Contents

I. INTRODUCTION/GENERAL CONCEPTS.................................1
A. Contract of Transportation............................................1
- Parties (Carriage of Passengers and Carriage of Goods)1
- Perfection.....................................................................2
- Governing Laws in General..........................................2
B. Common Carriers...........................................................3
- Statutory Definition (Art. 1732, NCC)...........................3
- Diligence required of common carriers (Art. 1733, NCC) 3
C. Test................................................................................3
- private carrier..............................................................3
- freight forwarder.........................................................4
- school bus service........................................................4
- ancillary ferry services in resort operations.................4
- lighterage.....................................................................4
- customs broker and warehouseman............................4
- stevedoring..................................................................4
- Arrastre operator.........................................................4
- travel agency................................................................4
- tramp and line service..................................................4
- Towage.........................................................................4
D. Transport Network Companies (TNCs) and Transport Network Vehicle Service (TNVS) 5
E. Effect of Charter Parties.................................................5
F. Registered owner Rule...................................................6
- Kabit System................................................................6
- Boundary System.........................................................7
G. Pipeline Transportation definition under RA 11647 or the Foreign Investments Act as Amended 7
H. Notion of Common carrier synonymous with public service under Commonwealth Act 146 or the Public Service Act 8
Cabotage Act......................................................................8
II. OBLIGATIONS OF A COMMON CARRIER.............................8
A. Applicable provisions (Arts 1753 & 1766, CC)............9
B. Over goods (Arts. 1733 – 1754); Commercial Code 363, 364 & 365) See cases no. 13-20 9
i. the duration of the common carrier’s responsibility. 10
ii. the presumption of negligence.................................11
iii. instances when the common carrier is not liable....11
iv. stipulations which limit the common carrier’s liability13
C. Over passengers.......................................................13
C.1. when a person is deemed a passenger.................13
C.2. presumption of negligence of common carriers. . .14
C.3. instances when common carrier is not liable........14
C.4. situations where the common carrier’s liability may be limited by stipulation 15
C.5. waiver of claim for damages against common carriers 15
C.6. the common carrier’s liability for acts of employees, other passengers, or strangers 15
C.7. the responsibility of the passenger.......................15
D. Actions and Damages in Cases of Breach.................15

Fabian | Transportation Law

I. INTRODUCTION/GENERAL When can CONSIGNEE be bound by contract?
- consignee may be deemed to be bound by the terms
CONCEPTS and conditions of the bill of lading where it was
A. Contract of Transportation established that he accepted the same and is trying
Definition to enforce the agreement.
There is a contract of transportation when a person obligates
himself to transport persons or property from one place to - Perfection
another for a consideration. Types of Contract of Carriage of PASSENGERS
1. contract to carry
The contract may involve: - agreement to carry the passenger at some future
- carriage of passengers or date.
- carriage of goods. - Consensual
- PERFECTION: mere consent
The person who obligates himself to transport the goods or 2. contract of carriage or of common carriage itself
passengers may be a: - real contract
- common carrier or - not until the facilities of the carrier are actually used
- private carrier. can the carrier be said to have already assumed the
obligation of the carrier.
- Parties (Carriage of Passengers and Carriage of Goods) - PERFECTION: facilities of the carrier are actually
CARRIAGE OF PASSENGER used
a. common carrier
b. passenger
Perfection of contract of Carriage of GOODS
- PERFECTION: act of delivery of the goods
Passenger
- “when the goods [are] unconditionally placed in the
- one who travels in a public conveyance by virtue of
possession and control of the carrier, and upon their receipt
contract, express or implied, with the carrier as to the
by the carrier for transportation, the contract of carriage [is]
payment of fare or that which is accepted as an equivalent
perfected.”
thereof.

Contract to carry may still be binding even if NO TICKETS

What if gratuitous or reduced fare?
were issued
- passenger is still considered as such even if carried at
- Even if no tickets were issued, a verbal contract to carry is
reduced or gratuitous fare.
already a binding consensual contract.
- cost of airfare tickets were already paid but
Article 1758, CC
confirmed bookings were cancelled without prior
- when a passenger is carried gratuitously, a stipulation
notice
limiting the common carrier’s liability for negligence is valid.
British Airways, Inc. v. The Hon. Court of Appeals
The Passenger is the contracting party and is the real party-
Aircraft
in-interest
- even if no tickets have been issued, there is PERFECTION so
Hence, the injured party’s parents cannot maintain an action
long as there was already a meeting of minds with respect to
because they are not real parties-in-interest in an action for
the subject matter and the consideration.
breach of contract of carriage. Every action based on
contract must be brought by the person whose contractual
Passenger and Airline - Perfection
right has been invaded.
There is a perfected contract of carriage between a
Baliwag Transit Corporation v. Court of Appeal
passenger and an airline if it can be established that the
passenger had checked in at the departure counter, passed
CARRIAGE OF GOODS
through customs and immigration, boarded the shuttle bus
a. shipper
and proceeded to the ramp of the aircraft and that his
b. carrier
baggage had already been loaded in the aircraft to be flown
with the passenger to his destination.
Shipper
Korean Airline vs. CA
- the person who delivers the goods to the carrier for
transportation.
Buses, Jeepneys and Street Cars
Carrier
- When is there OFFER?
- the person who pays the consideration or on whose behalf
- once a public utility stops
payment is made.
- it is the duty of the drivers to stop their
conveyances for a reasonable length of time in order
Consignee, may be a 3rd person not actually a party to the
to afford passengers an opportunity to board and
contract
enter, and they are liable for injuries suffered by
- the person to whom the goods are to be delivered.
boarding passengers resulting from the sudden
- may be the shipper himself as in the case where the
starting up of the carrier.
goods will be delivered to one of the branch offices
- When is there ACCEPTANCE?
of the shipper.
- when passenger is already attempting to board
- may be a third person who is not actually a party to
- This is when the contract of carriage is perfected.
the contract.

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From hereon, the liability of the carrier is already based on The law of the country to which the goods are to be
contract (offer and acceptance of the offer). transported shall govern the liability of the common carrier
for their loss, destruction or deterioration.
Trains Collision occurring in foreign waters
- When can a person be considered a passenger? - Laws of the Phil still apply when they are to be
- must purchase a ticket and must present himself at transported to the Philippines
the proper place and in a proper manner for Hong Kong to Phil, through overboard the voyage
transportation. - Law of the Phil
There must be intention
- must have: Treaties
- a bona fide intention to use the facilities of the - Treaties are part of the law of the land
carrier, GR: WITHIN TERRITORIES OF 2 CONTRACTING COUNTRIES
- possess sufficient fare with which to pay for his - Regardless of WON there was a break in transit
passage, and Exc: TERRITORY OF A SINGLE CONTRACTING COUNTRY
- present himself to the carrier for transportation in - If there is an agreed stopping place within a territory
the place and manner provided. subject to sovereignty even though power is not a
If he does not do so, he will not be considered a passenger. party to the Convention
B. Common Carriers
Struck by a moving train while waiting for one, a passenger
- Statutory Definition (Art. 1732, NCC)
Navidad died after he fell on the LRT tracks and was struck
ARTICLE 1732, CC
by a moving train which was coming in at the exact moment
Common carriers are persons, corporations, firms or
that Mr. Navidad fell from the platform.
associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
Mr. Navidad was treated as a passenger because he entered
air, for compensation, offering their services to the public.
the LRT station after having purchased a “token” and he fell
while he was on the platform waiting for a train. Thus, Mr.
Other Definition
Navidad was in the place designated for boarding the train
- one that holds itself out as ready to engage in the
with the intention of riding the oncoming train.
transportation of goods for hire as a public
Light Rail Transit Authority (LRTA), et al. v. Marjorie Navidad
employment and not as a casual occupation.

Boarded the freight wagon, not the passenger coach, NOT

- Diligence required of common carriers (Art. 1733,
A PASSENGER
- X was not a “passenger.” X, who was a “stowaway,” was a
NCC)
ARTICLE 1733, CC
mere trespasser. Hence, the carrier assumes no duty of care
Common Carriers, Extraordinary Diligence
in favor of X.
Common carriers, by reason of the nature of their business,
should observe extraordinary diligence in the vigilance over
While waiting for the train, man fell on the rails during a
the goods they carry.
fistfight and was hit by an incoming train, PASSENGER
- Railway’s contention - lack of cause of action, contending
Private Carriers, Ordinary Diligence
that the mishap occurred before Ricardo Santos boarded the
In the case of private carriers, however, the exercise of
train and that it was not guilty of negligence.
ordinary diligence in the carriage of goods will suffice
SC: Contention is untenable
- Governing Laws in General
Presumption in case of loss, destruction or deterioration
i. Sections 11,17, 18 and 19, Article XII,1987 Constitution Common carriers:
ii. New Civil Code – Articles 1732-1766 Common carriers are presumed to have been at fault or to
iii. Code of Commerce (Sections 349 to 379, 573 to 736, and have acted negligently, and the burden of proving otherwise
806-809 of the Code of Commerce rests on them.
iv. Carriage of Goods by Sea Act (COGSA)
v. Public Service Act (Commonwealth Act 146 as amended) Private Carriers:
vi. Land Transportation and Traffic Code - Republic Act No presumption of fault
4136
vii. Civil Aviation Authority Act of 2008 – RA 9497
Public Service and Common Carriers
ARTICLE 1766, CC
- concept of “common carrier” under Article 1732 may be
In all matters not regulated by this Code, the rights and
seen to coincide neatly with the notion of “public service”
obligations of common carriers shall be governed by the
Code of Commerce and by special laws.
Section 13, paragraph (b) of the Public Service Act
“,.. every person that now or hereafter may own, operate,
Law of the Country of Destination shall apply
manage, or control In the Philippines, for hire or
Article 1753 of the Civil Code is also explicit that with respect
compensation, with general or limited clientele, whether
to cases involving loss, destruction or deterioration of goods,
permanent, occasional or accidental, and done for general
the law of the country of destination shall apply. Thus,
business purposes, any common carrier, railroad, street
Philippine Laws shall apply if the goods are to be transported
rallway, traction ratlway, subway motor vehicle, elther for
from Japan to the Philippines.”
freight or passenger, or both, with or without fixed route
and whatever may be its classification, freight or carrier
ARTICLE 1753, CC
service of any class, express service, steamboat, or

