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U.P.

LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

TRANSPORTATION LAWS
Commercial Law
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Common Carriers only from a narrow segment of the general population


[De Guzman v. CA, G.R. No. L-47822 (1988)].

1. Concept The true test for a common carrier is not the quantity or
extent of the business actually transacted, or the number
A contract of transportation is one whereby a certain and character of the conveyances used in the activity, but
person or association of persons obligate themselves to whether the undertaking is a part of the activity engaged in
transport persons, things, or news from one to another for a by the carrier that he has held out to the general public as
fixed price [Crisostomo v CA, G.R. No. 138334 (2003)]. his business or occupation. If the undertaking is a single
transaction, not a part of the general business or
PARTIES TO THE CONTRACT: occupation engaged in, as advertised and held out to the
a. Shipper - one who gives rise to the contract of general public, the individual or the entity rendering such
transportation by agreeing to deliver the things or service is a private, not a common, carrier. The question
news to be transported, or to present his own person must be determined by the character of the business
or those of other or others in the case of transportation actually carried on by the carrier, not by any secret
of passengers intention or mental reservation it may entertain or assert
b. Carrier or conductor - one who binds himself to when charged with the duties and obligations that the law
transport person, things, or news, as the case may be, imposes [Teodoro v. Nicolas, G.R. No. 157917 (2012)].
or one employed in or engaged in the business of
carrying good for others for hire. A common carrier need not have fixed and publicly known
c. Consignee - the party to whom the carrier is to deliver routes. Neither does it have to maintain terminals or issue
the things being transported; to whom the carrier may tickets [Asia Lighterage and Shipping v. CA, G.R. No.
lawfully make delivery in accordance with its contract 147246 (2003)].
of carriage. The shipper and the consignee may be the
same person. One engaged in the business of transporting petroleum
products from refineries via pipeline is a common carrier. It
Carriers are persons or corporations who undertake to is engaged in the business of transporting or carrying
transport or convey goods, property or persons, from one goods, i.e., petroleum products, for hire as a public
place to another, gratuitously or for hire, and are classified employment. It undertakes to carry for all persons
as: indifferently, that is, to all persons who choose to employ
a. Private or special carriers, who transport or undertake its services, and transports the goods by land and for
to transport in a particular instance for hire or reward compensation. The fact that it has a limited clientele does
[AGBAYANI, Commercial Laws of the Philippines not exclude it from the definition of a common carrier [First
(1987)]; and Phil. Industrial v. CA, G.R. No. 125948 (1998)].
b. Common or public carriers [Art. 1732, NCC]
A customs broker may be regarded as a common carrier. As
Common carriers are: long as a person holds itself to the public for the purpose of
a. Persons, corporations, firms or associations; transporting goods as a business, it is already considered a
b. Engaged in the business of carrying or transporting; common carrier regardless if it owns the vehicle used or
c. Passengers or goods or both; has to hire one. [Schmitz Transport v. Transport Venture,
d. By land, water, or air; Inc, G.R. No. 150255. (2005)]
e. For compensation;
f. Offering their services to the public [Art. 1732, NCC]. A travel agency is not a common carrier. It is not an entity
engaged in the business of transporting either passengers
Art. 1732 makes no distinction: or goods and is therefore neither a private nor a common
a. Between one whose principal business activity is the carrier. Its covenant with its customers is simply to make
carrying of persons or goods or both, and one who travel arrangements on their behalf [Crisostomo v. CA, G.R.
does such carrying only as an ancillary activity [Fabre No. 138334 (2003)].
v. CA, G.R. No. 111127 (1996)];
b. Between a person or enterprise offering transportation
service on a regular or scheduled basis and one
offering such service on an occasional, episodic, or
unscheduled basis [Loadstar Shipping Co., Inc. v. CA,
G.R. No. 131621 (1999)]; DIFFERENCE BETWEEN COMMON CARRIER AND PRIVATE
c. Between a carrier offering its services to the general CARRIER
public and one who offers services or solicits business Common Carrier Private Carrier
Availability
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Holds himself out in another and operated under his license. [Dizon v.
common, that is, to all Agrees in some special Octavio (1955)].
persons who choose to case with some private d. However, one who has availed of the kabit system is
employ him, as ready to individual to carry for hire not precluded from filing for damages against another
carry for hire who caused the injury, as the policy against the kabit
Binding Effect system will not be defeated by giving such person
Not bound to carry for any standing to sue. [Lim v. CA, G.R. No. 125817 (2002)]
Bound to carry all who offer
reason, such goods as it is
and tender reasonable TRANSPORTATION NETWORK VEHICLE SERVICE
accustomed to carry,
compensation for carrying Transport Network Company or TNC is defined as an
unless it enters into a
them organization whether a corporation, partnership, or sole
special agreement to do so
Diligence Required proprietor, that provides pre-arranged transportation
Extraordinary diligence Ordinary diligence services for compensation using an internet-based
Governing Law technology application or a digital platform technology to
Civil Code; Code of connect passengers with drivers using their personal
Commerce and special vehicles [DOTC D.O. No. 2015-011].
laws, if not regulated by the
Civil Code (Art. 1766); law The TNC may or may not have been granted a Certificate of
of the country to which the Law on obligations and Public Convenience (CPC). If it is a holder of a valid and
goods are to be contracts current CPC, it is known as a common carrier. Otherwise, it
transported, if regarding is classified as a land transportation service contractor.
liability for loss,
destruction, or The Partners (owners of the vehicles used in transporting
deterioration of goods passengers) forming part of the network of a TNC, may or
Regulation may not be a common carrier, depending on whether the
A public service, therefore Partner(s) itself/themselves are holders of a CPC. A mere
subject to provisions Not subject to regulation as Accreditation given by LTFRB is not an equivalent to a CPC
governing common carriers a common carrier and will not make said holder a common carrier. If the
and public utilities Partner is a holder of a CPC, said Partner is a common
carrier. However, if the Partner is not a holder of a CPC,
said Partner is merely a land transportation service
It is not necessary that the carrier be issued a certificate of
contractor [BIR RMC 70-2015].
public convenience [Loadstar Shipping Co., Inc. v. CA, G.R.
No. 131621 (1999)].
Note: Please be guided by the requirements under Art.
1732.
KABIT SYSTEM:
a. It is an arrangement whereby a person who has been
granted a certificate of convenience allows another Diligence Required of Common
person who owns motor vehicles to operate under
such franchise for a fee [Lita Enterprises, Inc. v. IAC, Carriers
G.R. No. L-64693 (1984)].
b. It is invariably recognized as being contrary to public a. Standard of Diligence
policy and therefore void and inexistent under Art.
1409. Thus, for the safety of passengers and the Common carriers, from the nature of their business and for
public, the registered owner of the vehicle is not reasons of public policy, are bound to observe
allowed to prove that another person has become the extraordinary diligence, according to all the circumstances
owner so that he may be thereby relieved of of each case:
responsibility [Lim v. CA, G.R. No. 125817 (2002)]. 1. In the vigilance over the goods, and
c. One of the primary factors considered in the granting 2. For the safety of the passengers transported by them
of a certificate of public convenience for the business [Art. 1733, NCC]
of public transportation is the financial capacity of the
holder of the license, so that liabilities arising from Extraordinary diligence in the vigilance over the goods is
accidents may be duly compensated. The kabit system expressed in Arts 1734, 1735, and 1745, Nos. 5, 6, and 7,
renders illusory such purpose and, worse, may still be while the extraordinary diligence for the safety of the
availed of by the grantee to escape civil liability passengers is further set forth in Arts. 1755 and 1756 [Art.
caused by a negligent use of a vehicle owned by 1733, NCC].
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

