LAW ON TRANSPORTATION AND PUBLIC UTILITIES  still a CC even if services offered to a limited clientele

 pipeline operators are CCs – not necessarily motor

Contract of Transportation – person obligates himself to transport vehicles
persons or property from one place to another for a consideration.
CHARTER PARTY:
2 KINDS: - 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.
1. CARRIAGE OF PASSENGERS
2 types:
Parties: common carrier & passenger (carried gratuitously or not)
1. Contract of affreightment
Perfection: – involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for another
> contract to carry (agreement to carry the passenger at some - CC = observe extraordinary diligence; in case of loss,
future date) – consensual contract and perfected by mere consent deterioration or destruction of goods of goods, CCs are presumed
to be at fault or have acted negligently
* AIRCRAFT – perfected even without issuance of ticket as long as
there was already meeting of minds with respect to the subject 2. Charter by demise/ Bareboat Charter
matter and consideration – whole vessel is let to the charterer with a transfer to him of its
entire command and possession and consequent control over its
> contract of carriage navigation including the master and the crew who are his
– real contract; not until the facilities of the carrier are actually servants.
used can the carrier be said to have assumed the obligation of the - charter includes both vessel and crew—CC becomes private
carrier; perfected by actual use. carrier (PC) insofar as that particular voyage is concerned
- if PC- ordinary diligence in the carriage of goods will suffice
* AIRCRAFT – perfected if it was established that the passenger - PC = undertaking is a single transaction, not a part of the
had checked in at the departure counter, passed through customs general business or occupation, although involving the carriage of
and immigration, boarded the shuttle bus and proceeded to the goods for a fee; NO presumption of negligence applies –
ramp of the aircraft and baggage already loaded to the aircraft. whosoever alleges damage to or deterioration of the goods
carried has the burden of proving that the cause was the
* Public Utility Bus or Jeepneys – once it stops it is in effect making negligence of the carrier.
a continuous offer to riders; perfected when passenger is already
attempting to board the vehicle CCs v. Towage, Arrastre and Stevedoring

* TRAINS – perfected when a person: Towage- a vessel is hired to bring another vessel to another place
a. purchased a ticket/ possess sufficient fare with which e.g. a tugboat may be hired by CC to bring the vessel to a port
to pay for his passage (operator of tugboat not CC)
b. presented himself at the proper place and in a proper
manner to be transported Arrastre operator’s functions has nothing to do with the trade and
c. has a bona fide intention to use facilities of the carrier business of navigation nor to the use or operation of vessels.
Services are not maritime.
2. CARRIAGE OF GOODS
Stevedoring- involves the loading and unloading of coastwise
Parties: shipper & carrier vessels calling at the port.

Perfection: >>> Common carriers are public utilities, impressed with public
> contract to carry goods – consensual interest and concern subject to regulation by the state.
> contract of carriage - act of delivery of goods ( goods are
unconditionally placed in the possession and control of the carrier REGISTERED OWNER RULE
and upon their receipt by the carrier for transportation)
- the registered owner of a vehicle is liable from
CARRIER: any damage caused by the negligent operation of the vehicle
Common carriers (CC) (1732) although the same was already sold or conveyed to another
– persons, corporations, firms or associations engaged in person at the time of the accident.
the business of carrying or transporting passengers or - The registered owner is liable to the injured
goods or both, by land, water, or air, for compensation, party subject to his right of recourse against the transferee or
offering their services to the public. (NOT the means of the buyer
transportation) - Applicable in case of lease
– one that holds itself out as ready to engage in the
transportation of goods for hire as a public employment - Registered owner not liable if vehicle was taken
and not as a casual occupation. from him without his knowledge and consent.

