cannot successfully maintain an action
against the other for the loss or injury to his vessel.
When a third vessel is at fault, the owner of the third vessel
shall indemnify the losses and damages caused, the captain
thereof being civilly liable to said owner [Art. 831, COC].
Inscrutable Fault
In case of inscrutable fault, that is, if it cannot be decided which
of the two vessels was the cause of the collision, each shall
bear his own damage and both shall be jointly responsible for
the losses and damages suffered by their cargoes [Art. 828,
COC].
Collision between a Steam and a Sail Vessel
General Rule: When meeting a sailing vessel, whether close
hauled or with the wind free, the sail vessel has a right to keep
her course, and it is the duty of the steamer to adopt
precautions as will avoid the sail vessel.
In a collision between a steam vessel and a sail vessel, the
presumption is against the steam vessel.
The steam vessel must show that she took the proper
measures to avoid a collision.
Ratio: The steamer’s greater facility of maneuvering over a sail
vessel means it has the greater ability to avoid collisions [A.
Urrutia & Co. v. Baco River Plantation Co, G.R. No. L- 7675.
[1913)].
Collision between Two Power-Driven Vessels
General Rule: When two power-driven vessels are meeting
head on, or nearly head on, so as to involve risk of collision,
each shall alter her course to starboard (right side).
Ratio: So that each may pass on the port (left) side of the other
[Smith Bell and Co. v. CA, G.R. No. L-56294 (1991)].
Liability in Collision Cases
Liability in collision cases is negligence-based. Courts are called
upon to determine the negligence of the persons involved in
order to impose liability.
The person who caused the injury is both civilly and criminally
liable.
Nevertheless, the rules that apply to quasi- delict cannot be
applied to collision cases.
The doctrine of last clear chance and the rules on contributory
negligence cannot be applied in collision cases.
This is in accordance with Art. 827 of theCode of Commerce.
Thus, if both vessels were negligently operated, each must
suffer its own damage even if the other has the last clear
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chance of avoiding the injury [C.B. Williams v. Yangco, G.R. No.
L-8325 (1914)].
Similarly, proof that the plaintiff was negligent will bar
recovery from the defendant in collision cases even if the
plaintiff’s negligence can be classified as merely contributory
[Gorgonio De Sarasola v. Yu Biao Sontua, G.R. No. L-22630
(1925)].
J. CARRIAGE OF GOODS BY SEA ACT
APPLICATION
The COGSA is applicable to all contracts for the carriage of
goods by sea to and from Philippine ports in foreign trade.
Under Article 1753 of the Civil Code, the law of the country to
which the goods are to be transported shall govern the liability
of the common carrier for their loss, destruction or
deterioration. Where the shipment is transported to the
Philippines from another counter, the Civil Code provisions
shall apply. In all matters not regulated by the Civil Code, the
rights and obligations of common carriers shall be governed by
the Code of Commerce and by special laws (Article 1766, NCC),
such as COGSA.
Significant provisions of COGSA:
a) It acts as a supplement to the Civil Code and applies
to all contracts of carriage of goods coming to or from
Philippine ports in foreign trade;
b) When there is damage to the goods, notice must be
given by the recipient to the carrier or his agent upon
receipt of the goods. However, if the damage is
apparent or externally visible, notice must be given
within 3 days from receipt of the goods;
c) Failure of the recipient to notify the carrier will not
prevent the filing of a suit for the loss or damage of
the goods; and
d) The maximum liability is $500.00 per package or
customary freight unit unless the shipper or owner of
the goods declares a higher value. It may be lowered
by agreement in the bill of lading.
CONCEPT OF LOSS OR DAMAGE
Witten notice of loss or damage and the general rule of such
loss or damage, if apparent or patent, shall be given to the
carrier or his agent at the port of discharge before or at the
time of the removal of the goods into the custody of the person
entitled to its delivery under the contract of carriage.
Otherwise, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill of
lading.
If the loss or damage is not apparent, that is, concealed or
latent, the notice must be given within three days from
delivery.

Said notice of loss or damage may be endorsed on the receipt
for the goods given by the person taking delivery.
The notice in writing need not be given if the state of the goods
at the time of their receipt has been subject of a joint survey
or inspection.
Note:
• Even if a notice of loss or damage is not given as
required, that fact shall not affect or prejudice the
right of the shipper to bring suit within one year after
the delivery of the goods.
• Failure to file a notice of claim within three days will
not bar recovery if it is nonetheless filed within one
year.
• The carrier and the ship may put up the defense of
prescription if the action for damages is not brought
within 1 year after:
o The delivery of the goods; or
o The date when the goods should have been
delivered.
• Not only the shipper but also the consignee or legal
holder of the bill may invoke the prescriptive period.
• Article 1155 of he CC providing that the prescription
of actions is interrupted by the making of an
extrajudicial written demand by the creditor is not
applicable to actions brought under the COGSA.
Rationale for the prescriptive period under COGSA
The one-year period of limitation is designed to meet he
exigencies of maritime hazards.