Fabian | Transportation Law

steamship line, pontines, ferries and water craft, engaged in
the transportation of passengers or freight or both, shipyard, Line vs tramp service
marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and Distinction Common Carrier Private carrier
power, water supply and power petroleum, sewerage Diligence Extraordinary Ordinary
system, wire or wireless communications systems, wire or Stipulation (exempt Void (contrary to Valid
wireless broadcasting stations and other similar public from liability) public policy)
services .. .” Presumption of Presumed None
negligence
C. Test
Exaples of private carriers:
Test in Determining WON a party is a common carrier of
- bareboat charter
goods:
- funeral car
1. He must be engaged in the business of carrying
goods for others as a public employment, and must
hold himself out as ready to engage in the - freight forwarder
transportation of goods for person generally as a - school bus service
business and not as a casual occupation; - ancillary ferry services in resort operations
2. He must undertake to carry goods of the kind to Services intertwined with the main business – ancilliary
which his business is confined; SC: Court observed that its ferry services are so intertwined
3. He must undertake to carry by the method by which with its main business as to be properly considered ancillary
his business is conducted and over his established thereto. The constancy of respondent’s ferry services in its
roads; and resort operations is underscored by its having its own boats.
4. The transportation must be for hire. And the tour packages it offers, which include the ferry
First Philippine Industrial Corporation v. Court of Appeals services, may be availed of by anyone who can afford to pay
the same. These services are thus available to the public.
True test is the carriage of goods/passengers (Space) Spouses Cruzv. Sun Holidays
SC: the true test of a common carrier is the carriage of goods - lighterage
or passengers, provided it has space for all who opt to avail Lighterage, A Common Carrier
themselves of its transportation for a fee. It is involved in the buisness of carrying goods through its
National Steel Corporation v. Court of Appeals barges. It has no fixed and publicly known route, maintains
no terminals, and issues no tickets.
Test – part of the business engaged in by carrier
SC: the test to determine a common carrier is whether the The Supreme Court still ruled that the petitioner is a
given undertaking is part of the business engaged in by the common carrier pointing out that the principal business of
carrier which he has held out to the general public as his the petitioner is that of lighterage and drayage and it offers
occupation rather than the quantity or extent of the business its barges to the public for carrying or transporting by water
transacted. for compensation Petitioner was considered a common
Bascos v. Court of Appeals carrier whether its business of carrying of goods is done on
an irregular basis rather than scheduled manner and with a
limited clientele A common carrier need not have a fixed and
- private carrier
publicly known route nor does it have to maintain terminals
Distinction is based on Character of the business
or issue tickets. (Asia Lighterage vs CA)
The distinction between a “common or public carrier” and a
“private or special carrier” lies in the character of the - customs broker and warehouseman
business - stevedoring
- that if the undertaking is a single transaction, not a The function of stevedores involves the loading and
part of a general business or occupation, although unloading of coastwise vessels calling at the port. The
involving the carriage of the goods for a fee, the responsibility of the stevedore ends upon the loading and
person or corporation offering such service is a stowing of the cargo in the vessel,
private carrier
Two-pronged test: - Arrastre operator
- Part of the General Business The functions of an arrastre operator usually include the
o Character of the business following:
- Public Representation 1. to receive, handle, care for, and deliver all
o Hold himself out to the general public? merchandise imported and exported, upon or
passing over Government-owned wharves and piers
Case: Vessels involved rendered tramping services, does not in the port;
transport cargo or shipment for the general public. Services 2. to record or check all merchandise which may be
available only to specific persons under special contract of delivered to said port at shipside, and in general and;
charter party 3. to furnish light, and water services and other
Ruled: Private Carrier incidental services in order to undertake its arrastre
- in a contract of private carriage, the parties may service
freely stipulate their duties and obligations, which The functions of an arrastre operator have nothing to do
perforce would be binding on them with the trade and business of navigation, nor to the use or
- Unlike in a contract involving a common carrier, operation of vessels.
private carriage does not involve the general public.
National Steel Corporation v. Court of Appeals
Fabian | Transportation Law
An arrastre operator should observe the same degree of - Although he does not indiscriminately hold his
diligence as that required of a common carrier and a services out to the public, the fact that he still offers
warehouseman. Being the custodian of tie goods discharged the same to select parties, she is bound to exercise
from a vessel, an arrastre operator's duty is to take good the extraordinary diligence in transporting the
care of the goods and to turn them over to the party entitled goods.
to their possession. Summa Insurance Corp vs CA
Regularity of activities indicates more than just a casual
- travel agency activity on its part
A travel agency is only the agency’s service of arranging and
- The regularity of its activities indicates more than
facilitating the booking, ticketing and accommodation in a
just a casual activity on its part. Neither can the
package tour.
concept of a common carrier change merely because
- tramp and line service individual contracts are executed or entered into
Republic Act (RA) No. 9515 defines “Line service” as the with the patrons of the carrier.
operation of a common carrier which publicly offers services Phil. American General Insurance Company, et al. v. PKS
without discrimination to any user, has regular ports of Shipping Company
call/destination, fixed sailing schedules and frequencies and
published freight rates and attendant charges and usually No fixed and published routes, common carrier
carries multiple consignments. Petitioner was involved in the business of carrying goods
through its barges but has no fixed and publicly known
RA No. 9515 defines “Tramp service” as the operation of a route, maintains no terminals, and issues no tickets.
contract carrier which has no regular and fixed routes and
schedules but accepts cargo wherever and whenever the SC: Still a common carrier pointing out that the principal
shipper desires, is hired on a contractual basis, or chartered business of the petitioner is that of lighterage and drayage
by any one or few shippers under mutually agreed terms and and it offers its barges to the public for carrying or
usually carries bulk or break bulk cargoes. transporting by water for compensation.

“Line Service” as a common carrier, an entity that provides A common carrier need not have a fixed and publicly known
“Tramp Service” is only referred to as a “contract carrier.” route nor does it have to maintain terminals or issue tickets.
Nevertheless, those engaged in “Tramp Service” may also be Asia Lighterage and Shipping; Inc. Appeals
considered common carriers depending on the
circumstances. D. Transport Network Companies (TNCs) and
- Towage Transport Network Vehicle Service (TNVS)
Ordinary Diligence
In towage, one vessel is hired to bring another vessel to New modes of public transportation
another place. The party that provides the service in a DOTr D.O. 2015-011 officially classified TNVS and TNC as new
contract of towage is required to observe the due diligence modes of public transportation.
of a good father of the family.
Officially classified as public utilities
Examples of common carrier by operation of law In 2018, by virtue of DO 2018-013
- Oil pipeline operators RA 11647
Public Utility – a business service engaged in regularly
- EPIRA electrity distributors
supplying the public with some commodity or service of
Who may become liable as common carriers public consequence.
- Freight forwarders
- Customs brokers Determinative Characteristics of a Public Utility
Other examples of CC - Of service to, or readiness to serve, an indefinite
- Shipoweners public or portion of public which has a legal right to
- Trucking companies demand and receive its services or commodities.
- Bus operators
- Barge operaors Formal definitions
- Passenger jeepney TNC – an organization whether a corporation, partnership or
- Vessels engaged in interisland shipping sole proprietorship that provides pre-arranged
transportation services for compensation using an internet-
Junk dealer, utilizing trucks. On return trip, would load based technology application or digital platform technology
cargo from merchants to connect passengers with drivers using their personal
- Considered a common carrier although his principal vehicles. (DOTr D.O. 2015-011)
business was a junk dealer - E.g. Grab, Uber
De Guzman v. Court of Appeals TNVS – a public utility vehicle accredited with a TNC which is
granted authority or franchise by the LTFRB to run a public
Limited Clientele transport service.
- Although the clientele is limited, the regularity of the
activities of a carrier may indicate that the same TNCs and TNVS are subject to full regulation and
carrier is a common carrier. supervision by the LTFRB
TNC's and TNVS are now expressly subject to full regulation
Customs broker and warehouse man, common carrier and supervision by the LTFRB including, but not limited to,
the following:
Fabian | Transportation Law
 - Approval/denial of the franchise application persons, provided the charter is limited to the ship only, as in
- Setting of fares, routes and operating conditions the case of a time-charter or voyage-charter.
- Imposition of fines, suspension and cancellation of Planters Products, Inc. v. Court of Appeals
franchise.
F. Registered owner Rule
Classification of TNVS GR: The person who can be sued for breach of contract is the
- OETC – Online-Enabled Transportation service contracting party.