Tests for determining WON a party is a common carrier of goods: - Applicable to people involved on a “kabit
1. He must be engaged in the business of carrying goods system” (arrangement whereby a person who has been
for others as a public employment, and must hold himself granted a certificate of public convenience allows other
out as ready to engage in the transportation of goods for persons who own motor vehicles to operate them under his
persons generally as a business and not as a casual license, sometimes for a fee or percentage of the earnings ---
occupation. contrary to public policy)
2. He must undertake to carry good of the kind to which his
business is confined. • parties to the “kabit system”
3. he must undertake to carry by the method by which his cannot invoke the same as against each other either to
business is conducted and over his established roads enforce their illegal agreement or to invoke the same to
4. transportation must be for hire. escape liability --- pari delicto rule
• having entered into an illegal
Characteristics of Common carriers (CC): contract, neither can seek relief from the courts and each
 no distinction between one whose principal business is must bear the consequences of his acts
the transportation of persons/goods and one who does • also applicable to aircrafts and
such as an ancillary business vessels – basic rule that no person can operate a
 common carrier without securing a certificate of public B. DUTY TO DELIVER THE GOODS
convenience and necessity. a. Time of Delivery
Where a carrier has made an express contract, the goods must be
delivered within a specified time otherwise he is liable for any
CHAPTER 2 delay (indemnity for damages). In the absence of any agreement,
OBLIGATIONS OF THE PARTIES goods must be delivered at its destination within a reasonable
time (depending on the attending circumstances, nature of the
I. Obligations of the carrier goods).
A. DUTY TO ACCEPT
A common carrier granted a certificate of public
convenience is duty bound to accept passengers or cargo
without any discrimination.
b. Consequences/Effects of Delay
It is illegal for domestic ship operators to refuse to accept or Excusable delays in carriage suspend, but do not generally
carry passengers or cargo without just cause. (Section 16, RA terminate, the contract of carriage; when the cause is removed,
9295) the master must proceed with the voyage and make delivery.
During the detention or delay, vessel continues to be liable as a
In air transportation, passengers with confirmed tickets who common carrier, not a warehouseman, and remains duty bound to
were not allowed to board are provided with denied boarding exercise extraordinary diligence.
compensation and priority boarding rules. No compensation
for refusal if it is because of 1) government requisition of the If common carrier negligently delays in transporting the goods,
space, 2) substitution of equipment of lesser capacity when a natural disaster shall not free it from responsibility.
required by operational and or safety and/or other causes
beyond the control of the carrier, and 3) if arrangements If common carrier delays , without just cause, in transporting
have been made for the passenger to take another flight in a the goods or changes the stipulated or usual route, the contract
comparable air transportation which will arrive not later than limiting its liability cannot be availed of in case of the loss,
three hours after the time of flight on which the confirmed destruction, or deterioration of the goods.
space is held is supposed to arrive. (Civil Aeronautics Board
Economic Regulation) (1) Abandonment
In case of delay through the fault of the carrier, the consignee
a. Grounds for valid refusal to accept goods may refuse to accept the goods or may leave the goods in the
1. dangerous objects or substances including hands of the carrier. It must be communicated to the carrier in
dynamites and other explosives writing. This right must be exercised between the time of delay
2. goods are unfit for transportation and before the arrival of the goods at its destination. The carrier
3. acceptance would result in overloading must pay the full value of the goods as if they had been lost or
4. contrabands or illegal goods mislaid.
5. goods injurious to health
6. goods will be exposed to untoward danger If abandonment is not made, indemnification for the losses and
like flood, capture by enemies and the like damages by reason of the delay cannot exceed the current price
7. goods like livestock will be exposed to which the goods would have on the day and at the place they are
diseases to be delivered.
8. strike
9. failure to tender goods on time The value of the goods which the carrier must pay in case of loss
or misplacement shall be that what is declared in the bill of lading.
In Fisher v. Yangco, factors in determining reasonable
discrimination include, 1) suitability to the vessel for the Consignee must not defer the payment of the expenses and
transportation of such products; 2) reasonable possibility of transportation charges of the goods otherwise carrier may
danger or disaster resulting from their transportation in the form demand the judicial sale of the goods.
and under the conditions in which they are offered for carriage;
and 3) the general nature of the business done by the carrier. (2) Rights of Passengers in Case of Delay
As to the rights and duties of the parties strictly arising out of
(1) Hazardous and Dangerous Substances delay, the Civil Code is silent. However, the Code of Commerce
Carrier not properly equipped to transport dangerous chemicals or provides for such a situation:
explosives may validly refuse to accept the same for transport.
Those which are not authorized by the Maritime Industry Authority ARTICLE 698. In case a voyage already begun should be
to carry such goods may also validly refuse the same for interrupted, the passengers shall be obliged to pay the fare in
transport. There must be a Special Permit to Carry from the proportion to the distance covered, without Right to recover for
MARINA. losses and damages if the interruption is due to fortuitous event
of force majeure, but with a right to indemnity if the interruption
(2) Unfit for Transport should have been caused by the captain exclusively. If the
Carriers may refuse to accept goods that are unfit for interruption should be caused by the disability of the vessel and a
transportation (by nature be unfit for transportation or are unfit passenger should agree to await the repairs, he may not be
because of improper packaging or defect in their containers). required to pay any increased price of passage, but his living
However, carriers may accept the goods and limit its liability by expenses during the stay shall be for his own account.
stipulation.
In case the vessel is not able to depart on time and the delay is
If by reason of well-founded suspicion of falsity in the declaration unreasonable, the passenger may opt to have his/her ticket
as to the contents of the package carrier should decide to immediately refunded without any refund service fee from the
examine and investigate it in the presence of witnesses, with the authorized issuing/ticketing office.
shipper and consignee in attendance. If declaration of shipper is
true, expenses occasioned by the examination and of repacking C. WHERE AND TO WHOM DELIVERED
the packages shall be for the account of the carrier a. Place
Goods should be delivered to the consignee in the place agreed
Even if the cause of the loss, destruction or deterioration of the upon by the parties.
goods should be caused by the character of the goods, or the
faulty nature of the packing or of the containers, the common The shipper may change the consignment of the goods provided
carrier must exercise due diligence to forestall or lessen the loss. that at the time of ordering the change of the consignee the bill of
lading signed by the carrier be returned to him, in exchange for
another wherein the novation of the contract appears. The (2) Carriage of Passengers
expenses occasioned by the change shall be for the account of By trains – the extraordinary responsibility of common carrier
the shipper. commences the moment the person who purchases the ticket (or
a ‘token’ or ‘card’) from the carrier presents himself at the proper
b. Consignee place and in a proper manner to be transported with a bona fide
Delivery must generally be made to the owner or consignee or to intent to ride the coach.
someone lawfully authorized by him to receive the goods for his
account or to the holder of the negotiable instrument. * Mere purchase of a ticket does not of itself create the relation of
carrier and passenger but it is an element in the inception of the
c. Delay to Transport Passengers relation.
Effects of ‘delayed and unfinished voyage’ in inter-island vessels:
• vessel can not continue or complete her voyage for any * A proper person who enters upon the carrier’s premises (station,
cause – carrier is under obligation to transport the ticketing office, or waiting room) with the intention of becoming a
passenger to his/her destination at the expense of the passenger will ordinarily be viewed as assuming the status of a
carrier including free meals and lodging before the passenger.
passenger is transported to his/her destination; the
passenger may opt to have his/her ticket refunded in full * One who goes to the railroad station to inquire as to the
if the cause of the unfinished voyage is due to the possibility of securing passage on a freight train, which he knows,
negligence of the carrier or to an amount that will suffice by the rules of the company, is not allowed to carry passengers,
to defray transportation cost at the shortest possible and to secure passage thereon if possible, is not entitled to the
route if the cause of the unfinished voyage is fortuitous rights of a passenger but is a mere trespasser.
event.
• vessel is delayed in arrival at the port of destination – * One who rides upon any part of the vehicle or conveyance which
free meals during mealtime is unsuitable or dangerous, or which he knows is not intended for
• delay in departure at the point of origin due to carrier’s passengers, is not presumed to be a passenger.
negligence; fortuitous event - free meals during
mealtime; carrier not obliged to serve free meals * One who secures free passage by fraud or stealth is precluded
• carrier is not obliged to inform passengers of sailing from recovery for injuries sustained through the negligence of the
schedule of the vessel carrier, for he has not assumed the status of a passenger.

B.DUTY TO EXERCISE EXTRAORDINARY DELIGENCE * A person riding on a freight train, on a driver’s pass or similar
Goods should be delivered in the same condition that they arrangement, to look after livestock being transported and as
were received and to transport the passengers without incident to such transportation is, generally regarded as a
encountering any harm or loss. passenger for hire.

ARTICLE 1755. A common carrier is bound to carry the * Motor vehicles like jeepneys and buses are duty bound to stop
passengers safely as far as human care and foresight can provide, their conveyances for a reasonable length of time in order to
using the utmost diligence of very cautious persons, with a due afford passengers an opportunity to board and enter, and they are
regard for all the circumstances. (Civil Code) liable for injuries suffered by boarding passengers resulting from
the sudden starting up or jerking of their conveyances while they
a. Presumption of Negligence do so. Once a public utility bus or jeepney stops, it is making a
Two conditions for the birth of the presumption of negligence: continuous offer to bus riders.
1. there exists a contract between the passenger or the
shipper and the common carrier Duty to exercise utmost diligence with respect to passengers will
2. the loss, deterioration, injury or death took place during not ordinarily terminate until the passenger has, after reaching his
the existence of the contract destination, safely alighted from the carrier’s conveyance or had a
reasonable opportunity to leave the carriers premises.
Doctrine of Proximate Cause – there is presumption of negligence
If the goods are lost, destroyed or deteriorated, common carriers E. DEFENSES OF COMMON CARRIERS
are presumed to have acted negligently, unless they prove that 1. Flood, storm, earthquake, lightning, or other natural disaster or
they observed extraordinary diligence. In case of death of or calamity
injuries to passengers, common carriers are presumed to have 2. Act of the public enemy in war, whether international or civil
been at fault or to have acted negligently, unless they prove that 3. Act or omission of the shipper or owner of the goods
they observed extraordinary diligence. 4. The character of the goods or defects in the packing or in the
containers
b. Duration of Duty 5. Order or act of competent public authority
(1) Carriage of Goods 6. Exercise of extraordinary diligence
ARTICLE 1736. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed Fortuitous Event – to be a valid defense must be established to be
in the possession of, and received by the carrier for the proximate cause of the loss
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person Requisites:
who has a right to receive them… 1. The cause of the unforeseen and the unexpected occurrence,
or of the failure of the debtor to comply with his obligation,
ARTICLE 1737. The common carrier’s duty to observe must be independent of the human will
extraordinary diligence over the goods remains in full force and 2. It must be impossible to foresee the event which constitutes
effect even when they are temporarily unloaded or stored in the caso fortuito, or if it can be foreseen, it must be impossible
transit, unless the shipper or owner has made use of the right of to avoid
stoppage in transitu. (common carrier becomes a warehouseman 3. The occurrence must be such as to render it impossible for the
– ordinary diligence) debtor to fulfill his obligation in a normal manner
4. The obligor (debtor) must be free from any participation in or
ARTICLE 1738. The extraordinary liability of the common carrier the aggravation of the injury resulting to the creditor
continues to be operative even during the time the goods are
stored in a warehouse of the carrier at the place if destination, In order for the common carrier to be exempted from
until the consignee has been advised of the arrival of the goods responsibility, the natural disaster must have been the proximate
and has had reasonable opportunity thereafter to remove them or and only cause of the loss. However, the common carrier must
otherwise dispose of them. exercise due diligence to prevent or minimize loss before, during
and after the occurrence of flood, storm or other natural disaster
in order that the common carrier may be exempted from liability passenger of the bus and that she suffered injuries
for the loss, destruction, or deterioration of the goods. while on board the bus.