Instances when prescription is suspended:
The one-year prescriptive period is suspended by:
a) The express agreement of the parties;
b) The filing of an action in court until the same is
dismissed
When cases for loss or damage of goods must be filed
Suits should for the loss of or damage to cargo must be brought
within one year from:
• The delivery of the goods, in case of damage; or
• The date when the goods should have been delivered,
in case loss
Instances when carrier or ship not liable
1. If the damage resulted from the dangerous nature of
the shipment loaded without the consent of the
carrier;
2. If the deviation was made for the purpose of saving or
attempting to save life or property at sea;
3. If the nature or value thereof has been knowingly and
fraudulently misstated by the shipper in the bill of
lading;
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4. If the unseaworthiness is nor caused by want of due
diligence on the part of the carrier to make the ship
seaworthy.
LIMITATION OF LIABILITY
The CC does not of itself limit the liability of the common
carrier to a fixed amount per package although the Code
expressly permits a stipulation limiting such liability. Thus, the
COGSA which is suppletory to the provisions of the CC steps in
and supplements the Code by establishing a statutory
provision limiting the carrier’s liability in the absence of a
declaration of a higher value of the goods by the shipper in the
bill of lading.
Under Section 4(5), COGSA, an amount recoverable in case of
loss or damage shall not exceed $500.00 per package or per
customary freight unless the nature and value of such goods
have been declared by the shipper before shipment and
inserted in the bill of lading.
Note:
• The carrier and the shipper may fix by agreement
another maximum amount provided that such
maximum shall not be for more than the amount of
damage actually sustained.
• A stipulation in the bill of lading limiting carrier’s
liability for the loss or destruction of the cargoes to a
certain sum, unless the shipper or owner declares a
greater value, is allowed.
• A contract fixing the sum that may be recovered by
the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable
and just under the circumstances, and has been fairly
and freely agreed upon.
Stipulation limiting the carrier’s liability; when valid
A stipulation limiting the carrier’s liability is valid, provided that
it is:
a) In writing, signed by the shipper or owner;
b) Supported by a valuable consideration other than the
service rendered by the common carrier; and
c) Reasonable, just and not contrary to public policy
K. AIR TRANSPORTATION
Civil Aeronautics Board
It is empowered to regulate the economic aspect of air
transportation and has general supervision and regulation of
and jurisdiction and control over air carriers, general sales
agents, cargo sales agents and air freight forwarders.
Civil Aviation Authority of the Philippines
• It is responsible for implementing policies on civil
aviation to assure safe, economic and efficient air
travel.
 • It also investigates aviation accidents via its Aircraft
Accident Investigation and Inquiry Board.
• It also performs the function of a public registry for
aircraft and regulating the technical, operational,
safety and security aspects of aviation.
L. THE WARSAW CONVENTION
APPLICABILITY
The Warsaw Convention applies to:
• All international carriage of persons, baggage, or
cargo performed by aircraft for reward;
• Gratuitous carriage by aircraft performed by an air
transport undertaking [Art. 1(1), Warsaw
Convention].
International air carriage or international air transport means
transportation by air between points of contact of two high
contracting parties, or those countries that have acceded to
the Warsaw Convention, wherein the place of departure and
the place of destination are situated:
a. Within the territories of two high contracting
parties, regardless of whether or not there be a break
in the transportation or a transshipment; or
b. Within the territory of a single high contracting
party, if there is an agreed stopping place within a
territory subject to the sovereignty, mandate or
authority of another power, even though the power
is not a party to the Convention [Art. 1(2), WC].
A carriage to be performed by several successive air carriers is
deemed, for the purposes of the Convention, to be one
undivided carriage, if it has been regarded by the parties as a
single operation, whether it had been agreed upon under the
form of a single contract or of a series of contracts [Art. 1(3),
WC].
The carrier is liable for damages for:
a. Death or injury of a passenger if the accident causing it took
place:
1. On board the aircraft;
2. In the course of the operations of embarking or
disembarking; or
3. When there was delay [Art. 17 and 19,WC].
b. Destruction, loss, or damage to any baggage or goods that
are checked in, if damage occurred:
1. During the transportation by air; or
2. When there was delay [Art. 18 and 19, WC].
c. Delay in the transport by air of passengers, baggage or goods
[Art. 19, WC].
The carriage by air contemplated comprises the period in
which the baggage or goods are in charge of the carrier,
whether in an airport or on board an aircraft, or, in the case of
a landing outside an airport, in any place whatsoever.
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It does not cover any transportation by land, by sea, or by river
performed outside an airport.
If transportation takes place in the performance of a contract
by air, for the purpose of loading, delivery, or transshipment,
any damage is presumed, subject to proof to the contrary, to
have been the result of an event which took place during the
transportation by air [Art. 18, WC].
The Warsaw Convention does not provide for an exclusive
enumeration of instances when the carrier is liable.
• It does not provide an absolute limit of liability and it
does not preclude the application of the Civil Code
and other pertinent local laws in the determination of
the extent of liability of the common carrier
• Hence, a complaint for quasi-delict can still be filed
even if the filing is beyond the prescriptive period
provided for under the Convention so long as it is
within the prescriptive period of four years under the
Civil Code.