EXTRAORDINARY DILIGENCE
Requires carrying passengers safely as far as human care
Liabilities of Common Carriers
and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the The obligation of the common carrier consists in the
circumstances [Art. 1755, NCC]; transportation of passengers or goods or both [Art. 1732,
NCC].
Note: A common carrier is not an insurer of the safety of its
passengers and is not bound absolutely and at all events to Principles governing the liability of common carriers:
carry them safely and without injury [Yobido v. CA, G.R. No. a. The liability of a carrier is contractual and arises upon
113003 (1997)]. breach of its obligation. There is breach if it fails to
exert extraordinary diligence according to all
circumstances of each case;
Presumption of Negligence b. A carrier is obliged to carry its passenger with the
utmost diligence of a very cautious person, having due
The mere proof of delivery of goods in good order to a regard for all the circumstances;
carrier, and of their arrival at the place of destination in bad c. A carrier is presumed to be at fault or to have acted
order, makes out a prima facie case against the carrier, so negligently in case of death of, or injury to,
that if no explanation is given as to how the injury occurred, passengers, it being its duty to prove that it exercised
the carrier must be held responsible. It is incumbent upon extraordinary diligence; and
the carrier to prove that the loss was due to accident or d. The carrier is not an insurer against all risks of travel.
some other circumstance inconsistent with its [Isaac v. A.L. Ammen, G.R. No. L-9671 (1957)].
liability [Ynchausti Steamship v. Dexter and Unson, G.R.
No. L-15652 (1920)].