Nature of TNC and TNVS as carriers EXCEPTION: In certain cases, by reason of public policy, the
- Common Carriers engaged in Public Service law allows victims of accidents to sue those who, strictly
ARTICLE 1732, CC speaking, are third parties. (Registered Owner Rule)
- Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or RA 4136 Land Transportation and Traffic Code
transporting passengers or goods or both, by land, SECTION 5. Compulsory registration of motor vehicles.
water, or air, for compensation, offering their SECTION 14. Issuance of certificates of registration.
services to the public. SECTION 15. Use and authority of certificate of registration.
- TNVS fits the definition SECTION 16. Suspension of registration certificate.
o They offer services to the willing public SECTION 17. Number plates, preparation and issuance of
consumers for compensation despite the SECTION 18. Use of number plates.
irregularity of their schedule and limited
market scope. Purpose of the motor vehicle registration rule
- to identify the owner so that if any accident
happens, or that any damage or injury is caused by
E. Effect of Charter Parties
the vehicle on the public highways, responsibility
Charter Party
therefor can be fixed on a definite individual, the
A ‘charter-party’ is defined as a contract by which an entire
registered owner
ship, or some principal part thereof, is let by the owner to
Chinchilla v. Rafael and Verdaguer
another person for a specified time or use; a contract of
- identification of the vehicle and of the operator, in
affreightment by which the owner of a ship or other vessel
case of accident; and another is that the knowledge
lets the whole or a part of her to a merchant or other person
that means of detection are always available may act
for the conveyance of goods, on a particular voyage, in
as a deterrent from lax observance of the law and of
consideration of the payment of freight.
the rules of conservative and safe operation
King v. Brenham Automobile Co.
Two types of Charter Parties
a. contract of affreightment which involves the use of
Registered Owner Rule
shipping space on vessels leased by the owner in
- the person who is the registered owner of a vehicle
part or as a whole, to carry goods for others (hire
is liable for any damage caused by the negligent
of the vessel only); and
operation of the vehicle although the same was
i. may either be:
already sold or conveyed to another person at the
1. time charter - wherein the vessel is
time of the accident
leased to the charterer for a fixed
- the registered owner is liable to the injured party
period of time, or
o subject to his RIGHT OF RECOURSE against
2. voyage charter - wherein the ship is
the transferee or buyer
leased for a single voyage
- no vehicle may be used or operated upon any public
b. charter by demise or bareboat charter, by the
highway unless the same is properly registered
terms of which the whole vessel is let to the
charterer with a transfer to him of its entire
What if the vehicle was leased to another who is the actual
command and possession and consequent control
operator?
over its navigation, including the master and the
Registered owner is STILL LIABLE – directly liable.
crew, who are his servants.
Planters Products, Inc. v. Court of Appeals,
How to be free from liability in this case?
- the lessor-owner should register the lease contract
Charter party may transform common carrier to private
with the Land Transportation Office
- when the charter includes BOTH THE VESSEL AND ITS
o should be annotated in the certificate of
CREW
registration
o as in a bareboat or demise that a common
Registered Owner Rule still applies in Financial Lease
carrier becomes private, at least insofar as
Financial lease - contract under which the lessor purchases
the particular voyage covering the charter-
or acquires, at the instance of the lessee, machinery,
party is concerned.
equipment, motor vehicles, appliances, business and office
Home Insurance Co. v. American Steamship Agencies, Inc
machines, and other movable or immovable property in
Although the charter party involved in the said case was a
consideration of the periodic payment by the lessee of a
contract of affreightment, the Court still ruled that it was a
fixed amount of money sufficient to amortize at least
private carrier.
seventy (70%) of the purchase price or acquisition cost,
including any incidental expenses and a margin of profit over
Charter BUT common carrier remains as such
an obligatory period of not less than two (2) years during
A public carrier shall remain as such, notwithstanding the
which the lessee has the right to hold and use the leased
charter of the whole or portion of a vessel by one or more
property, x x x but with no obligation or option on his part to
Fabian | Transportation Law
purchase the leased property from the owner-lessor at the Not to penalize parties, but to identify the person
end of the lease contract. responsible
- The purpose of the law in enjoining the kabit system
Section 12 RA 8556 is to protect the riding public. Thus, if the public is
Financing companies shall not be liable for loss, damage or not deceived or involved, the policy loses its force.
injury caused by a motor vehicle, aircraft, vessel, equipment,
machinery or other property leased to a third person or When evil sought to be prevented in enjoining the kabit
entity except when the motor vehicle, aircraft, vessel, system does not exist.
equipment or other property is operated by the financing Case:
company, its employees or agents at the time of the loss, - First, neither of the parties to the pernicious kabit
damage or injury.” system is being held liable for damages.
- Second, the case arose from the negligence of
BUT… another vehicle in using the public road to whom no
representation, or misrepresentation, as regards the
The non-registration of the financial lease precludes ownership and operation of the passenger jeepney
enjoyment of the benefits of Section 12 of R.A. 8556. was made and to whom no such representation, or
PCI Leasing and Finance, Ine. v. UCPB General Insurance Co. misrepresentation, was necessary. Thus, it cannot be
said that private respondent Gonzales and the
In sum: Financial lease, like the other types of leases, is still registered owner of the jeepney were in estoppel for
required to be registered with LTO, annotated to the leading the public to believe that the jeepney
certificate of registration, in order for the registered owner belonged to the registered owner.
to be free from liability. - Third, the riding public was neither bothered nor
inconvenienced at the very least by the illegal
When Registered Owner NOT LIABLE arrangement. On the contrary, it was private
- if the vehicle was taken from his garage without his respondent himself who had been wronged and was
knowledge and consent seeking compensation for the damage done to him.
o to hold the owner liable would be absurd as Held:
it would be like holding liable the owner of a - Certainly, it would be the height of inequity to deny
stolen vehicle for an accident caused by the him his right.
person who stole such vehicle. - Private respondent (one of the alleged parties to the
kabit system) has the right to proceed against
Right of the Transferor as against the Transferee petitioners for the damage caused to his passenger
- A third party complaint against the transferee may jeepney as well as on his business.
be appropriate in a case filed by the injured Abelardo Lim case
passenger against the registered owner.
Pari Delicto Rule
- Kabit System Persons who are parties to the “kabit” system cannot invoke
Kabit System the same as against each other either to enforce their illegal
- Registered owner rule is applicable agreement or to invoke the same to escape liability.
- an arrangement whereby a person who has been
granted a certificate of public convenience allows Neither can seek relief from the courts
other persons who own motor vehicles to operate - Each must bear the consequences of his acts.
them under his license, sometimes for a fee or
percentage of the earnings. Court will not aid either party to enforce an illegal contract
Case:
Kabit system is VOID Petitioner filed a case against the private respondent alleging
- VOID and INEXISTENT because it is contrary to public that the latter purchased from said petitioner a motorcycle
policy with sidecar. The petitioner was constrained to file an action
- diametrically opposed to the policy of the law for damages because the private respondent allegedly failed
requiring operators of public utility vehicles to to pay the balance of the purchase price.
secure a certificate of public convenience for their SC:
operation - Supreme Court sustained the dismissal of the case
Abelardo Lim, et al. v. Court of Appeals because the parties were in pari delicto.
- Although the motorcycle was allegedly purchased
Kabit system is against the registered owner rule’s purpose from the petitioner, the same remained to be
- It may be availed of by the grantee to escape civil registered in the name of the petitioner and was
liability caused by a negligent use of a vehicle owned operated under the latter’s franchise pursuant to
by another and operated under his license. what is commonly known as “kabit system” without
- If a registered owner is allowed to escape liability by prior approval of the appropriate government
proving who the supposed owner of the vehicle is, it agency.
would be easy for him to transfer the subject vehicle - Court ruled that it will not aid either
to another who possesses no property with which to - Party to enforce an illegal contract.
respond financially for the damage done. Teja Marketing v. Intermediate Appellate Court
Dizon v. Octavio

Fabian | Transportation Law

- Boundary System Section 13, paragraph (b) of the Public Service Act
Carrier cannot exempt himself on the ground that he is only “,.. every person that now or hereafter may own, operate,
a lessor manage, or control In the Philippines, for hire or
- Carrier cannot escape liability by claiming that the driver is compensation, with general or limited clientele, whether
a lessee. permanent, occasional or accidental, and done for general
WHY? business purposes, any common carrier, railroad, street
- to tolerate such position would not only abet rallway, traction ratlway, subway motor vehicle, elther for
flagrant violations of the Public Service Law but also freight or passenger, or both, with or without fixed route
to place the riding public at the mercy of reckless and whatever may be its classification, freight or carrier
and irresponsible drivers service of any class, express service, steamboat, or
o reckless because the measure of their steamship line, pontines, ferries and water craft, engaged in
earnings depends largely upon the number the transportation of passengers or freight or both, shipyard,
of trips they make and, hence, the speed at marine repair shop, wharf or dock, ice plant, ice-refrigeration
which they drive; and plant, canal, irrigation system, gas, electric light, heat and
o irresponsible because most if not all of them power, water supply and power petroleum, sewerage
are in no position to pay the damages they system, wire or wireless communications systems, wire or
might cause wireless broadcasting stations and other similar public
services .. .”
G. Pipeline Transportation definition under RA
11647 or the Foreign Investments Act as Amended Cabotage Act
Means of Transportation RA 10668 Cabotage Act
Pipeline operators are common carriers that are subject to - Geared towards the primary objective of promoting
business taxes on common carriers. Such operators are competition in the maritime cargo shipping industry
common carriers even if the oil or petroleum products are - The law is seen as a welcome initiative to stimulate
being transported not through motor vehicles but through economic activity, to bring down shipping costs and
pipelines. to support the planned ASEAN market integration
- It also aims to improve voyage safety and address
TEST: all are met the perennial problem of port congestion in Metro
- Engaged in the business of transporting or carrying Manila.
goods i.e., petroleum products, for hire as a public - The law intends to lift the long-standing cabotage
employment. restrictions imposed upon foreign vessels.
- undertakes to carry for all persons indifferently that - Under the law, the activities of foreign vessels have
is, to all persons who choose to employ its services, been expanded to include sea carriage of:
and o Foreign cargo arriving from a foreign port to
- Transports the goods by land and for compensation. its Philippine port of destination, after being
First Philippine Industrial Corp. v. Court of Appeals cleared at its port of entry;
o Foreign cargo of another foreign vessel from
Section 2(i) RA 11647 Foreign Investments Act its Philippine port of entry to its Philippine
The term “pipeline transportation” shall mean the sector port of destination;
which includes transport of goods or materials through a o Foreign cargo intended for export from a
pipeline such as crude, refined petroleum, natural gas, Philippine port of origin to another
biofuels, and other chemically stable substance. Philippine port and eventually to its foreign
port of destination;
Civil Code makes no distinction o Foreign cargo of another foreign vessel
The definition of “common carriers” in the Civil Code makes
through a domestic transshipment port to its
no distinction as to the means of transporting, as long as it is
foreign port of destination; and
by land, water or air.
o Empty foreign containers going to or coming
from any Philippine port, or going to or
Section 86 RA 387 Petroleum Act
coming from a foreign port and being
Pipe line concessionaire as common carrier.
transshipped between two Philippine ports.
— A pipe line shall have the preferential right to utilize
Section 7 – these foreign vessels are not common carriers;
installations for the transportation of petroleum owned by
not considered public
him, but it is obliged to utilize the remaining transportation
capacity pro rata for the transportation of such other - Not required to obtain a certificate of public
petroleum as may be offered by others for transport, and to convenience and certificate of public convenience
charge without discrimination such rates as may have been and necessity (differentiate the two)
approved by the Secretary of Agriculture and Natural
Resources.”

II. OBLIGATIONS OF A COMMON

H. Notion of Common carrier synonymous with
public service under Commonwealth Act 146 or the CARRIER
Public Service Act 1. Obligations of Carrier
Public Service and Common Carriers - to transport the goods or passenger safely to the
- concept of “common carrier” under Article 1732 may be agreed destination.
seen to coincide neatly with the notion of “public service”

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Duties of a common carrier: objections, is made to appear in the bill of lading.
- to accept passengers and goods without
discrimination; ARTICLE 357.
- to seasonably deliver the goods or bring the If by reason of well-founded suspicion of falsity in the
passenger to the destination; declaration as to the contents of a package the carrier
- to deliver the goods to the proper person; and should decide to examine it, he shall proceed with his
- to exercise extraordinary diligence in the investigation in the presence of witnesses, with the shipper
performance of its duties or consignee in attendance.