Fire – not considered as a natural calamity or disaster (b) Supposing that there were armed men who staged a
hold-up while the bus was speeding along the
Fire caused by lightning – a natural calamity highway. One of them stole the passenger’s bag and
wallet while pointing a gun him. Is the bus liable?
Hijacking – does not fall under the categories of exempting Answer: No. Hand-carried luggages are governed by
causes; the common carrier is presumed to be at fault or to have necessary deposit. Besides, theft with use of arms or
acted negligently unless there is a proof of extraordinary diligence through irresistible force is a force majeure which
on its part exempts carriers from liability.

Mechanical defects – damage or injury resulting from mechanical 3. Hi-jacking cannot exculpate the carrier from liability if it
defects is not a damage or injury that was caused by fortuitous is shown that the employees of the carrier were not
event; carrier is liable to its passengers for damages caused by overwhelmed by the hijackers and that there was no
mechanical defects of the conveyance (breakage of a faulty drag- showing of irresistible force. Since, there were 4
link spring, fracture of the vehicle’s right steering knuckle, employers while there were only 2 hijackers and only one
defective breaks) of them was armed with bladed weapon.
ON THE OTHER HAND, a hijacking by 3 armed men is an
Pages 123-190 event which is considered to be beyond the control of the
Juntilla v. Fontanar carrier. Thus, the carrier may be adjudged from liability if
“Tire-blowouts” was not considered as fortuitous event although it it can be proven that the hijacking was unforeseeable.
was alleged that the tires were in good condition; no evidence
was presented to show that the evidence were due to adverse c. PUBLIC ENEMY
road conditions – the carrier must prove all angles. - presupposes a state of war and refers to the government of a
The explosion could have been caused by too much air pressure foreign nation at war with the country to which the carrier
injected into the tires and the fact that the jeepney was belongs, though not necessarily with that to which the owner of
overloaded and speeding at the time of the accident. the gods owes allegiance.
- Thieves, rioter, and insurrectionists are not included. They are
b. OTHER INVALID DEFENSES merely private depredators for whose acts a carrier is answerable.
1. Damage to cargo due to EXPLOSION of another cargo – not - Rebels in insurrection against their own government are
attributable to peril of the seas or accidents of navigation. generally not embraced in the definition of public enemy.
2. Damage by WORMS and RATS resulting to damage to cargoes – However, if the rebels hold a portion of territory, they have
can’t be cited as an excuse by the carrier. declared their impendence, cast off their allegiance and has
3. Damage by WATER through a port which had been left open or organized armed hostility to the government, and the authority of
insufficiently fastened on sailing. the latter is at the time overthrown, such an uprising may take on
4. Carrier cannot escape liabilities to third persons if damage was the dignity of a civil war, and so matured and magnified, the
caused by BARRATRY – where the master or crew of the ship parties are belligerent and are entitled to belligerent rights.
committed unlawful acts contrary to their duties – includes theft - Depredation by pirates (which are enemy of all civilized nation)
and fraudulently running the ship ashore. excuses the carrier from liability.
- Common carriers may be exempted from responsibility only if
Cases: the act of the public enemy has been the proximate and only
1. Problem: A carrier bus on its way to its destination cause of the loss. Moreover, due diligence must be exercised to
encountered an engine failure, thus, it has to be repaired prevent or at least minimize the loss before, during and after the
for 2 days. And while in the repair shop, a typhoon came performance of the act of the public enemy in order that the
resulting to the spoilage of cargoes. carrier may be exempted from liability for the loss, destruction, or
Answer: A typhoon although a natural disaster, is not a deterioration of the goods.
valid defense if it is shown that it was not the only cause
of the loss. Especially when the facts indicate that the
typhoon was foreseeable and could have been detected d. IMPROPER PACKING
through the exercise of reasonable care. Cargoes should
have been secured while the bus was being repaired for Character of the goods and defects in the packaging or in the
2 days. containers are defenses available to the common carrier.
Similarly, the Carriage of Good b Sea Act provides that carrier
2. Problem: A passenger told the driver that he has valuable shall not liable for: (1) wastage in bulk or weight or any damages
items in his bag which was placed under his feet and he arising form the inherent defect, quality or vice of goods; (2)
asked the driver (to which he is seated near) to watch for insufficiency of packing; (3) insufficiency or inadequacy of the
the bag while he is asleep. marks, or (4) latent defects no discoverable by due diligence.

(a) There have been incidents of throwing of stones at However, NCC likewise provides:
passing vehicles in the North Express Way. While the Art. 1742. Even if the loss, destruction, or deterioration of
bus was traversing the super highway, a stone the goods should be caused by the character of the goods,
hurled from the overpass and hit the passenger or the faulty nature of the packing or the containers, the
resulting to injuries. Can the passenger hold the bus common carrier must exercise due diligence to forestall or
liable for damages? lessen the loss.
Answer: Yes. The incident was foreseeable due the
prior incidents of stone hurling. The bus should have Thus, if the carrier accepted the goods knowing the fact of
exercised utmost diligence and employed adequate improper packing or even if the carrier does not know but
precautionary measures to secure safety of the defect was nonetheless apparent upon ordinary
passengers since the incident was foreseeable. . observation, it is not relived form liability for loss or injury to
HOWEVER, if the stone throwing was entirely goods resulting therefrom.
unforeseeable and the carrier exercised the utmost
diligence, then, the bus can’t be held liable. Cases:
Nonetheless, the burden of proof Is on the carrier to 1. Problem: A carrier knowing that some of a cargo of sacks
prove such exercise of diligence. It is up to the of rice had big holes and others had openings just loosely
carrier to overthrow the presumption of negligence. tied with strings resulting to the spillage of rice during
If the passenger decides to file a case, al the the trip. Thus, there was shortage in the delivery of the
passenger has to do is to prove that she was a cargoes. When sued due to the shortage, the carrier
 interposed a defense that it was not liable since the defense is also subject to the exercise of a carrier of due
shortage was due to the defective condition of the sacks. diligence to prevent or stop the act or omission.
Decide. Negligence of the carrier need not be the sole cause of the
Answer: Carrier must still exercise extraordinary damage or injury to the passenger or the goods. The carrier
diligence if the fact of improper packing is known to the would still be liable even if the contractual breach concurs
carrier or its servants, or apparent upon ordinary with the negligent act or omission of another person.
observation. If the carrier accepted the cargo despite
such defects, the carriers becomes liable for the damage G. PASSENGER’S BAGGAGES
resulting therefrom. Apply Article 1742. Rules that are applicable to goods that are being shipped are also
applicable to baggage delivered to the custody of the carrier.
e. ORDER OF PUBLIC AUTHORITY Arts. 1733. 1734 and 1736 of Civil Code are applicable.
Art. 1743. If through the order of public authority the goods are However, if the luggage was hand-carried, Arts. 1998, 2000-2003
seized or destroyed, the common carrier is not responsible, shall apply.
provided said public authority had power to issue order. Art. 1998. The deposit of effects made by the travellers in
hotels or inns shall also be regarded as necessary. The
Cases: keepers of hotels or inns shall be responsible for them as
1. Carrier was not excused from liability since the order of depositaries, provided that notice was given to them, or to
an acting mayor was not considered as a valid order of a their employees, of the effects brought by the guests and
public authority. It is required that public authority who that, on the part of the latter, they take the precautions
issued the order must be duly authorized to issue the which said hotel-keepers or their substitutes advised
order. relative to the care and vigilance of their effects. (1783)
2. Carriage of Goods by Sea Act – provides that carrier shall
not responsible for loss or damage resulting from “arrest
Art. 2000. The responsibility referred to in the two
or restraint of princes, rulers, or people, or seizure under
preceding articles shall include the loss of, or injury to the
legal process” and from “quarantine restrictions”.
personal property of the guests caused by the servants or
employees of the keepers of hotels or inns as well as
F. DEFENSES IN CARRIAGE OF PASSENGERS
strangers; but not that which may proceed from any force
majeure. The fact that travellers are constrained to rely on
- Primary defense of carrier is exercise of extraordinary
the vigilance of the keeper of the hotels or inns shall be
diligence in transporting passengers. Even if there is a fortuitous
considered in determining the degree of care required of
event, the carriers must also present proof of exercise of
him. (1784a)
extraordinary diligence.