Note: While delay in the delivery of goods is a breach of


contract of carriage, it does not raise the presumption of
negligence because the goods are not lost, deteriorated, or
destroyed [Art. 1735, NCC].

In case of death of or injuries to passengers, common


carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as prescribed in Arts 1733 and
1755 [Art. 1756, NCC].

Art. 1733, NCC. Common carriers, from the nature of their


business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the


goods is further expressed in Articles 1734, 1735, and
1745, Nos. 5, 6, and 7, while the extraordinary diligence
for the safety of the passengers is further set forth in
Articles 1755 and 1756.

Art. 1755, NCC. A common carrier is bound to carry the


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

Note: Mere failure to reach one’s destination, without injury


or death, does not raise the presumption of negligence
because it does not involve safety of the passengers.
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Vigilance over Goods NATURAL DISASTER OR CALAMITY


Requisites:
a. The natural disaster must have been the proximate
1. Liability, in General and only cause of the loss;
b. The common carrier must exercise due diligence to
The law of the country to which the goods are to be prevent or minimize the loss before, during and after
transported shall govern the liability of the common carrier the occurrence of the flood, storm or natural disaster
for their loss, destruction or deterioration [Art. 1753, NCC]. [Art. 1739, NCC]; and
c. The common carrier must not have negligently
Under Philippine law, the liability of the common carrier incurred delay [Art. 1740, NCC];
with respect to vigilance over goods, in general, are as
follows: In order that a common carrier may be absolved from
a. Common carriers are responsible for the loss, liability where the loss, destruction or deterioration of the
destruction, or deterioration of the goods [Art. 1734, goods is due to a natural disaster or calamity, it must be
NCC]. In fact, they are liable even in those cases where shown that such natural disaster or calamity was the
the cause of the loss or damage is unknown proximate and only cause of the loss; there must be an
[AGBAYANI]. entire exclusion of human agency from the cause of the
b. Moreover, if the goods are lost, destroyed, or injury of the loss [Philippine American General Insurance
deteriorated, common carriers are presumed to have Co., Inc. v. MGG Marine Services, Inc., G.R. No. 135645
been at fault or to have acted negligently [Art. 1735, (2002)].
NCC].
Fire may not be considered a natural disaster or calamity.
Note: Two-pronged analysis in determining liability: This must be so as it arises almost invariably from some act
a. Whether or not the cause of the loss, destruction, or of man or by human means. It does not fall within the
deterioration is included under Art. 1734; category of an act of God unless caused by lightning or by
b. If not, whether or not the common carrier exercised other natural disaster or calamity. It may even be caused by
extraordinary diligence. the actual fault or privity of the carrier [Eastern Shipping
Lines v. IAC, G.R. No. L-69044 (1987)].
Exempting Causes Note: If the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not free
General rule: Common carriers are responsible for the loss, such carrier from responsibility [Art. 1740].
destruction, or deterioration of the goods.
ACT OF PUBLIC ENEMY
Exception: The same is due to any of the following causes Requisites:
only: a. The act of the public enemy was committed either in
a. Flood, storm, earthquake, lightning, or other natural an international or civil war [Art. 1734 (2), NCC];
disaster or calamity; b. The act of the public enemy must have been the
b. Act of the public enemy in war, whether international proximate and only cause; and
or civil; c. The common carrier must exercise due diligence to
c. Act of omission of the shipper or owner of the goods; prevent or minimize the loss before, during and after
d. The character of the goods or defects in the packing or the act of the public enemy causing the loss,
in the containers; destruction or deterioration of the goods [Art. 1739,
e. Order or act of competent public authority [Art. 1734, NCC].
NCC].
Thieves, rioters, robbers, and insurrectionists, though at
In all other cases of loss, destruction, or deterioration, the war with social order, are not in a legal sense classed as
common carrier is presumed to have been at fault or to public enemies, but are merely private depredators for
have acted negligently, unless they prove that they whose acts a carrier is answerable. Pirates on the high
observed extraordinary diligence [Art. 1735, NCC]. seas, however, stand as an exception to this rule. They are
considered the enemies of all civilized nations, and indeed
Thus, in De Guzman v. CA [G.R. No. L-47822 (1988)], it was of the human race, and consequently their depredations on
held that hijacking, not being included in Art. 1734, must a common carrier will excuse him from liability. [AQUINO].
be dealt with under the provisions of Art. 1735, and thus,
the common carrier is presumed to have been at fault or ACT OR OMISSION OF SHIPPER OR OWNER
negligent.
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