1.01. Duty to Accept If the shipper or consignee who has to be cited does not
- A common carrier that is granted a certificate of attend, the examination shall be made before a notary, who
public convenience is duty bound to accept shall prepare a memorandum of the result of the
passengers or cargo without any discrimination. investigation, for such purposes as may be proper.
o Mere whim or prejudice will not suffice. The
grounds for the discrimination must be If the declaration of the shipper should be true, the expense
substantial ones, such as will justify the occasioned by the examination and that of carefully
courts in holding the discrimination to have repacking the packages shall be for the account of the carrier
been reasonable and necessary under all and in a contrary case for the account of the shipper.
circumstances of the case.
d. Lessening Loss
Section 16 of Republic Act No, 9295 passed in May Article 1742 of the Civil Code provides that even if the loss,
2004 makes it illegal for domestic ship operators to refuse to destruction, or deterioration of the goods should be caused
accept or carry passengers or cargo without just cause. by the character of the goods, or the faulty nature of the
packing or of the containers, the common carrier must
1.01.b. Duty to accept – Passengers exercise due diligence to forestall or lessen the loss.
- A vessel generally engaged as a common carrier of
passengers is bound to receive for carriage, without 1.03 Duty to Deliver the Goods
discrimination all proper persons who desire it and The carrier is duty bound to deliver the goods within the
properly offer to become passengers unless some time agreed upon to the designated consignee.
sufficient excuse exists for refusing them.
a. Agreement as to time
1.02 Valid Grounds for Non-Acceptance Where a carrier has made an express contract to transport
GR: Carriers cannot select its passengers and cargoes. and deliver property within a specified time, he is bound to
Exception: For some sufficient reason the discrimination fulfill the contract and is liable for any delay, no matter from
against is reasonable and necessary. what cause it may have arisen.
- (1) When the goods sought to be transported are
dangerous objects, or substances including When no agreement as to time
dynamites and other explosives; ARTICLE 358. If there is no period fixed for the delivery of the
- (2) The goods are unfit for transportation;’ goods the carrier shall be bound to forward them in the first
- (3) Acceptance would result in overloading; shipment of the same or similar goods which he may make
- (4) The goods are considered contrabands or illegal to the point of delivery; and should he not do so, the
goods; damages caused by the delay should be for his account.
- (5) Goods are injurious to health;
- (6) Goods will be exposed to untoward danger like b. Reasonable time
flood, capture by enemies and the like;* When a common carrier undertakes to convey goods, the
- (7) Goods like livestock will be exposed to diseases;" law implies a contract that they shall be delivered at
- (8) Strike;" and destination within a reasonable time, in the absence, of any
- (9) Failure to tender goods on time. agreement as to the time of delivery.
- How to determine reasonable time
o Upon the expected date of arrival reflected
b. Hazardous and Dangerous Substances in the bill of lading
Carriers may be granted the authority to carry goods that are o Upon the nature of the goods.
by nature dangerous or hazardous.
c. Unfit for Transport 1.04 Consequences of Delay
These goods may by nature be unfit for transportation or are - Delay can be excusable or inexcusable.
unfit because of improper packaging or defect in their - If the delay is excusable:
containers. However, the carrier may choose to transport o The delay suspends the contract of carriage
such goods and limit its liability by stipulation. The Code of and DO NOT TERMINATE it
Commerce provides:  Once the cause of the delay is
removed, the contract continues
ARTICLE 356. - If the delay is inexcusable:
Carriers may refuse packages which appear unfit for o the carrier is still liable even if natural
transportation; and if the carriage is to be made by railway, disaster cause the damage;
and the shipment is insisted upon, the company shall o the stipulation limiting the liability of the
transport them, being exempt from all responsibility if its carrier is inoperative;

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 o the carrier is liable for the damages caused matter from what cause it reasonable time – depends
by the delay, and the consignee may may have arisen. on the exact date of arrival
exercise his right to abandon under Article reflected on the bill of
371 of the Code of Commerce. lading or the nature of the
goods.
Reason: It is presumed to Code of Commerce: Carrier
a. Applicable provisions (Arts 1753 & 1766, have prepared for any is bound to forward them in
CC) contingency. the first shipment of the
b. Over goods (Arts. 1733 – 1754); Commercial same or similar goods
Code 363, 364 & 365) See cases no. 13-20 which he may make to the
point of deliver.
Effects of Delay
Obligations over goods
- Delay can be excusable or inexcusable.
A. Duty to deliver the goods, without discrimination, to
- If the delay is excusable:
the proper PERSON;
o The delay suspends the contract of carriage
B. Duty to ACCEPT the goods;
and DOES NOT TERMINATE it
C. Duty to SEASONABLY Deliver the goods to the
 Once the cause of the delay is
destination;
removed, the contract continues
D. Duty to TRANSPORT the goods safely to the agreed
 Carrier continues to be liable as a CC
destination;
and NOT as a warehouseman
E. Duty to exercise EXTRAORDINARY DELIGENCE
- If the delay is inexcusable:
o the carrier is still liable even if natural
A. Duty to Deliver disaster cause the damage;
- Bill of Lading – not only to transport safely but to the o the stipulation limiting the liability of the
deliver to the person indicated in the bill of lading. carrier is inoperative;
- If bill of lading validly transferred or negotiated o the carrier is liable for the damages caused
deliver to the consignee or any other person. by the delay, and the consignee may
- Purpose of a bill of lading: exercise his right to abandon under Article
o Contract 371 of the Code of Commerce
o Evidence of receipt of goods
o Represents the goods (negotiation) Effects of Inexcusable Delay (ALDEN)
Art 371, COC
B. Duty to Accept the Goods - Consignee may exercise his right to abandon.
GR: The common carrier that is granted a certificate of public
convenience is duty bound to accept passengers or cargo Art 1747, NCC
without any discrimination - If the delay is without just cause, the contract
EXP: (SPGCircumstances) limiting the CC’s liability CANNOT be availed of in
case of loss or deterioration of the goods.
 SUITABILITY of vessel for the transportation of the
product;
Art 358 COC, Saludo Jr. v. CA
 Reasonable POSSIBILITY of Danger based on the - The carrier is liable for damages caused by the delay.
products form and condition in which they are
offered; Aquino Transpo Law
 GENERAL nature of carrier’s business; - The carrier remains duty bound to exercise
 All attendant CIRCUMSTANCES affecting the extraordinary diligence.
question of reasonable necessity for the refusal to
transport. Art 1740, NCC
- A natural disaster shall not free the carrier from
Validly Refuse to Accept the Goods (D2uo-CITES) responsibility.
 The goods sought to be transported are dangerous
When the goods are deemed delivered
objects, or substances including dynamites and other
explosives;
17. Saludo, Jr. v. Court of Appeals, G.R. No. 95536, March
 Goods will be exposed to untoward danger like
23, 1992
flood, capture by enemies and the like;
missing cadaver misdelivered ;airway bill of lading;
 The goods are unfit for transportation;
unreasonable delay results to damages; Art. 1736]
 Acceptance would result in overloading;
 The goods are deemed delivered to the carrier when
 The goods are considered contrabands or illegal
the goods are ready for and have been placed in the
goods;
exclusive possession, custody and control of the
 Goods are injurious to health;
carrier for the purpose of their immediate
 Failure to tender goods on time.
transportation and the carrier has accepted them.
 Goods like livestock will be exposed to diseases;"
When such delivery has thus been accepted by the
 Strike;" and
carrier, the liability of the carrier commences eo
instanti.“
C. Duty to Seasonably Deliver the Goods (When delivery
 Airway bill - Under the Tariff and Customs Code, a
should be made)
bill of lading includes airway bills of lading. The two-
fold character of a bill of lading is all too familiar: it is
Stipulation in Contract/BOL No Stipulation
a receipt as to the quantity and description of the
Liable for any delay, no Delivery must be within
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 goods shipped and a contract to transport the goods ARTICLE 1738. The extraordinary liability of the common
to the consignee or other person therein designated, carrier continues to be operative even during the time the
on the terms specified in such instrument goods are stored in a warehouse of the carrier at the place of
o General rule: Since a bill of lading destination, until the consignee has been advised of the
acknowledges receipt of goods to be arrival of the goods and has had reasonable opportunity
transported, delivery of the goods to the thereafter to remove them or otherwise dispose of them.
carrier normally precedes the issuance of
the bill; or, to some extent, delivery of the CC to Avoid Liability under Art 1738
goods and issuance of the bill are regarded A. Notice of arrival
in commercial practice as simultaneous acts. B. Reasonable opportunity to remove
o Exception: As may be prohibited by law,
there is nothing to prevent an inverse order 16. Nedlloyd Liner B.V. Rotterdam and the East Asiatic Co.,
of events, that is, the execution of the bill, Ltd. v. Glow Laks Enterprises, Ltd., GRN. 156330, November
of lading even prior to actual possession 19, 2014
and control by the carrier of the cargo to be misdelivery of goods; doctrine of processual presumption;
transported. Arts. 1736 and 1738
 Delay  Doctrine of Processual presumption - in the absence
o That in the absence of a special contract, a of pleading and proof, the laws of the foreign
carrier is not an insurer against delay in country or state will be presumed to be the same as
transportation of goods. When a common our local or domestic law.
carrier undertakes to convey goods, the law  In case of loss of goods in transit, the common
implies a contract that they shall be carrier is presumed under the law to have been in
delivered at destination within a reasonable fault or negligent.
time, in the absence of any agreement as to o The standard of extraordinary diligence
the time of delivery. imposed on common carriers in contract of
carrier of goods is intended to tilt the scales
D. Duty to Transport the Goods Safely to the Agreed in favor of the shipper who is at the mercy of
Destination the common carrier once the goods have
- To the consignee in the place agreed upon by the parties been lodged for the shipment
- Still deliver to the agreed place or warehouse, even
if IT IS NOT the usual place of delivery. Delivery to Custom Authorities
GR: Not delivery to the consignee
Change in the consignment of goods by the shipper EXP: Parties may agree to limit the liability of the carrier
- NOVATION considering that the goods have still to go through the
- Provided, that at the time of the change the BOL inspection of the customs authorities before they are
signed by the carrier must be returned to him in actually turned over to the consignee. (Lu Do v.
another for a new one. Binamira)
- EXPENSES – by the shipper
20. Lu Do & Lu Ym Corp. v. Binamira, G.R. No. L-9840, April
E. Duty to Exercise Extraordinary Diligence 22, 1957
ARTICLE 1733. Common carriers, from the nature of their liability of carriers while goods are with customs authorities
business and for reasons of public policy, are bound to not the delivery mentioned in Art. 1736
observe extraordinary diligence in the vigilance over the It is believed that it is just and reasonable to stipulate that he
goods and for the safety of the passengers transported by is no longer responsible when the goods are delivered to
them, according to all the circumstances of each case. customs authorities. The stipulation is valid because nothing
i. the duration of the common carrier’s responsibility therein is contrary to morals or public policy, said stipulation
being adopted to mitigate the responsibility of the carrier.
ARTICLE 1736. The extraordinary responsibility of the
common carrier lasts from the time the goods are ii. the presumption of negligence
unconditionally placed in the possession of, and received
by the carrier for transportation until the same are Article 1735. In all cases other than those mentioned in Nos.
delivered, actually or constructively, by the carrier to the 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost,
consignee, or to the person who has a right to receive them, destroyed or deteriorated, common carriers are presumed
without prejudice to the provisions of Article 1738. to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as
ARTICLE 1737. The common carrier’s duty to observe required in article 1733.
extraordinary diligence over the goods remains in full force 1734…
and effect even when they are temporarily unloaded or 1. Flood, storm, earthquake, lightning, or other natural
stored in transit, unless the shipper or owner has made use disaster or calamity;
of the right of stoppage in transitu. 2. Act of the public enemy in war, whether
international or civil;
Right of Stoppage in transitu 3. Act or omission of the shipper or owner of the
- One of rights of an unpaid seller when he has parted goods;
with the goods and the buyer is or becomes 4. The character of the goods or defects in the packing
insolvent. (ART 1526(2), 1530, NCC) or in the containers;