Art. 1759. Common carriers are liable for the death of or Art. 2001. The act of a thief or robber, who has entered
injuries to passengers through the negligence or willful the hotel is not deemed force majeure, unless it is done
acts of the carrier’s employees, although such employees with the use of arms or through an irresistible force. (n)
may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
Art. 2002. The hotel-keeper is not liable for compensation
The liability does not cease even upon proof that they
if the loss is due to the acts of the guest, his family,
exercised diligence in the selection and supervision of
servants or visitors, or if the loss arises from the character
their employees.
of the things brought into the hotel. (n)
Art. 1763. Carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of Art. 2003. The hotel-keeper cannot free himself from
other passengers or of strangers, if the common carrier’s responsibility by posting notices to the effect that he is
employees through the exercise of the diligence of a good not liable for the articles brought by the guest. Any
father of a family could have prevented or stopped the act stipulation between the hotel-keeper and the guest
or omission. whereby the responsibility of the former as set forth in
articles 1998 to 2001 is suppressed or diminished shall be
a. Employees void. (n)
- Carrier is liable for the acts of its employees. It can’t
escape liability by claiming that it exercised due
diligence in supervision and selection of its employees
(unlike in quasi-delicts).
Cases:
1. Despite the fact that the carrier gave notice that it shall
Reasons for the rule:
not be liable for baggage brought in by passengers, the
1. Undertaking of the carrier requires that its passenger
carrier is still liable for lost hand-carried luggage since it
that full measure of protection afforded by the exercise
is governed by rules on necessary deposits. Under Art.
of high degree of care prescribed by law, inter alia from
20000, the responsibility of the depositary includes the
violence and insults at the hands of strangers and other
loss of property of the guest caused by strangers but not
passengers, but above all, from the acts of the carrier’s
that which may proceed from force majeure. Moreover,
own servants.
article 2001 considers theft as force majeure if it is done
2. The liability of the carrier for the servant’s violation of
with use of arms or through irresistible force.
duty to performance of his contract to safely transport
2. Even if the passenger did not declare his baggage nor
the passenger, delegating therewith the duty of
pay its charges contrary to the regulations of the bus
protecting the passenger with utmost care prescribed by
company, the carrier is still liable in case of loss of the
law.
baggage. Since, it has the duty to exercise extraordinary
3. As between the carrier and the passenger, the former
diligence over the baggage that was turned over to the
must bear the risk of wrongful acts or negligence of the
carrier or placed in the baggage compartment of the bus.
carrier’s employees against passenger, since it, and not
The non-payment of the charges is immaterial as long as
the passenger, has the power to select and remove
the baggage was received by the carrier for
them.
transportation.
II. OBLIGATIONS OF SHIPPER, CONSIGNEE and PASSENGER.
b. Other Passengers and Third Persons
A. Negligence of Shipper or Passenger
The obligation to exercise due diligence is not limited to the
With respect to acts of strangers and other passengers
carrier. The shipper is obliged to exercise due diligence in
resulting in injury to apassenger, the availability of such
avoiding damage or injury. Nevertheless, contributory
 negligence on the part of the shipper/ passenger would only the accident was the driver’s willful and reckless act in running
mitigate the carrier’s liability; it is not a total excuse. the race with the other bus.
However, if the negligence of the shipper/ passenger is the
proximate and only cause of the loss, then, the carrier shall B. FREIGHT
not be liable. The carrier may overcome the presumption of a. Amount to be Paid
negligence and any be able to prove that it exercised Common carriers are subject to heavy regulations with respect to
extraordinary diligence in handling the goods or in rates that they are charging to the public. The regulation of rates
transporting the passenger. is founded upon the valid exercise of the Police Power of the state
The carrier may be able to prove that the only cause of the in order to protect the public from arbitrary and excessive rates
loss of the goods is any of the following: while maintaining the efficiency and quality of services rendered.
1. Failure of the shipper to disclose the nature of the goods; The fixing of just and reasonable rates involves a balancing of
2. Improper marking or direction as to the destination; investor and the consumer interest.
3. Improper loading when he assumes such responsibility. Although the consideration that should be paid to the carrier is
The shipper must likewise see to it that the goods are still subject to the agreement between parties, what can be
properly packed; otherwise, liability of the carrier may either agreed upon should not be beyond the maximum amount fixed by
be mitigated or barred depending on the circumstances. appropriate government agency.
b. Who will pay.
Art. 1741. If the shipper or owner merely contributed Although either of the shipper or the consignor may pay the
to the loss, destruction or deterioration of the goods, freight before or at time the goods are delivered to the carrier for
the proximate cause thereof being the negligence of shipment, nonetheless, it is the consignor (whom the contract of
the common carrier, the latter shall be liable in carriage is made) who is primarily liable for the payment of freight
damages, which however, shall be equitably reduced. whether or not he is the owner of the goods. The obligation to pay
is implied from the mere fact that the consignor has placed the
goods with the carrier for the purpose of transportation.
Art. 1761. The passenger must observe the diligence of a
c. Time to pay.
good father of a family to avoid injury to himself.
Code of Commerce provides that payment should be made within
24-hours from the time of delivery in the absence of any
Art. 1762. The contributory negligence of the passenger agreement between the parties.
does not bar recovery of damages for his death or injuries,
if the proximate cause thereof is the negligence of the ARTICLE 374. The consignees to whom the shipment was made
common carrier, but the amount of damages shall be may not defer the payment of the expenses and transportation
equitably reduced. charges of the goods they receive after the lapse of twenty-four
hours following their delivery; and in case of delay in this
payment, the carrier may demand the judicial sale of the goods
a. Last Clear Chance
transported in an amount necessary to cover the cost of
transportation and the expenses incurred.
A negligent carrier is liable to a negligent passenger in placing (1) Carriage of Passengers by Sea
himself in peril, if the carrier was aware of the passenger’s peril, With respect to carriage of goods by sea, the tickets are
or should have been aware of it in the reasonable exercise of due purchased in advance. Carriers are not supposed to allow
care, had in fact an opportunity later than that of the passenger to passengers without tickets. The carrier shall collect/ inspect the
avoid an accident. passenger’s ticket within one hour from vessel’s departure as not
to disrupt resting or sleeping passengers.
If the vessel is not able to depart on time and the delay is
Last clear chance applies in a suit between the owners and drivers
unreasonable, the passenger may opt to have his/ her ticket
of colliding vehicles. It does no tarise where a passenger demands
refunded without refund service fee.
responsibility from the carrier to enforce its contractual
Delayed voyage means “late departure of the vessel from its port
obligations. For it would be inequitable to exempt the negligent
of origin and/ or late arrival of the vessel to its port of
driver of the carrier and its owner on the ground that the other
destination”. Unreasonable delay means “the period of time that
driver was likewise guilty of negligence.
has lapsed without just cause and is solely attributable to the
carrier which has prejudiced the transportation of the passenger