The act or omission of the shipper must have been the c. The occurrence must be such as to render it impossible
proximate and only cause of the loss, destruction, or for the debtor to fulfill his obligation in a normal
deterioration of the goods. manner; and
d. The obligor must be free from any participation in the
If the shipper or owner merely contributed to the loss, aggravation of the injury resulting to the creditor.
destruction or deterioration of the goods, the proximate
cause being the negligence of the common carrier, the There must be an entire exclusion of human agency from
latter shall be liable for the damages, which shall, however, the cause of injury or loss.
be equitably reduced [Art. 1741, NCC].
Moreover, a common carrier may not be absolved from
CHARACTER OF THE GOODS liability in case of force majeure or fortuitous event alone.
Requisites: The common carrier must still prove that it was not
a. The loss, destruction, or deterioration of the goods is negligent in causing the death or injury resulting from an
due to the character of the goods or defects in the accident [Yobido v. CA, G.R. No. 113003 (1997)].
packing or in the containers [Art. 1734 (4), NCC]; and
b. The common carrier must exercise due diligence to Loss of a ship and of its cargo, in a wreck due to accident or
forestall or lessen the loss [Art. 1742, NCC]. force majeure must, as a general rule, fall upon their
respective owners, except in cases where the wrecking or
If the fact of improper packing is known to the carrier or its stranding of the vessel occurred through the malice,
servants or apparent upon ordinary observation, but it carelessness, or lack of skill on the part of the captain or
accepts the goods notwithstanding such condition, it is not because the vessel put to sea is insufficiently repaired and
relieved of liability for loss or injury resulting therefrom prepared.
[Southern Lines v. CA, G.R. No. L-16629 (1962)].
In order that the exemption due to force majeure would
ORDER OF COMPETENT AUTHORITY apply, the carrier must prove that the loss or destruction of
Requisites: the merchandise was due to accident and force majeure
a. There must be an order or act of competent public and not to fraud, fault, or negligence on the part of the
authority through which the goods are seized or captain or owner of the ship [Tan Chiong Sian v. Inchausti,
destroyed [Art. 1734 (5), NCC]; and G.R. No. L-6092 (1912)].
b. The said public authority must have had the power to
issue the order [Art. 1743, NCC]. Contributory Negligence
The intervention of the municipal officials was not of a
character that would render impossible the fulfillment by The liability of the common carrier shall be equitably
the carrier of the obligation. A carrier is not duty bound to reduced when the loss, destruction, or deterioration of the
obey an illegal order (of a mayor) to dump into the sea the goods when:
scrap iron. There is absence of sufficient proof that the a. The negligence of the common carrier was the
issuance of the order was attended with such force or proximate cause thereof; and
intimidation as to completely overpower the will of the b. The shipper or owner merely contributed to such loss,
carrier’s employees [Ganzon v. CA, G.R. No. L-48757 destruction, or deterioration [Art. 1741, NCC].
(1988)].
Duration of Extraordinary
FORCE MAJEURE
Force majeure – in general, has also been invoked as an Responsibility for Goods
exempting cause based on Art. 1174, which states that no
person shall be responsible for a fortuitous event which a. Instances when carrier has responsibility to exercise
could not be foreseen, or which, though foreseen, was extraordinary diligence: From the time the goods
inevitable. are unconditionally placed in the possession of, and
received by the carrier [Art 1736, NCC] or its
A fortuitous event has the following characteristics: authorized agent [Compania Maritima v Insurance
a. The cause of the unforeseen and unexpected Co., G.R. No. L-18965 (1964)], until the same are
occurrence, or the failure of the debtor to comply with delivered actually and constructively by the carrier to
his obligations, must be independent of human will; the consignee or to the person who has a right to
b. It must be impossible to foresee the event which receive them;
constitutes the caso fortuito, or if it can be foreseen, it b. When goods are temporarily unloaded or stored in
must be impossible to avoid; transit, unless the shipper or owner has made use of
the right of stoppage in transitu [Art 1737, NCC];
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