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Burden of Proof - not Negligently incurred, no delay in transporting
- Lies to the Common Carrier – prove that they (Article 1740, NCC)
exercised extraordinary diligence
Fire
Baggage, Defined Broadly speaking, force majeure generally applies to a
The term baggage has been defined to include whatever natural accident, such as that caused by a lightning, an
articles a passenger usually takes with him for his own earthquake, a tempest or a public enemy. Hence, fire is not
personal use, comfort, and convenience according to the considered a natural disaster or calamity.
habits or wants of the particular class to which he belongs,
either with reference to his immediate necessities or to the 13. Edgar Cokaliong Shipping Lines, Inc. vs. UCPG General
ultimate purpose of his journey.” Insurance Company Inc, GRN 146018, June 25, 2003
- Fire is not considered a natural disaster or calamity
Checked-in Baggage The vessel sank due to fire caused by the crack in the
Baggages that are “checked in” or delivered to the carrier auxiliary engine fuel oil service tank. Having originated from
are governed by the rules discussed requiring extraordinary an unchecked crack in the fuel oil service tank, the fire could
diligence. In other words, the rules that are applicable to not have been caused by force majeure.
goods that are being shipped are applicable to baggage
delivered to the custody of the carrier. Art. 1734
Common carriers are responsible for the loss, destruction, or
15. Sarkies Tours Philippines, Inc. v. Court of Appeals,, et al, deterioration of the goods, unless the same is due to any of
GRN 108897, Oct. 2, 1997 the following causes only:
presumption of negligence of CC for the loss of passenger’s 1. Flood, storm, earthquake, lightning, or other natural
baggages; Art. 1735] disaster or calamity;
The three pieces of luggage of a passenger who was on her 2. Act of the public enemy in war, whether
way to Legaspi City were kept in the baggage compartment international or civil;
of the bus. During the stopover at Daet, it was discovered 3. Act or omission of the shipper or owner of the
that only one bag remained in the compartment which was goods;
already open. The cause of the loss was the negligence of 4. The character of the goods or defects in the packing
the carrier in not ensuring that the doors of the baggage or in the containers;
compartment of the bus were securely fastened. Articles 5. Order or act of competent public authority
1733, 1734 and 1736 of the Civil Code were applied to hold
the carrier liable. Storm
- PAGASA described a storm as having a wind force of 48 to
iii. instances when the common carrier is not liable 55 knots or 55 to 63 miles per hour.
- The presence of strong wind does not by itself justify the
Article 1734. Common carriers are responsible for the loss, conclusion that there is a storm. For instance, strong
destruction, or deterioration of the goods, unless the same is monsoon winds is not a storm within the contemplation of
due to any of the following causes only: (FANCO) Article 1734 [1] of the New Civil Code.
1. Flood, storm, earthquake, lightning, or other natural - Monsoon wind is not an unusual occurrence and is
disaster or calamity; a normal and foreseeable condition while navigating
2. Acts of the public enemy in war, whether in the sea.”
international or civil; However, there may be cases when strong winds may be
3. Negligence - Act or omission of the shipper or owner unforeseeable.
of the goods;
4. The character of the goods or defects in the packing 14. Asia Lighterage and Shipping Inc. v. Court of Appeals,
or in the containers; GRN 147246, August 19, 2003
5. Order or act of competent public authority - lighterage, a common carrier; test of common carriers;
typhoon not the proximate and only cause of the loss; Art.
1. Fortuitous Events 1734]
Article 1174. Except in cases expressly specified by the law,  As to being a common carrier
or when it is otherwise declared by stipulation, or when the  The petitioner was also involved in the buisness of
nature of the obligation requires the assumption of risk, no carrying goods through its barges. It has no fixed and
person shall be responsible for those events which could not publicly known route, maintains no terminals, and
be foreseen, or which, though foreseen, were inevitable issues no tickets.
 The Supreme Court still ruled that the petitioner is a
Exemption from obligation due to fortuitous events: (CUIP) common carrier pointing out that the principal
1. Cause is independent from the debtor’s will business of the petitioner is that of lighterage and
2. Unforeseen or if foreseen is unavoidable drayage and it offers its barges to the public for
3. Impossible to fulfill obligation carrying or transporting by water for compensation.
4. no Participation on the part of debtor  Petitioner was considered a common carrier
whether its business of carrying of goods is done on
Requisites for fortuitous events to exempt/limit in case of an irregular basis rather than scheduled manner and
LOSS OR DAMAGE TO GOODS: (PEN) with a limited clientele A common carrier need not
- Proximate and only cause of the loss have a fixed and publicly known route nor does it
- Exercised due diligence to prevent/minimize loss have to maintain terminals or issue tickets.
before during and after the occurrence of disaster  As to fortuitous event

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From the book: Fortuitous event, to be a valid defense, must If improper packing is apparent, NOT exempt
be established to be the proximate cause of the loss. - if the improper packing is made known to the CC or is
 Petitioner failed to prove that the typhoon was the apparent upon ordinary observation, but he nevertheless
proximate and only cause of the loss and that it has accepts without protest or exception, he is NOT relieved of
exercised due diligence before, during and after the liability for damage resulting therefrom. (Calvo v. UCPB)
occurrence.
5. Order or Act of Competent Public Authority
Exemption from obligation due to fortuitous events: (CUIP) Article 1743. If through the order of public authority the
1. Cause is independent from the debtor’s will goods are seized or destroyed, the common carrier is not
2. Unforeseen or if foreseen is unavoidable responsible, provided said public authority had power to
3. Impossible to fulfill obligation issue the order
4. no Participation on the part of debtor
When not a defense to be exempted from liability
19. Philippine American General Insurance Co., Inc. v. MCG  No authority to issue the subject order
Marine Services, Inc., GRN 135645,  No authority to issue such order
loss of cargo caused by fortuitous event ; Art. 1734 Public Authority must have had the power to issue such
The carrier was not made liable because the proximate and order.
only cause of the loss was unforeseeable strong winds and
enormous waves. 18. Ganzon v. Court of Appeals, G.R. No. L-48757, May 30,
1988
Proximate cause – that cause which, in natural and order of competent public authority not considered force
continuous sequence, unbroken by any efficient intervening majeure; Arts. 1734 and 1736 relate with Art. 1743
cause, produces the injury, and without which the result Soon after the scraps were delivered to, and received by the
would not have occurred. petitioner-common carrier, loading was commenced. By the
said act of delivery, the scraps were unconditionally placed
2. Acts of the Public Enemy (PWE) in the possession and control of the common carrier, and
 Proximate and only cause of loss upon their receipt by the carrier for transportation, the
 Actual state of war contract of carriage was deemed perfected.
 Exercised due diligence to prevent/minimize loss
before during or after act Consequently, the carrier's extraordinary responsibility for
the loss, destruction, or determination of the goods
3. Negligence of the Shipper or Owner commenced. The fact that part of the shipment had not
 Negligence, Proximate cause – Absolute Defense been loaded on board the lighter did not impair the said
 Negligence, Contributory – Partial Defense, Art 1741 contract of transportation as the goods remained in the
custody and control of the carrier, albeit still unloaded.
Article 1741. If the shipper or owner merely contributed to
the loss, destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the iv. stipulations which limit the common carrier’s
common carrier, the latter shall be liable in damages, which liability
however, shall be equitably reduced. VOID STIPULATIONS
Article 1745. Any of the following or similar stipulations shall
Negligence – conduct that creates undue risk of harm to be considered unreasonable, unjust and contrary to public
another. (Smith Bell Dodwell Shipping vs Borja) policy: (OLD-FETUs)
1. That the goods are transported at the risk of the
Proximate cause – that cause which, in natural and owner or shipper;
continuous sequence, unbroken by any efficient intervening 2. That the common carrier will not be liable for any
cause, produces the injury, and without which the result loss, destruction, or deterioration of the goods;
would have occurred. 3. That the common carrier need not observe any
diligence in the custody of the goods;
Contributory Negligence – conduct on the part of the 4. That the common carrier shall exercise a degree of
injured party, contributing as legal cause to the harm he has diligence less than that of a good father of a family,
suffered, which falls below the standard to which he is or of a man of ordinary prudence in the vigilance
required to conforms for his own protection (Valenzuela v. over the movables transported;
CA) 5. That the common carrier shall not be responsible for
the acts or omission of his or its employees;
4. Character of the Goods or Defect in the Packing of the 6. That the common carrier's liability for acts
Containers committed by thieves, or of robbers who do not act
- CC must still exercise due diligence to forestall or lessen to with grave or irresistible threat, violence or force, is
loss. dispensed with or diminished;
7. That the common carrier is not responsible for the
Article 1742. Even if the loss, destruction, or deterioration of loss, destruction, or deterioration of goods on
the goods should be caused by the character of the goods, or account of the defective condition of the car,
the faulty nature of the packing or of the containers, the vehicle, ship, airplane or other equipment used in
common carrier must exercise due diligence to forestall or the contract of carriage.
lessen the loss.
STIPULATION OF LIABILITY IS LIMITED TO THE VALUE

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Article 1749. A stipulation that the common carrier's liability From book:
is limited to the value of the goods appearing in the bill of It is the duty of the drivers to stop their conveyances for a
lading, unless the shipper or owner declares a greater value, reasonable length of time in order to afford passengers an
is binding. opportunity to board and enter, and they are liable for
injuries suffered by boarding passengers resulting from the
Article 1750. A contract fixing the sum that may be sudden starting up of the carrier. Liability of the carrier is
recovered by the owner or shipper for the loss, destruction, already based on contract. It follows that the passenger is
or deterioration of the goods is valid, if it is reasonable and deemed to be accepting the offer if he is already
just under the circumstances, and has been fairly and freely attempting to board the conveyances and the contract of
agreed upon. carriage is perfected from that point.

Article 1751. The fact that the common carrier has no

ii. reasonable time to leave the carrier’s premises
competitor along the line or route, or a part thereof, to
iii. crew or complement
which the contract refers shall be taken into consideration
on the question of whether or not a stipulation limiting the
22. Philippine Air Lines, Inc. v. Court of Appeals, G.R. No. L-
common carrier's liability is reasonable, just and in
46558, July 31, 1981, [safety of passengers extend to safety
consonance with public policy.
of the crew or the complement of the CC; Arts. 19, 1169,
1711-1712; 2209 and 2212]
Stipulation of Liability Is Limited To the Value, When Valid
DOCTRINES:
 Contract is reasonable and just
1. The duty to exercise the utmost diligence on the part of
 Fairly and freely agreed upon by the parties.
common carriers is for the safety of passengers as well as
for the members of the crew or the complement operating
Limitation of liability in the absence of declaration of a
the carrier.
greater value
2. The act of PAL in unjustly refusing Samson’s demand for
Article 1749. A stipulation that the common carrier's liability
special medical service abroad for the reason that Samson’s
is limited to the value of the goods appearing in the bill of
deteriorating physical condition was not due to the accident
lading, unless the shipper or owner declares a greater value,
violates the provisions of Article 19 of the Civil Code on
is binding.
human relations “to act with justice, give everyone his due,
and observe honesty and good faith.”
20. Lu Do & Lu Ym Corp. v. Binamira, G.R. No. L-9840, April
22, 1957
Articles 1169, 2209 and 2212 of the Civil Code govern when
liability of carriers while goods are with customs authorities
interest shall be computed. Thereunder interest begins to
not the delivery mentioned in Art. 1736
accrue upon demand, extrajudicial or judicial. A complaint is
It is believed that it is just and reasonable to stipulate that he
a judicial demand. Under Article 2212 of the Civil Code,
is no longer responsible when the goods are delivered to
interest due shall earn legal interest from the time it is
customs authorities. The stipulation is valid because nothing
judicially demanded, although the obligation may be silent
therein is contrary to morals or public policy, said stipulation
upon this point.”
being adopted to mitigate the responsibility of the carrier.