Notice of claim with the international carrier is a mandatory or
condition precedent under the Warsaw Convention.
a. Baggage: within 3 days from receipt. In case of
delay, within 14 days from the time the baggage was
placed at the disposal of the passenger;
b. Goods: within 7 days from delivery.
In case of an action for damage to passenger baggage, the case
must be filed in court within two years.
LIMITATION OF LIABILITY
Any provision tending to relieve the carrier of liability or to fix
a lower limit than that which is laid down shall be null and void,
but the nullity of any such provision does not involve the nullity
of the whole contract [Art. 23, WC].
Availing of Provisions Excluding/Limiting Liability
The carrier shall not be entitled to avail himself of the
provisions which exclude or limit his liability, if:
(1) The damage is caused by his willful misconduct or by such
default on his part, as is considered to be equivalent to willful
misconduct; or
(2) The damage is caused as aforesaid by any agent of the
carrier acting within the scope of his employment [Art. 25,
WC].
Sec. 22(2), WC does not operate as an exclusive enumeration
of the instances of an airline’s liability, or as an absolute limit
of the extent of that liability. The Convention’s provisions do
not regulate or exclude the following areas:
 (1) Liability for other breaches of the contract by the
carrier;
(2) Misconduct of its officers and employees;
and
(3) For some particular or exceptional type of damage
(i.e. moral, nominal, temperate or exemplary
damages) [Alitalia v. IAC, G.R. No. 71929 (1990)].
Right to Damages
The right to damages under the WC is extinguished after two
years from the date of arrival at the destination or from the
date on which the aircraft ought to have arrived, or from the
date on which the carriage stopped. The method of calculating
the period of limitation shall be determined by the law of the
Court seized of the case [Art. 29, WC].
Liability to Passengers
General rule: In the carriage of passengers, the liability of the
carrier for each passenger is limited to “100,000 Special
Drawing Rights for the aggregate of the claims” in respect of
damage suffered as a result of death or personal injury to each
passenger [Art. 22(1), WC as amended by Additional Protocol
No. 3 (1975)].
Exception: By special contract, the carrier and the passenger
may agree to a higher limit [Art. 22(1), WC].
Note: Special drawing rights are supplementary foreign
exchange reserve assets defined and maintained by the
International Monetary Fund.
Liability for Checked Baggage
General rule: “In the carriage of cargo, the liability of the
carrier is limited to a sum of 17 Special Drawing Rights per
kilogram” [Art. 22(1), WC as amended by Additional Protocol
No. 3 (1975)].
Exception: The limit does not apply when the consignor has
made, at the time when the package was handed over to the
carrier, a special declaration of the value at delivery and has
paid a supplementary sum if the case so requires.
In that case, the carrier will be liable to pay a sum not
exceeding the declared sum, unless he proves that that sum is
greater than the actual value to the consignor at delivery [Art.
22(2), WC].
Liability for Hand-Carried Baggage
As regards hand-carried baggage, the liability of the carrier is
limited to “332 Special Drawing Rights per passenger” [Art.
22(3) WC, as amended by Additional Protocol No. 2 (1975)].
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The Guatemala Protocol of 1971 increased the limit for
passengers to $100,000 and for baggage to $1,000. However,
the Supreme Court noted in Santos III v. Northwest Orient
Airlines [G.R. No. 101538(1992)], that the Guatemala Protocol
is still ineffective [Sundiang and Aquino].
The Warsaw Convention should be deemed a limit of liability
only in those cases where:
(1) The cause of death or injury to person, or
destruction, loss or damage to property or delay in its
transport is not attributable to or attended by:
a. Any willful misconduct, bad faith,
recklessness; or
b. Otherwise improper conduct on the part
of any official or employee for which the
carrier is responsible; and
(2) There is otherwise no special or extraordinary
form of resulting injury
Note: The Montreal Convention 1999 changed the limits of
liability in relation to delay, baggage and cargo as follows:
1. In the case of damage caused by delays as specified
in Article 19 in the carriage of persons, the liability of
the carrier for each passenger is limited to 4,150
Special Drawing Rights;
2. In the carriage of baggage, the liability of the carrier
in the case of destruction, loss, damage or delay is
limited to 1,000 Special Drawing Rights for each
passenger x x x;
3. In the carriage of cargo, the liability of the carrier in
the case of destruction, loss, damage or delay is
limited to a sum of 17 Special Drawing Rights per
kilogram x x x [Art. 22, Montreal Convention].
Willful Misconduct
A common carrier may not avail of the limitation in the
following cases:
a. Willful misconduct;
b. Default amounting to willful misconduct [Art. 25,
WC];
c. Accepting passengers without ticket [Art. 3(2), WC];
d. Accepting goods without airway bill or baggage
without baggage check.
Receipt by the person entitled to the delivery of baggage or
cargo without complaint is prima facie evidence that the same
has been delivered in good condition and in accordance with
the document of carriage.
JURISDICTIONAL RULES
An action for damages may be brought, at the option of the
plaintiff, in:
• The court of the place where the carrier is domiciled;
 • The court of the place where it has its principal place
of business;
• The court of the place where it has a palce of business
by which the contract has been made; or
• The court of the place of destination.

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