b. Assumption of Risk and/ or cargoes to their port of destination.
A passenger who failed ot board the vessel can refund or
revalidate the ticket subject to surcharges. Revalidation means
Carriers are not insurers of the lives of their passengers. Thus, in
“the accreditation of the ticket that is not used and intended to be
air travel, adverse weather conditions or extreme climatic
used for another voyage.
changes are some of the perils involved in air travel, the
consequence of which the passenger must assume or expect.
(2) Carrier’s Lien
If consignor or the consignee fails to pay the consideration for the
However, there is no assumption of risk in a case wherein a transportation of goods, the carrier may exercise his lien in
passenger boarded a carrier that was filled to capacity. The act of accordance with Art. 375 of Code of Commerce:
the passenger in taking the extension chair does not amount to
implied assumption of risk. ARTICLE 375. The goods transported shall be especially bound
Case: to answer for the cost of transportation and for the expenses and
Although, there is a sign in the bus that says: “do not talk to the fees incurred for them during their conveyance and until the
driver while the bus is in motion, otherwise, the company would moment of their delivery.
not assume responsibility for any accident:. Nonetheless, the This special right shall prescribe eight days after the delivery has
passengers dared the driver to race with another bus, as the bus been made, and once prescribed, the carrier shall have no other
speeds up in the attempt to overtake the other bus, it failed to action than that corresponding to him as an ordinary creditor.
slow down. As a result, the bus turns turtle causing the death and C. DEMURRAGE
injuries to passengers. Is the bus company liable? Demurrage is the compensation provided for the contract of
Answer: Yes. The bus company is obligated to exercise utmost affreightment for the detention of the vessel beyond the time
diligence in carrying passengers. This liability cannot be agreed on for loading and unloading. It is the claim for damages
eliminated or limited by simply posting notices. The passenger for failure to accept delivery. In broad sense, very improper
cannot be said to have assumed the risk of being injured when he detention of a vessel may be considered a demurrage.
urged the driver to accept the dare. At most, the passengers can Technically, liability for demurrage exists only when expressly
only be said to be guilty of contributory negligence which would stipulated in the contract.
mitigate the liability of the driver, since the proximate cause of Using the term in broader sense, damages in the nature of
demurrage are recoverable for a breach of the implied obligation
to load or unload the cargo with reasonable dispatch, but only by
the party to whom the duty is owed and only against on who is a b.) No duty to inquire – Because of the implied warranty
party to the shipping contract. Notice of arrival of vessels or of seaworthiness, shippers of goods, when transacting
conveyances, or their placement for purposes of unloading is with common carriers, are not expected to inquire into
often a condition precedent to the right to collect demurrage the vessels seaworthiness, genuineness of its licenses
charges. and compliance with all maritime laws. Passengers
cannot be expected to inquire everytime they board a
CHAPTER 3: EXTRAORDINARY DILIGENCE common carrier, whether the carrier possesses the
necessary papers or that all the carrier’s employees are
I. RATIONALE qualified.
A common carrier is bound to carry the passengers safely as far a
human care and foresight provide, using the utmost diligence of It is the carrier that carries such burden of proving that
very cautious persons, with due regard for all circumstances. the ship is seaworthy. Presentation of certificates of
seaworthiness is not sufficient to overcome the
Extraordinary diligence: Calculated to protect the passengers presumption of negligence.
from the tragic mishaps that frequently occur in connection with
rapid modern transportation. c.) Meaning of Seaworthiness – A vessel must have such
degree of fitness which an owner who is exercising
extraordinary diligence would require his vessel to have
II. HOW DUTY IS COMPLIED WITH at the commencement of the voyage, having regard to
Common carrier binds itself to carry the passengers safely as far all the probable circumstances of it. This includes fitness
as human care and foresight can provide, using the utmost of the vessel itself to withstand the rigors of voyage,
diligence of a very cautious person, with due regard for all the fitness of the vessel to store the cargoes and
circumstances. accommodate passengers to be transported and that it is
- The duty even extends to the members of the crew adequately equipped and properly manned.
or complement operating the carrier.
General Test of Seaworthiness: Whether the ship and its
A reasonable man or a good father of a family in the position of appurtenances are reasonably fit to perform the service
the carrier must exercise extraordinary diligence in the undertaken.
performance of his contractual obligation.
- Whether or not a reasonable man, exercising Example: The carrier was able to establish that
extraordinary diligence, could have foreseen and the ship itself was seaworthy because the
prevented the damage or loss that occurred. records reveal that the vessel was drydocked
and inspected by the Phil. Coast Guard before
III. EFFECT OF STIPULATION its first destination.
A. GOODS
The law allows a stipulation whereby the carrier will exercise a A warranty of seaworthiness requires that it be properly
degree of diligence which is less than extraordinary with respect laden, and provided with a competent master, a
to goods. sufficient number of competent officers and seamen, and
the requisite appurtenances and equipment.
Art. 1744. A stipulation between the common carrier and
the shipper owner limiting the liability of the former for The carrier shall be bound before and at the beginning of
the loss, destruction, or deterioration of the goods to a the voyage to exercise due diligence to:
degree less than extraordinary diligence shall be valid, 1. Make the ship seaworthy;
provided it be: 2. Properly man, equip, and supply the ship;
3. Make all parts of the ship in which goods are
1. In writing, signed by the shipper/owner; carried, fit and safe for their reception, carriage,
2. Supported by a valuable consideration other than the and preservation.
service rendered by the common carrier (Note: Typically
fare/freight); and The carrier shall properly and carefully load, handle,
3. Reasonable, just and contrary to public policy. stow, carry, keep, care for, and discharge the goods
carried.
B. PASSENGERS
There can be no stipulation lessening the utmost diligence that is The ship must be cargoworthy. The ship must be
owed to passengers. efficiently strong and equipped to carry the particular
kind of cargo which she has contracted to carry and her
Art. 1757. The responsibility of a common carrier for the cargo must be so loaded that it is safe for her to proceed
safety of passengers as required in Arts. 1733 and 1755 on her voyage.
cannot be dispensed with or lessened by stipulation, by
the posting of notices, by statements on tickets, or The vessel must be adequately equipped and properly
otherwise. (Note: Absolute; extraordinary at all times.) manned. On top of regular maintenance and inspection,
Captains, masters or patrons of vessels must prove the
Gratuitous passenger – A stipulation limiting the common carrier’s skill, capacity, and qualifications necessary to command
liability for negligence is valid, but not for willful acts of gross and direct the vessel. If the owner of a vessel desires to
negligence. The reduction of fare does not justify any limitation. be the captain without having the legal qualifications, he
shall limit himself to the financial administration of the
vessel and shall entrust the navigation to a qualified
IV. EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA person.
A. SEAWORTHINESS
It is not an excuse that the carrier cannot afford the
a.) Warranty of Seaworthiness of Ship – Extraordinary salaries of competent and licensed crew or that latter is
diligence requires that the ship which will transport the unavailable.
passengers and goods is seaworthy. Seaworthiness of
the vessel is impliedly warranted.