Art. 1711. Owners of enterprises and other employers are

-End of Pre-Miderm Coverage -
obliged to pay compensation for the death or injuries to
c. Over passengers their laborers, workmen, mechanics or other employees,
Obligations in the Carriage of Passengers (U-STAB) even though the event may have been purely accidental or
1. Duty to observe UTMOST diligence to passengers; entirely due to a fortuitous cause, if the death or personal
2. Duty to SEASONABLY bring the passenger to the injury arose out of and in the course of the employment. The
destination; employer is also liable for compensation if the employee
3. Duty to TRANSPORT the passenger safely to the contracts any illness or disease caused by such employment
agreed destination; or as the result of the nature of the employment. If the
4. Duty to ACCEPT passengers without discrimination; mishap was due to the employee’s own notorious
and negligence, or voluntary act, or drunkenness, the employer
5. Duty to take care of the passenger’s BAGGAGE. shall not be liable for compensation. When the employee’s
lack of due care contributed to his death or injury, the
C.1. when a person is deemed a passenger compensation shall be equitably reduced.
i. continuing offer rule
21. Dangwa Transportation Co., Inc. v. Court of Appeals Art. 1712. If the death or injury is due to the negligence of a
GRN 95582, Oct. 7, 1991 [Dangwa Doctrine – continuing fellow-worker, the latter and the employer shall be
offer rule] solidarily liable for compensation. If a fellow-worker’s
Doctrine: When the bus is not in motion there is no necessity intentional or malicious act is the only cause of the death or
for a person who wants to ride the same to signal his injury, the employer shall not be answerable, unless it
intention to board. A public utility bus, once it stops, is in should be shown that the latter did not exercise due
effect making a continuous offer to bus riders. Hence, it diligence in the selection or supervision of the plaintiffs
becomes the duty of the driver and the conductor, every fellow-worker.
time the bus stops, to do no act that would have the effect
of increasing the peril to a passenger while he was 23. Aboitiz Shipping Corporation v. CA, Lucila Viana, Sps.
attempting to board the same. The premature acceleration Antonio and Gorgonia Viana and Pioneer Stevedoring
of the bus in this case was a breach of such duty. Corporation GRN. 84458, Nov. 6, 1989 [carrier passenger
relationship continues until passenger has landed at the
Fabian | Transportation Law
port of destination and has left the vessel-owner’s of a family in the selection or supervision of their
premises; Art. 1755] employees.
DOCTRINES:
C.3. instances when common carrier is not liable
1. Carrier-passenger relationship continues until the
27. Gacal v. Philippine Air Lines, Inc., G.R. No. 55300, March
passenger has been landed at the port of destination and
15, 1990, [skyjacking incident a cause of force majeure ;
has left the vessel-owner’s premises.
Arts. 1755 and 1174]
2. Reasonableness of time should be made to depend on the
Air piracy is an instance of force majeure that would exempt
attending circumstances, such as the kind of common
the airline from liability.
carrier; the victim’s presence in the petitioner’s premises
FROM BOOK:
after the lapse of one hour from the time he disembarked
Under normal circumstances, PAL might have foreseen the
from the vessel is justified, hence he is deemed still a
skyjacking incident which could have been avoided had there
passenger when the accident occurred.
been a more thorough frisking of passengers and inspection
of baggages as authorized by R.A No. 6235. But the incident
24. La Mallorca v. Court of Appeals, G.R. No. L-20761, July
in question occurred during Martial Law where there was a
27, 1966, 124 PHIL 145-153 [averment of quasi-delict
military take-over of airport security including the frisking of
although incompatible with claim under contract of
passengers and the inspection of their luggage preparatory
carriage is permissible; Arts. 1755 and Art. 2180 of the NCC]
to boarding.
DOCTRINE:
The complaint contained an allegation for quasi-delict. The
28. Japan Airlines v. Court of Appeals, G.R. No. 118664,
inclusion of this averment for quasi-delict, while
August 7, 1998 [eruption of Mt. Pinatubo is force majeure,
incompatible with the other claim under the contract of
CC not insurers of risk]
carriage, is permissible under Section 2 of Rule 8 of the New
There is no question that when a party is unable to fulfill his
Rules of Court, which allows a plaintiff to allege causes of
obligation because of "force majeure," the general rule is
action in the alternative, be they compatible with each other
that he cannot be held liable for damages for non-
or not, to the end that the real matter in controversy may be
performance. Corollarily, when JAL was prevented from
resolved and determined.
resuming its flight to Manila due to the effects of Mt.
Pinatubo eruption, whatever losses or damages in the form
C.2. presumption of negligence of common carriers of hotel and meal expenses the stranded passengers
25. Manay , Jr. , et. al v. Cebu Air, Inc., GRN 210621, Apr. 4,
incurred, cannot be charged to JAL.
2016 [airplane tickets issued for different dates ; Arts. 1733,
From book:
1755-1756]
Passengers must take such risks incident to the mode of
Common carriers are required to exercise extraordinary
travel. Carriers are not insurers of the lives of their
diligence. When a common carrier, through its ticketing
passengers. Thus, in air travel, adverse weather conditions
agent, has not yet issued a ticket to the prospective
or extreme climactic changes are some of the perils involved
passenger, the transaction between them is still that of a
in air travel, the consequences of which the passenger must
seller and a buyer. The obligation of the airline to exercise
assume or expect.
extraordinary diligence commences upon the issuance of the
contract of carriage. Ticketing, as the act of issuing the
C.4. situations where the common carrier’s liability may
contract of carriage, is necessarily included in the exercise
of extraordinary diligence.
be limited by stipulation
C.5. waiver of claim for damages against common
26. Baliwag Transit Inc., v. Court of Appeals, Sps Antonio carriers
and Letecia Garcia and Julio Recontinque; GRN 116110, 29. Reynalda Gatchalian v. Arsenio Delim, G.R. No. L-56487,
May 5, 1998 [death or injuries of a passenger; Arts. 1755 & October 21, 1991[a waiver must be couched in clear and
1759] unequivocal terms];
As a common carrier, Baliwag breached its contract of A waiver, to be valid and effective, must in the first place be
carriage when it failed to deliver its passengers, Leticia and couched in clear and unequivocal terms which leave no
Allan Garcia to their destination safe and sound. doubt as to the intention of a person to give up a right or
benefit which legally pertains to him. A waiver may not
A common carrier is bound to carry its passengers safely as casually be attributed to a person when the terms thereof do
far as human care and foresight can provide, using the not explicitly and clearly evidence an intent to abandon a
utmost diligence of a very cautious person, with due regard right vested in such person
for all the circumstances. The records are bereft of any
proof to show that Baliwag exercised extra ordinary C.6. the common carrier’s liability for acts of
diligence. On the contrary, the evidence demonstrates its employees, other passengers, or strangers
driver's recklessness. 30. Sulpicio Lines, Inc. v. Sesante, GR No. 172682, Jul 27,
2016 [fortuitous event and death/injury of passengers; Art.
1759]
Art. 1759. Common carriers are liable for the death of or
- The presumption of negligence applies so long as there is
injuries to passengers through the negligence or willfull acts
evidence showing that:
of the former's employees, although such employees may
a. a contract exists between the passenger and
have acted beyond the scope of their authority or in
the common carrier; and
violation of the orders of the common carriers.
b. the injury or death took place during the
This liability of the common carriers do not cease upon existence of such contract.
proof that they exercised all the diligence of a good father

Fabian | Transportation Law

- In such event, the burden shifts to the common carrier to destination or the moment the passenger did not
prove its observance of extraordinary diligence, and that an reach his destination while riding the carrier. It is by
unforeseen event or force majeure had caused the injury. reason of such presumption that it has been
- This liability of the common carriers does not cease upon observed that the doctrine of proximate cause is
proof that they exercised all the diligence of a good father of inapplicable to a contract of carriage. The injured
a family in the selection and supervision of their employees. passenger or owner of goods need not prove
- For a common carrier to be absolved from liability in case causation to establish his case. The presumption
of force majeure, it is not enough that the accident was arises upon the happening of the accident.
caused by a fortuitous event. The common carrier must still
prove that it did not contribute to the occurrence of the 35. Estacion vs. Bernardo, G.R. No. 144723 February
incident due to its own or its employees' negligence. 27,2006 [contributory negligence on the part of injured
party; Arts. 1761-1762]
31. G.V. Florida Transport, Inc. v. Heirs of Battung, Jr., G.R. DOCTRINE:
No. 208802, October 14, 2015 [death of a passenger caused • Contributory negligence is conduct on the part of the
by a fellow passenger; diligence of a good father of a family injured party, contributing as a legal cause to the harm he
not extra-ordinary diligence; Art. 1763] has suffered, which falls below the standard to which he is
Common carriers should be given sufficient leeway in required to conform for his own protection. To hold a person
assuming that the passengers they take in will not brig as having contributed to his injuries, it must be shown that
anything that would prove dangerous to himself, as well as he performed an act that brought about his injuries in
his co-passengers, unless there is something that will disregard of warning or signs of an impending danger to
indicate that a more stringent inspection should be made. health and body.
• If an employee is negligent causing injury to another, there
32. Fortune Express, Inc. v. Court of Appeals, G.R. No. is a presumption that the employer was negligent in
119756, March 18, 1999 [CC liable for failing to prevent a selecting and supervising said employee.
hijacking by frisking passengers and inspecting their • Vehicle owner has an obligation to make his vehicle
baggage ; Art. 1763] roadworthy and in good operating condition.
Article 1763 holds common carriers liable for the injuries to
passengers caused by the wilful act of other passengers, if its • Art 2179, NCC (on contributory negligence) - When the
employees failed to exercise the diligence of a good father in plaintiff's own negligence was the immediate and
preventing the act. proximate cause of his injury, he cannot recover damages.
But if his negligence was only contributory, the immediate
If petitioner took the necessary precautions, they would and proximate cause of the injury being the defendant's lack
have discovered the weapons and the large quantity of of due care, the plaintiff may recover damages, but the
gasoline the malefactors carried with them. courts shall mitigate the damages to be awarded.