B. OVERLOADING
The carrier shall be bound before and at the beginning of Duty to exercise due diligence likewise includes the duty to take
the voyage to exercise due diligence to make the ship passengers or cargoes that are within the carrying capacity of the
seaworthy. vessel.
C. PROPER STORAGE
The vessel itself may be suitable for the cargo but this is not VI. EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR
enough because the cargo must also be properly stored. The aircraft must be in such a condition that it must be able to
withstand the rigors of flight.
Cargo must generally not be placed on deck. The carrying of deck
cargo raises the presumption of unseaworthiness unless it can be Airworthiness – An aircraft, its engines propellers, and other
shown that the deck cargo will not interfere with the proper components and accessories, are of proper design and
management of the ship. construction, and are safe for air navigation purposes, such design
and construction being consistent with accepted engineering
D. NEGLIGENCE OF CAPTAIN AND CREW practice and in accordance with aerodynamic laws and aircraft
Failure on the part of the carrier to provide competent captain and science.
crew should be distinguished from the negligence of the said
captain and crew, because the latter is covered by the Limited Proof of airworthiness is not by itself sufficient to prove exercise of
Liability Rule (liability of the shipowner may be limited to the extraordinary diligence.
value of the vessel). If the negligence of the captain and crew can
be traced to the fact that they are really incompetent, the Limited The fact that the flight was cancelled due to fortuitous event does
Liability Rule cannot be invoked because the shipowner may be not mean that the carrier’s duty already ended. The carrier is still
deemed negligent. obligated to look after the convenience and comfort of the
passenger.
a.) Rules on passenger safety (Read Memorandum
Circular No. 114: p. 204) A. INSPECTION
Is the duty of the carrier to make inquiry as to the general nature
E. DEVIATION AND TRANSSHIPMENT of the articles shipped and of their value before it consents to
carry them; and its failure to do so cannot defeat the shipper’s
a.) Deviation – If there is an agreement between the right to recovery of full value of the package if lost, in the absence
shipper and the carrier as to the road over which the of showing of fraud or deceit on the part of the shipper.
conveyance is to be made (subject to the approval by the
Maritime Industry Authority), the carrier may not change Where a common carrier has reasonable ground to suspect that
the route, unless it be by reason of force majeure. the offered goods are of a dangerous character, the carrier has
Without this cause, he shall be liable for all the losses the right to know the character of such goods and to insist
which the goods may suffer, aside from paying the sum inspection, if reasonable and practical under the circumstances,
stipulated for that case. When on account of the force as a condition of receiving and transporting such goods. To be
majeure, the carrier had to take another route which subjected to unusual search, other than the routinary inspection
resulted to an increase in transportation charges, he procedure customarily undertaken, there must exist proof that
shall be reimbursed upon formal proof. would justify cause for apprehension that the baggage is
dangerous as to warrant exhaustive inspection, or even refusal to
b.) Transshipment – The act of taking cargo out of one accept carriage of the same.
ship and loading it into another; to transfer goods from
the vessel stipulated in the contract of affreightment to CHAPTER 4
another vessel before the place of destination named in BILL OF LADING
the contract has been reached.
Transshipment of freight without legal excuse is a I. CONCEPTS, DEFINITION AND KINDS
violation of the contract and subjects the carrier to
liability if the freight is lost even by a cause otherwise Bill of Lading (BOL)- a written acknowledgement, signed by the
excepted. master of a vessel or other authorized agent of the carrier, that he
has received the described goods from the shipper, to be
V. EXTRAORDINARY DILIGENCE IN CARRIAGE BY LAND transported on the expressed terms to be described the place of
A. CONDITION OF VEHICLE destination, and to be delivered to the designated consignees of
Common carriers that offer transportation by land are similarly the parties. It operates as a (1) RECEIPT (2) as a CONTRACT (3) as
required to make sure that the vehicles that they are using are in a DOCUMENT OF TITLE.
good order and condition.
A BOL is not necessary for the perfection of a contract of carriage.
Rule on Mechanical Defects – If the carriers will replace certain Thus, the obligation to exercise extraordinary diligence by the
parts of the motor vehicle, they are duty bound to make sure that carrier is still required even if there is no bill of lading. In the
the parts that they are purchasing are not defective. Hence, it is a absence of the bill of lading, disputes shall be determined on the
long-standing rule that a carrier cannot escape liability by basis of the provisions in the New Civil Code and suppletorily by
claiming that the accident that resulted because of a defective the Code of Commerce.
break or tire is due to a fortuitous event. This is true even if it can
be established that the tire that was subject of a blow-out is brand KINDS of BILL of LADING
new. The duty to exercise extraordinary diligence requires the
carrier to purchase and use vehicle parts that are not defective. 1. Clean Bill of Does not contain any notation indicating
Lading any defect in the goods.
B. TRAFFIC RULES 2. Foul Bill of One that contains the abovementioned
The carrier fails to exercise extraordinary diligence if it will not Lading notation.
comply with basic traffic rules. The Civil Code provides for a 3. Spent Bill of The goods are already delivered but the
presumption of negligence in case the accident occurs while the Lading bill of lading was not yet returned (upon
operator of the motor vehicle is violating traffic rules. delivery, the carrier is supposed to
retrieve the covering bill of the goods)
In cases involving breach of contract of carriage, proof of violation
of traffic rules confirms that the carrier failed to exercise 4. Through Bill Issued by a carrier who is obliged to use
extraordinary diligence. of Lading the facilities of other carriers as well as his
own facilities for the purpose of
C. DUTY TO INSPECT transporting the goods from the city of the
There is no unbending duty to inspect each and every package or seller to the city of the buyer, which BOL
baggage that is being brought inside the bus or jeepney. The is honored by the second and other
carrier is duty bound to conduct such inspection depending on the interested carriers who don’t issue their
circumstances. own BOL.
5. On Board Bill -states that the goods have been received rendered by the common carrier ( c ) the stipulation is just,
on board the vessel which is to carry the reasonable and not contrary to law.
goods. 3. Providing an unqualified limitation of such liability to an agreed
-apparently guarantees the certainty of valuation - INVALID
shipping as well as the seaworthiness of 4. Limiting the liability of the carrier to an agreed valuation unless
the vessel to carry the goods. the shipper declares a higher value and pays a higher rate of
6. Received for -states that the goods have been received freight- VALID and ENFORCEABLE.
Shipment Bill for shipment with or without specifying
the vessel by which the goods are to be III. AS A DOCUMENT OF TITLE
shipped.
-issued when conditions are not normal ART 1507 (NCC). A document of title in which it is stated that the
and there is insufficiency of shipping goods referred to therein will be delivered to the bearer or to the
space. order of any person named in such document is a negotiable
7. Custody Bill The goods are already receied by the document of title.
of Lading carrier but the vessel indicated therein
has not yet arrived in the port. If the document of title contains the required words of
negotiability to make the instrument negotiable under Article
8. Port Bill of The vessel indicated in the BOL that will
1507 of the NCC, the document remains to be negotiable even if
Lading transport the goods is already in the port.
the words “not negotiable” or non negotiable are places thereon

a. Bearer document- negotiated by delivery

b. Order document- negotiated by indorsement of the specified
EFFECTIVITY of BOL- upon its delivery to and acceptance by the
person so named
shipper. The acceptance of the bill without dissent raises the
presumption that all the terms therein were brought to the
Effects of negotiation. Negotiation of the document has the effect
knowledge of the shipper and agreed to by him, and in the
of manual delivery so as to constitute the transferee the owner of
absence of fraud or mistake, he is stopped thereafter from
the goods.
denying that he assented to such claims.
RECOVERY OF DAMAGES FROM CARRIER FOR CARRIAGE OF
THE 3-FOLD NATURE OF THE BILL OF LADING
GOODS:
1. Inter-island - if goods arrived in damaged condition (Art.
I. RECEIPT- as comprehending all methods of transportation, a
366):
BOL may be defined as a written acknowledgement of the receipt
a. If damage is apparent, the shipper must file a claim
of goods and an agreement to transport an to deliver them at a
immediately (it may be oral or written);
specified place to a person named or on his order. Other terms,
b. If damage is not apparent, he should file a claim within 24
“shipping receipts”, “forwarders receipts”, and “receipts for
hours from delivery.
transportation”. (SC) the designation however is not material, and
The filing of claim under either (1) or (2) is a condition
neither is the form of the instrument. If it contains an
precedent for recovery.
acknowledgement by the carrier of the receipt of goods for
If the claim is filed, but the carrier refuses to pay: enforce
transportation it is, in legal effect a BOL.
carrier’s liability in court by filing a case:
a. within 6 year, if no bill of lading has been issued; or
II. CONTRACT - it expresses the terms and conditions of the
b. within 10 years, if a bill of lading has been issued.
agreement between the parties; names the parties; includes
consignees etc. It is the law between the parties bound by its
2. Overseas –where goods arrived in a damaged condition from a
terms and conditions.
foreign port to a Philippine port of entry: (COGSA)
a. upon discharge of goods, if the damage is apparent, claim
It is to be construed liberally in favor of the shipper who adhered
should be filled immediately;
to such bill as it is a contract of adhesion. The only participation
b. if damage is not apparent, claim should be filled within 3 days
of the party is the signing of his signature or his adhesion thereto.
from delivery.
ART. 24 (NCC). In all contractual property or other relations, when
Filing of claim is not a condition precedent, but an action must be
one of the parties is at a disadvanatge on account of his moral
filed against the carrier within a period of 1 year from discharge; if
dependence, ignorance indigence, mental weakness, tender age
there is no delivery, the one-year period starts to run from the day
and other handicap, the court must be vigilant for his protection.
the vessel left port (in case of undelivered or lost cargo), or from
delivery to the arrastre (in case of damaged cargo).
It is covered by the parol evidence rule, that the terms of the
Where there was delivery to the wrong person, the prescriptive
contract are conclusive upon the parties and evidence aliunde is
period is 10 years because there is a violation of contract, and the
not admissible to vary or contradict a complete enforceable
carriage of goods by sea act does not apply to misdelivery. (Ang
agreement. If mistake was alleged, it must be timely raised in the
v. American SS Agencies (19 SCRA 631)
pleadings and it must be a mistake of fact mutual to the parties.
CARRIAGE OF GOODS BY SEA ACT (C.A. No. 65)
The BOL is the legal evidence of the contract and the entries
thereof constitutes prima facie evidence of the contract. All the
F COGSA is applicable in international maritime commerce. It can
essential elements of a valid contract (cause, consent, object) are
be applied in domestic sea transportation if agreed upon by the
present when such bill are issued.
parties. (paramount clause)
F COGSA is suppletory to the Civil Code and the Code of
BASIC STIPULATIONS (for overland transpo, maritime commerce
Commerce in the Carriage of goods from foreign ports to the
and airline transpo of passengers, please refer to the textbook for
Philippines.
the codal pp. 267-275)
F Under the Sec. 4 (5), the liability limit is set at $500 per package
unless the nature and value of such goods is declared by the
PROHIBITED AND LIMITING STIPULATION
shipper. This is deemed incorporated in the bill of lading even if
not mentioned in it (Eastern Shipping v. IAC, 150 SCRA 463).
1. Exempting the carrier from any and all liability for loss or
Note that Art. 1749 of the NCC applies to inter-island trade.
damage occasioned by its own negligence - INVALID as it is
contrary to public policy.
Prescriptive periods
2. Parties may stipulate that the diligence to be exercised by the
F Suit for loss or damage to the cargo should be brought within
carrier for the carriage of goods be less than extraordinary
one year after:
diligence if it is (a) in writing and signed by both parties (b)
a. delivery of the goods; or
supported by a valuable consideration other than the service
b. the date when the goods should be delivered. (Sec. 3[6]) Carrier not entitled to the foregoing limit if the damage is caused
by willful misconduct or default on its part. (Art. 25)
The one-year prescriptive period is suspended by:
ACTION FOR DAMAGES
1. express agreement of the parties (Universal Shipping Lines,
1. Condition precedent
Inc. v. IAC, 188 SCRA 170)
A written complaint must me made within:
2. when an action is filed in court until it is dismissed. (Stevens &
- 3 days from receipt of baggage
Co. v. Nordeutscher Lloyd, 6 SCRA 180)
- 7 days from receipt of goods
- in case of delay, 14 days from receipt of baggage/goods
WARSAW CONVENTION of 1929
F otherwise the action is barred except in case of fraud on the
part of the carrier. (Art. 26)
WHEN APPLICABLE:
2. Jurisdiction - governed by domestic law
Applies to all international transportation of person, baggage or
3. Venue – at the option of the plaintiff:
goods performed by aircraft for hire. “International
a. court of domicile of the carrier;
transportation” means any transportation in which the place of
b. court of its principal place of business;
departure and the place of destination are situated either:
c. court where it has a place of business through which the
1. within the territories of two High Contracting Parties regardless
contract has been made;
of whether or not there be a break in the transportation or
d. court of the place of destination. (Art. 28)
transshipment, or
4. Prescriptive period – 2 years from:
a. date of arrival at the destination
2. within the territory of a single High Contracting Party, if there is
b. date of expected arrival
an agreed stopping place within a territory subject to the
c. date on which the transportation stopped. (Art. 29)
sovereignty, mandate or authority of another power, even though
5. Rule in case of various successive carriers,
that power is not a party to the Convention.
a. In case of transportation of passengers – the action is filed
only against the carrier in which the accident or delay
Transportation to be performed by several successive air carriers
occurred unless there is an agreement whereby the first
shall be deemed to be one undivided transportation, if it has been
carrier assumed liability for the whole journey.
regarded by the parties as a single operation, whether it has been
b. In case of transportation of baggage or goods
agreed upon under the form of a single contract or of a series of
i. the consignor can file an action against the first carrier
contracts, and it shall not lose its international character merely
and the carrier in which the damage occurred
because one contract or a series of contracts is to be performed
ii. the consignee can file an action against the last carrier
entirely within a territory subject to the sovereignty, suzerainty,
and the carrier in which the damage occurred. These
mandate, or authority of the same High Contracting Party. (Art.
carriers are jointly and severally liable. (Art. 30)
1)
Nota Bene: COGSA/WARSAW applies to foreign vessels or airplane
NOTE: Warsaw prevails over the Civil Code, Rules of Court
or international travel
and all laws in the Philippines since an international law
Code of Commerce applies to inter-island or domestic
prevails over general law.
travel.
WHEN NOT APPLICABLE:
1. If there is willful misconduct on the part of the carrier’s
employees. The Convention does not regulate, much less
Bill of Lading as Document of Title (page 341)
exempt, carrier from liability for damages for violating the rights
of its passengers under the contract of carriage (PAL v. CA, 257
SCRA 33).  Bill of lading is a document of title under the Civil Code. It
can be a negotiable document of title.
2. when it contradicts public policy;
A. Negotiability
3. if the requirements under the Convention are not complied - It is negotiable if it is deliverable to the bearer, or to the order
with. of any person named in such document. (Art. 1507, Civil Code)

LIABILITY OF CARRIER FOR DAMAGES: a) Effect of Stamp or Notation “Non-Negotiable”

1. Death or injury of a passenger if the accident causing it took  the document remains to be negotiable even if the words
place on board the aircraft or in the course of its operations; (Art. “not-negotiable” or “non-negotiable” are placed thereon.
17) - Art. 1510 (Civil Code)
2. Destruction, loss or damage to any luggage or goods, if it took
place during the carriage; (Art. 18) and B. How Negotiated
3. Delay in the transportation of passengers, luggage or goods. a) Bearer document (Art. 1508 and 1511)
(Art. 19) - may be negotiated be delivery