33. Pilapil v. Court of Appeals, G.R. No. 52159, December • Art 2185, NCC (presumption of driver’s negligence) – A
22, 1989, [tort committed by a passenger does not accord a driver of motor vehicle is presumed negligent if at the time
cause of action against the CC; Art. 1763] of the mishap, he was violating any traffic violation.
A tort committed by a stranger which causes injury to a
passenger does not accord to the latter a cause of action 3. Actions and Damages in Cases of Breach
against the carrier. 36. Spouses Cruz v. Sun Holidays, Inc., G.R. No. 186312,
June 29, 2010, [damages, computation of indemnity; Art.
When the violation of the contract is due to the willful acts 1764 vis a vis Art. 2206]
of strangers, the degree of care essential to be exercised by Article 1764 vis-à-vis Article 2206 of the Civil Code holds the
the common carrier for the protection of its passenger is common carrier in breach of its contract of carriage that
only that of a good father of a family. results in the death of a passenger liable to pay the
following:
C.7. the responsibility of the passenger 1. indemnity for death,
34. Calalas vs. Court of Appeals Calalas v. Court of Appeals, 2. indemnity for loss of earning capacity and
G.R. No. 122039, May 31, 2000,[culpa contractual and culpa 3. moral damages.
aquiliana distinguished; doctrine of proximate cause
applicable only in quasi-delict] 37. Spouses Fabre v. Court of Appeals, G.R. No. 111127, July
- In quasi-delict, the negligence or fault should be 26, 1996,[ the act that breaks the contract may be also a
clearly established because it is the basis of the tort; award of moral damages in cases of quasi delict is
action, whereas in breach of contract, the action can allowed by Art. 2219(2); in cases of breach of contract of
be prosecuted merely by proving the existence of carriage, the award of moral damages is authorized by Art.
the contract and the fact that the obligor, in this 1764 in relation to Art. 2220]
case the common carrier, failed to transport his • Although the relation of passenger and carrier is
passenger safely to his destination. "contractual both in origin and nature," nevertheless "the
- The doctrine of proximate cause is applicable only in act that breaks the contract may be also a tort."
actions for quasi-delict, not in actions involving • Viewed as an action for quasi delict, this case falls
breach of contract. The doctrine is a device for squarely within the purview of Art. 2219(2) providing for the
imputing liability to a person where there is no payment of moral damages in cases of quasi delict. On the
relation between him and another party. theory that petitioners are liable for breach of contract of
- The common carrier is presumed negligent the carriage, the award of moral damages is authorized by Art.
moment he fails to deliver the goods to its.

Fabian | Transportation Law

1764, in relation to Art. 2220, since Cabil's gross negligence are contracts of adhesion, must be interpreted against the
amounted to bad faith. common carrier that prepared these contracts.
From book:
- A person or entity need not be engaged in the 40. Trans-Asia Shipping Lines, Inc. v. Court of Appeals, G.R.
business of public transportation for the provisions No. 118126, March 4, 1996, [CC liable for moral and
of the Civil Code on common carriers to apply to exemplary damages for breach of contract; Art. 1764]
them. Delay after commencement of voyage for failure to observe
- Supreme Court clarified that it was perraissible for extraordinary diligence holds the common carrier liable for
the plaintiff to allege in the Complaint alternative any pecuniary loss or loss of profits which the passenger
causes of action and join as many parties as may be may have suffered because of the delay. This however,
liable on such causes of action so long as the plaintiff assumes that he stayed on the vessel and was with it when it
does not recover twice for the same injury. Thus, the thereafter resumed its voyage.
carrier may be sued on the alternative causes of Effect of Decision of Passenger
action of breach of contract and quasi-delict. - The passenger was not able to recover lost profits
which resulted because of his own decision to
38. Singapore Airlines Limited v. Fernandez, G.R. No. disembark.
142305, - The Supreme Court explained that the carrier would
December 10, 2003, [breach of contract of air carriage have been liable for loss of income if the plaintiff
where there is delay; exemplary damages proper; Art.2232] was unable to report to his office on the day he was
In an action for breach of contract of carriage, the aggrieved supposed to arrive were it not for the delay. This,
party does NOT have to prove that the common carrier was however, assumes that he stayed on the vessel and
at fault or was negligent. All that is necessary to prove is the was with it when it thereafter resumed its voyage;
EXISTENCE of the contract and the fact of its NON- but he did not.
PERFORMANCE by the carrier. -END OF MIDTERM COVERAGE-
From book:
- Supreme Court reiterated the rule that delay or
diversion of flight due to fortuitous event does not III. CODE OF OMMERCE
terminate the contract of carriage. The carrier is still
duty-bound to safeguard the comfort, convenience
PROVISIONS ON OVERLAND
and safety of its stranded passengers. The carrier TRANSPORTATION (Articles 349-379)
must also communicate to its passengers the
consequences of the delay in their flight so that the IV. THE BILL OF LADING
passengers can make the proper arrangements. A. Nature
- The carrier may be held liable for the rude and
i. as a receipt
discourteous treatment of its passengers not only by
the crew inside the vessel but also the staff in the ii. as a contract
airport as well as the staff in branch offices of the iii. as a document of title
carrier. B. A contract of adhesion
- There would be breach of contract on the part of the C. FOB, FAS, CIF
carrier if its employees will refuse to accept the
passenger with confirmed tickets. The passenger has
D. Prohibited and Limiting Stipulations
CASES FOR III AND IV
every right to expect that he be transported on that
41. MOF Co., Inc. v. Shin Yang Brokerage Corp., G.R. No.
flight and on that date. If he is not so transported,
172822, December 18, 2009
then the carrier opens itself to a suit for breach of
[refusal of named consignee to pay the freight]
contract of carriage.

42. Provident Insurance Corp. v. Court of Appeals, G.R. No.

Art. 2232 of the Civil Code provides that in a contractual or
118030, January 15, 2004
quasi contractual relationship, exemplary damages may be
[bill of lading is in the nature of a contract of adhesion,
awarded only if the defendant had acted in a "wanton,
defined as one where one of the parties imposes a ready-
fraudulent, reckless, oppressive or malevolent manner." In
made form of contract which the other party may accept or
this case, petitioner's employees acted in a wanton,
reject]
oppressive or malevolent manner. The award of exemplary
damages is, therefore, warranted in this case.
V. MARITIME LAW (Articles 573-869)
39. Federal Express Corp. v. Antonino, G.R. No. 199455, (p 142)
June 27, 2018 [failure to deliver to consignee/person
authorized to receive goods tantamounts to loss of goods; Background
CC liable for loss; airway bill provision re period to file Code of Commerce provisions on Maritime Law were
claim] introduced in the Philippines in the same century marked by
ON EXTRAORDINARY DILIGENCE OF COMMON CARRIERS: an upsurge in international commerce.
The duty of common carriers to observe extraordinary  Laws designed in 19th century are still applicable
diligence in shipping goods does not terminate until delivery (Chapters 6-14)
to the consignee or to the specific person authorized to  Chapter 15 – outdated Salvage Law
receive the shipped goods. Failure to deliver to the person  Chapter 16 – COGSA (modified by NCC provisions)
authorized to receive the goods is tantamount to the loss of
the goods, thereby engendering the common carrier’s Maritime Law
liability for loss. Ambiguities in contracts of carriage, which
Fabian | Transportation Law
 - system of laws which “particularly relates to the - It is also JUST
affairs and business of the sea, to ships, their crews
and navigation, and to marine conveyance of B. Limited Liability rule and Its Exceptions
persons and property.”
C. Abandonment
- a corpus of rules, concepts, and legal practices
CASES FOR V.A, B, C
governing certain centrally important concerns of
the business of carrying goods and passengers by
43. Aboitiz Shipping Corp. v. General Accident Fire and Life
water.”
Assurance Corp., Ltd., G.R. No. 100446, January 21, 1993
- limited liability rule covers only civil liabilities for injuries to
Maritime Law vs. Admiralty Law
third parties (Art. 587),
The difference between admiralty and maritime law has
- acts of the captain (Art. 590);
historically been that admiralty law was limited to disputes
- not applicable when there is an actual finding of negligence
involving torts and contracts on the high seas. Maritime law
on the part of the vessel owner or agent]
gradually developed to include all other types of legal
disputes that arose on the high seas and other navigable
Limited liability rule covers only civil liabilities for injuries
waters. Torts are legal wrongs, and the term "high seas"
to third parties
refers to oceans beyond the territorial jurisdiction of a
ARTICLE 587. The ship agent shall also be civilly liable for the
country. Navigable waters generally are any body of water
indemnities in favor of third persons which may arise from
that functions as a highway for commerce between
the conduct of the captain in the care of the goods which he
countries or states. The distinction between the two types
loaded on the vessel; but he may exempt himself therefrom
of law faded with time, and U.S. courts now use the terms
by abandoning the vessel with all her equipments and the
interchangeably.
freight it may have earned during the voyage.
Special Laws
Acts of the captain
- Maritime Commerce – Book III of Code of Commerce
ARTICLE 590. The co-owners of a vessel shall be civilly liable
- Act NO. 2616 – Salvage Law
in the proportion of their interests in the common fund, for
- Commonwealth Act No. 65 – COGSA
the results of the acts of the captain, referred to in Article
- PD 1521 – Ship Mortgage Decree of 1978
587.
Each co-owner may exempt himself from this liability by the
Civil Code Primary Law
abandonment, before a notary, of the part of the vessel
Primary law – NCC
belonging to him.
Suppletory – Code of Commerce and other Special laws
44. Dela Torre v. Court of Appeals, G.R. Nos. 160088 &
Treaties and Conventions
160565, July 13, 2011
- GAAP of International law as part of the law of the
[No vessel, no liability rule is for shipowner to be supported
land.
and encouraged to pursue maritime commerce; absurd to
- There are instances when the Philippines has NOT
apply the Limited Liability Rule against him who, in the first
YET acceded to treaties BUT privisions are being
place, should be the one benefitting from the said rule; Art.
respected or followed by Philippine vessels
587 of the Code of Commerce]

A. Real and Hypothecatory Nature of Maritime Law 45. Government of the Philippine Islands v. Insular
Real and Hypothecary Nature Maritime Co., G.R. No. 21495, March 18, 1924
- What distinguishes maritime from civil law [liability of owners of a vessel for repairs to vessel after loss
Real nature of the vessel; Art. 591 of Code of Commerce]
- interests of the vessel and of the agent
- those of the owners of the cargo and consignees 46. Phil-Am General Insurance Co., Inc. v. Court of Appeals,
- those who salvage the ship, those who make loans G.R. No. 116940, June 11, 1997
upon the cargo [on abandonment of vessel; not applicable where ship agent
- those of the sailors and members of the crew as to is also liable for the negligent acts of the captain in the care
their wages, and of goods; Art. 587 of Code of Commerce not applicable]
- those of a constructor as to repairs made to the
vessel. 47. Magellan Manufacturing Marketing Corp. v. Court of
Appeals, G.R. No. 95529, August 22, 1991
Evidence of Real Nature of Maritime law [transhipment is not dependent upon the ownership of the
1. the limitation of the liability of the agents to the transporting ships or conveyances or change of carrier]
actual value of the vessel and the freight money
2. the right to retain the cargo and the embargo and
D. Protests
detention of the vessel even in cases where the
---Beginning of Group 1---
ordinary civil law would not allow more than a
personal action against the debtor or person liable. E. Vessels Chapter 11 (p. 292)
Presidential Decree No. 474
Rights are correlative VESSEL or WATERCRAFT any barge, lighter, bulk carrier,
If the agent can exempt himself from liability by passenger ship freighter, tanker, container ship, fishing
ABANDONING the vessel and freight money – thus boats, or other artificial contrivance utilizing any source of
AVOIDING the possibility of risking his whole fortune in the motive power, designed, used or capable of being used as a
business means of transportation operating either as a common

Fabian | Transportation Law

contract carrier, including fishing vessels covered under  A-tanker is a cargo ship constructed or adapted for the
Presidential Decree No. 43, except: carriage in bulk of liquid cargoes of an inflammable
1. those owned and/or operated by the Armed Forces nature.
of the Philippines and by foreign governments for  A fishing vessel is a vessel used for catching fish,
military purposes, and whales, seals, walrus or other living resources of the
2. bancas, sailboats and ther waterborne contrivance sea.
of less than three gross tons capacity and not  A nuclear ship is a ship provided with a nuclear power
motorized. plant.
 “New ship” means a ship the keel of which is laid or
Domestic Shipping Development Act of 2004 which is at a similar stage of construction on or after
“Ship” or “Vessel” may be used interchangeably and shall the date of coming into force of the SOLAS 1974.
mean any kind, class or type of craft or artificial contrivance  “Existing ship’ means a ship which is not a new ship.
capable of floating in water, designed to be used, or capable
of being used as a means of water transport in the domestic i. As Personal Property
trade for the carriage of passengers or cargo, or both, Article 416 of the Civil Code
utilizing its own motive power or that of another. Vessels are personal property.

Yu Con v. Ipil Code of Commerce, Article 585

The word vessel serves to designate every kind of craft ARTICLE 585. For all purposes of law, not modified or
by whatever particular or technical name it may now be restricted by the provisions of this Code, vessels shall
known or which nautical advancements may give it in the continue to be considered as personal property.
future.
48. Philippine Refining Co., Inc. v. Corominas, G.R. No.
A vessel is any kind of craft, considering solely the hull. 1506, March 25, 1935
[Vessels are considered personal property under the civil law
The grammatical meaning of the word “ship” and “vessels,” and the common law; mortgage of a ship does not confer
says, in his work aforecited, that these terms designate every admiralty jurisdiction; Art. 585 Code of Commerce]
kind of craft, large or small, whether belonging to the
merchant marine or to the navy. Vessels are personal property under the common law,
vessels are personal property although occasionally referred
Referring to their juridical meaning, he adds: “This does not to as a peculiar kind of personal property.
differ essentially from the grammatical meaning; the words
“ship” and “vessel” also designate every — craft, large or Since the term “personal property” includes vessels, they are
small, so long as it be not an accessory of another, such as subject to mortgage agreeably to the provisions of the
the small boat of a vessel, of greater or less tonnage. This Chattel Mortgage Law.
definition comprises both the craft intended for ocean or for
coastwise navigation, as well as the floating docks, mud The only difference between a chattel mortgage of a vessel
lighters, dredges, dumpscows or any other fioating and a chattel mortgage of other personality is that it is not
apparatus used in the service of an industry or in that of necessary for a chattel mortgage of a vessel to be noted in
maritime commerce.. the registry of the register of deeds, but it is essential that a
record of documents affecting the title to a vessel be
Lopez v. Duruelo entered in the record of the Collector of Customs at the port
Article 835 of the Code of Commerce dealing with collision, of entry
the vessel contemplated are sea-going vessels. Article 835
cannot be applied to small boats engaged in river and bay Special nature of a Vessel as Personal Property
traffic. GR: Personal Property
EXCEPT: “for all purposes not modified or restricted” by the
Vessels which are licensed to engage in maritime commerce, Code of Commerce.
or commerce by sea, whether in foreign or coastwise trade,
are no doubt regulated by Book III of the Code of Commerce. There are rules that are applicable to Common Carriers
Other vessels of a minor nature not engaged in maritime which are similar to the rules that apply to real estate.
commerce, such as river boats and those carrying passengers
from ship to shore, must be governed, as to their liability to
passengers, by the provisions of the Civil Code or other
appropriate special provisions of law.
Registration of vessels (MARINA Circular No. 2013-
Small Vessels (Other Vessels) 02)
Although small watercrafts are not contemplated under 49. Fubiso v. Rivera, G.R. No. L-11407, October 30, 1917
certain provisions of the COC, MARINA and other [registration of the purchase of vessels; Art. 573 of the Code
government agencies also regulate these small vessels. of Commerce]

Kinds of Vessels
 A passenger ship is a ship which carries more than
twelve passengers.
 A cargo ship is any ship which is not a passenger ship.

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ii. Their nationality Section 3. Mortgage of Vessel of Domestic Ownership;
iii. RA 9295 – Domestic Development Shipping Act of records.
2004 (a) No mortgage, which at the time such mortgage is made
includes a vessel of domestic ownership as this term is
iv. RA 10668 – Foreign Ships Co-Loading Act of 2015
defined in Presidential Decree No. 761, or any portion
(Concept of Cabotage)
thereof, as the whole or any part of the property mortgaged,
F. Ship’s manifest and logbook shall be valid, in respect to such vessel, against any person
i. Safety regulations of MARINA other than the mortgagor, his heir or assign, and a person
I. Freightage having actual notice thereof, until such mortgage is recorded
55. A. Magsaysay, Inc. v. Agan, G.R. No. L-6393, January 31, in the office of the Philippine Coast Guard of the port of
1955 En banc decision documentation of such vessel.
[salvage operation a success, yet if the sacrifice was for the
benefit of the vessel – to enable it to proceed to its (b) The Coast Guard District or Station Commander shall
destination- not for the purpose of saving the cargo; no
record mortgages delivered to him, in the order of their
general average]
reception, in books to be kept for that purpose and indexed
56. (International Harvester Co. in Russia v. Hamburg- to show:
American Line, G.R. No. 11515, July 29, 1918 1. The name of the vessel;
[general average; neutral cargo on interned vessel; war 2. The names of the parties tot he mortgage;
affects the obligation of the ship] 3. The time and date of reception of the instrument;
4. The interest in the vessel so mortgaged;
5. The amount and date of maturity of the mortgage;
J. Demurrage 6. Name, citizenship, nationality and residence of owner,
---end of Group 1/beginning of Group 2--- and
7. Any material change of condition in respect to any of
G. Ship’s mortgage and maritime lien (Chapter 8) the preceding items. A copy of the instrument or
- The Personal Property Security Act (RA 11057) mortgage shall be furnished the Central Bank of the
- PD 1521 - Ship Mortgage Decree of 1978 (repealed by Philippines
Article 580 COC)
 Mortgage and other encumbrances over vessels GR: Mortgage of Vessel of Domestic Ownership NOT VALID
 Annotation and cancellation of mortgages and EXCEPT: Recorded in the office of the Philippine Coast Guard
transfer of rights and other encumbrancs of the of the port of documentation of such vessel.
vessel.
StatCon
The provisions of PD No. 1521 with respect to preferred
mortgage prevail over the Civil Code provisions on mortgage 50. Poliand Industrial Limited v. National Development Co.,
as well as the provisions of the Code of Commerce. G.R. Nos. 143866 & 143877, August 22, 2005
 general legislation must give way to special [PD 1521 or the Ship Mortgage Decree of 1978 repealed Art.
legislation on the same subject 580 of the Code of Commerce]

Purpose of PD 1521 51. Crescent Petroleum Ltd. v. M/V "Lok Maheshwari ",
Growth and development of the “shipping industry” and G.R. No. 155014, November 11, 2005
“extend the benefits accorded to overseas shipping” [non application of PD 1521]
a. Meaning of Preferred Mortgage and its Requirements
Section 2. Who may Constitute a Ship Mortgage. Any citizen b. Maritime Lien and Salvage Lien
of the Philippines, or any association or corporation c. Preferred Claims
organized under the laws of the Philippines, at least sixty per
d. Executory contract doctrine
cent of the capital of which is owned by citizens of the
e. Waiver of Lien
Philippines may, for the purpose of financing the
construction, acquisition, purchase of vessels or initial f. Other important features include the impact of the
operation of vessels, freely constitute a mortgage or any Personal Property Security Act
other lien or encumbrance on his or its vessels and its g. Arrest of Vessels
equipment with any bank or other financial institutions,
domestic or foreign. 52. Ace Navigation Co., Inc. v. FGU Insurance Corp., G.R. No.
171591, June 25, 2012
Who may constitute a ship mortgage? [ACENAV not a ship agent merely an agent since it does not
- Any citizen of the Philippines provision the vessel; Art. 586 of the Code of Commerce; Art
- Any association or corporation 1868 of the NCC applies]
o Organized under the Philippine laws
o At least 60% capital owned by Philippine 53. Inter-Orient Maritime Enterprises, Inc. v. National Labor
citizens Relations Commission, G.R. No. 115286, August 11, 1994
For purpose of financing (vessels): [captain’s control of vessel and reasonable discretion as to
- Construction its navigation]
- Acquisition
- Purchase or initial operation 54. Far Eastern Shipping Co. v. Court of Appeals, G.R. Nos.
With any bank or financial institution, domestic or foreign. 130068 & 130150, October 1, 1998

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[master of the vessel found liable with compulsory pilot for
negligence; he failed to act decisively and quickly as master
of the ship]

H. Persons who take part in maritime commerce,

their powers, duties and liabilities (Chapter 13)
Charter Parties (Chapter 14)
---end of Group 2/Beginning of Group 3---

K. Loans on Bottomry and Respondentia (Chapter

15)

L. Averages (Chapter 16)

55. A. Magsaysay, Inc. v. Agan, G.R. No. L-6393, January 31,
1955 En banc decision,[ salvage operation a success, yet if
the sacrifice was for the benefit of the vessel – to enable it to
proceed to its destination- not for the purpose of saving the
cargo; no general average]

56. (International Harvester Co. in Russia v. Hamburg-

American Line, G.R. No. 11515, July 29, 1918;[ general
average; neutral cargo on interned vessel; war affects the
obligation of the ship]

---end of Group 3/Beginning of Group 4---

M. Collisions (Chapter 17)

N. Arrival Under Stress and Shipwrecks (Chapter
18)
O. Salvage (Chapter 19)
59. Barrios v. Go Thong & Co., G.R. No. L-17192, [March 30,
1963;
[requisites of salvage; quasi contract of towage]

60. Erlanger v. Oelwerke Teutonia, G.R. No. 10051, March

9, 1916;
[requisites of salvage]

VI. COGSA (Chapter 20)

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