NOTE: The Hague Protocol amended the Warsaw Convention by b) Order document (Sec. 38, NIL and Art. 1509, NCC)
removing the provision that if the airline took all necessary steps - can only be negotiated through the indorsement of the specified
to avoid the damage, it could exculpate itself completely (Art. person so named.
20(1)). (Alitalia v. IAC, 192 SCRA 9) - such indorsement may be in blank, to bearer or to a specified
person.
LIMIT OF LIABILITY
1. passengers - limited to 250,000
francs  Where a negotiable document of title is transferred for
except: agreement to a higher limit value by delivery, and the endorsement of the transferor
is essential for negotiation, the transferee acquires a
2. Goods and checked-in baggage - 250 francs/kg right against the transferor to compel him to endorse the
except: consigner declared its value and paid a supplementary document. xxx (Art. 1515, Civil Code)
sum, carrier liable to not more than the declared sum unless it
proves the sum is greater than its actual value. C. Effects of Negotiation
- has the effect of manual delivery so as to constitute the
3. hand-carry baggage - limited to 5,000 francs/passenger transferee the owner of the goods
- results in the transfer of ownership because transfer of
An agreement relieving the carrier from liability or fixing a lower document likewise transfers control over the goods
limit is null and void. (Art. 23) - refer to Art. 1513
 - Damages arising from delay or late delivery id not the
Chapter 5 damage or loss contemplated under the COGSA. The
Actions and Damages in Case of Breach goods are not actually lost or damaged. The applicable
period is ten (10) years.
 Cause of action of a passenger and shipper:
a) against common carrier – based on culpa contractual or culpa  This rule applies in collision cases. The one (1) year period
aquiliana starts not from the date of the collision but when the goods
b) on the part of the driver – based on either culpa delictual or should have been delivered, had the cargoes been saved.
culpa aquiliana

• If the negligence of third persons concurs with the breach,

Insurance
the liability of the third person who was driving the vehicle
 The insurer who is exercising its right of subrogation is also
and/or his employer may be based on quasi delict.
bound by the one (1) year prescriptive period.
 However, it does not apply to the claim against the insurer
• Solidary liability
for the insurance proceeds. The claim against the insurer is
- In case the negligence of the carrier’s driver and a third
based on contract that expires in ten (10) years.
person concurs, the liability of the parties – carrier and
his driver, third person – is joint and several.
II. Recoverable Damages
I. Notice of Claim and Prescriptive Period  Damages – is the pecuniary compensation, recompense
A. Overland Transportation of Goods and Coastwise or satisfaction for an injury sustained, or as otherwise
Shipping expressed, the pecuniary consequences which the law
a) When to file a claim with carrier imposes for the breach of some duty or violation of some
- Art. 366 constitutes a condition precedent to the accrual of a rights.
right of action against a carrier for damage caused to the
merchandise. A. Extent of Recovery (Art. 220, NCC)
 Carrier in good faith – is liable only to pay for the
 Under Art. 366 of the Code of Commerce, an action for damages that are the natural and probable consequences
damages is barred if the goods arrived in damaged of the breach of the obligation and which the parties have
condition and no claim is filed by the shipper within the foreseen or could have reasonably foreseen at the time
following period: the obligation was constituted.
1) immediately if damage is apparent;  Carrier in bad faith or guilty of gross negligence – liable
2) within twenty four (24) hours from delivery if damage is not for all damages, whether the same can be foreseen or
apparent not.

- the period does not begin to run until the consignee has - The carrier who may be compelled to pay has the right of
received possession of the merchandise that he may recourse against the employee who committed the
exercise over it the ordinary control pertinent to negligent, willful or fraudulent act.
ownership.
- This provision applies even to transportation by sea B. Kinds of Damages
within the Phils. or coastwise shipping. a) Actual or Compensatory Damages
- does not apply to misdelivery of goods. – only for the pecuniary loss suffered by him as he has duly
proved
 But the period prescribed in Art. 366 may be 2 Kinds:
subject to modification by agreement of the parties. 1. the loss of what a person already possesses (daňo emrgente);
2. the failure to receive as a benefit that would have pertained to
b) Extinctive Prescription him (lucro cesante).
- six (6) years if there is no written contract
- ten (10) years if there is written contract  Damages may be recovered: Art. 2205 (Civil Code)
1) For loss or impairment of earning capacity in cases of
 This rule likewise applies to carriage of passengers for temporary or permanent personal injury;
domestic transportation. 2) For injury to the plaintiff’s business standing or commercial
credit.
B. International Carriage of Goods by Sea
 A claim must be filed with the carrier within the following  Damages cannot be presumed.
period:
1) if the damage is apparent the claim should be filed  In case of goods – the plaintiff is entitled to their value at
immediately upon discharge of the goods; or the time of destruction.
2) within 3 days from delivery if damage is not apparent  For personal injury and even death – the claimant is
entitled to all medical expenses as well as other reasonable
 Filing of claim is not condition precedent. Thus, regardless expenses that he incurred to treat his or her relative’s
of whether the notice of loss or damage has been given, the injuries.
shipper can still bring an action to recover said loss or  In case of death – the plaintiff is entitled to the amount that
damage within one year after the delivery of the goods. he spent during the wake and funeral of the deceased. But,
expenses after the burial are not compensable.
a) Prescription
- Read Art. 2206 (Civil Code)
 Action for damages must be filed within a period of one (1)
year from discharge of the goods.  The amount of fixed damages is now P50,000.00
 The period is not suspended by an extra-judicial demand.
 Does not apply to conversion or misdelivery. 1) Loss of earning capacity
Net Earning Capacity = Life Expectancy x [Gross Annual Income
 The one (1) year period refers to loss of goods and not to
less Necessary Living Expenses]
misdelivery.
 Life expectancy – (2/3 x 80 – age at death)
  Net earnings – based on the gross income of the victim
minus the necessary incidental living expenses which the
victim would have incurred if he were alive.
 Amount of living expenses must be established. In the
absence of proof, it is fixed at fifty (50%) of the gross
income.

 Rules on loss of earning applies when the breach of the

carrier resulted in the plaintiff’s permanent incapacity.

2) Attorney’s fees
- refer to Art. 2208 of the Civil Code
- attorney’s fees may be awarded in an action for breach of
contract of carriage under par. 1,2,4,5,10 and 11 of Art. 2208.

3) Interests
 12% per annum – if it constitutes a loan or forbearance of
money
 6% per annum – if it does not constitute loan or
forbearance of money
 12% - for final judgment

b) Moral Damages
- Includes physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation and similar injury.
- Though incapable of pecuniary computation, moral damages
may be recovered if they were the proximate result of the
defendant’s wrongful act or omission.
- may be recovered when there is death or there is malice or bad
faith. (in transportation of passengers)
- Refer to Art. 2219 and 2220
- Generally, no moral damages may be awarded where the breach
of contract is not malicious.

c) Nominal Damages
- Refer to Art. 2221-2223 (Civil Code)
- the assessment of nominal damages is left to the discretion of
the court
- the award of nominal damages is also justified in the absence of
competent proof of the specific amounts of actual damages
suffered.
- cannot co-exist with actual damages

d) Temperate or Moderate Damages

- Art. 2224 provides:
 may be recovered when the court finds that some
pecuniary loss has been suffered but its amount can not,
from the nature of the case, be provided with certainty.
- cannot co-exist with actual damages

e) Liquidated Damages
 those agreed by the parties to a contract, to be paid in
case of breach thereof.
 Ordinarily, the court cannot change the amount of
liquidated damages agreed upon by the parties. However,
Art. 2227 of the Civil Code provides that liquidated
damages, whether intended as an indemnity or a penalty,
shall be equitable reduced if they were iniquitous or
unconscionable.

f) Exemplary or Corrective Damages

Requisites for the award of exemplary damages:
1. They may be imposed by way of example in addition to
compensatory damages, and only after the claimant’s right to
them has been established.
2. They cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory
damages that may be awarded to the claimant.
3. The act must be accompanied by bad faith or done in wanton,
fraudulent, oppressive or malevolent manner.

 The award of exemplary damages in breach of contract of

carriage is subject to the provisions under Art. 2232-2235 of
the Civil Code.