c. During storage in a warehouse of the carrier at the 2. The person who has a right to receive them, such as
place of destination, until consignee has been agents, brokers, and the like.
advised of the arrival of the goods and has had
reasonable opportunity to remove or dispose them Art. 1738 provides that the extraordinary liability of the
[Art 1738, NCC]; common carrier continues to be operative even during the
time the goods are stored in a warehouse of the carrier at
In dealing with the contract of common carriage of the place of destination, until the consignee has:
passengers, for purpose of accuracy, there are two (2) 1. Been advised of the arrival of the goods; and
aspects of the same, namely: 2. Had reasonable opportunity thereafter to remove them
1. contract ‘to carry (at some future time),’ which or otherwise dispose of them.
contract is consensual and is necessarily perfected
by mere consent; and Delivery of the cargo to the customs authorities is not
2. contract ‘of carriage’ or ‘of common carriage,’ which delivery to the consignee or “to the person who has a right
should be considered as a real contract for not until to receive them” as contemplated in Art. 1736 because in
the carrier is actually used can the carrier be said to such case the goods are still in the hands of the
have already assumed the obligation of a carrier government and the owner cannot exercise dominion over
[PARAS, Civil Code Annotated, 11th Ed]. them. However, the parties may agree to limit the liability of
the carrier considering that the goods still have to go
Note: The distinction is important in determining when the through the inspection of the customs authorities before
common carrier is required to exercise extraordinary they are actually turned over to the consignee. This
responsibility. The birth of the contract is not necessarily stipulation is not contrary to morals or public policy. This is
the birth of the duty to exercise extraordinary responsibility. a situation where it may be said that the carrier loses
control of the goods because of a custom regulation and it
a. Delivery of Goods to Common is unfair that it be made responsible for what may happen
during the interregnum [Lu Do v. Binamira, G.R. No. L-9840
Carriers (1957)].

Under Art. 1736, delivery means unconditionally placing It is settled in maritime law jurisprudence that cargoes
the goods in the possession of the carrier and the carrier while being unloaded generally remain under the custody
receiving them for transportation. of the carrier [Asian Terminals, Inc. v. Philam Insurance Co.,
G.R. No. 181163 (2013)]
Thus, if the common carrier received the goods not for
transportation but only for safekeeping, then the duty of
extraordinary diligence has not yet started.
Temporary Unloading or Storage

Unconditionally placing the goods in the possession of the General rule: Extraordinary diligence over the goods
carrier means the shipper cannot get them back from the remains even when the goods are temporarily unloaded or
common carrier at will. stored in transit.

The liability of the carrier as common carrier begins with the Exception: The duty to observe such diligence ceases when
actual delivery of the goods for transportation and not shipper or owner made use of the right of stoppage in
merely with the formal execution of a receipt or bill of transitu [Art 1737, NCC] .
lading; the issuance of a bill of lading is not necessary to
complete delivery and acceptance. Even where it is Stoppage in transitu is the act by which the unpaid vendor
provided by statute that liability commences with the of goods stops their progress and resumes possession of
issuance of the bill of lading actual delivery and them constructively while they are in the course of transit
acceptance are sufficient to bind the carrier [Compania from him to the purchaser, and not yet actually delivered to
Maritima v Insurance Co., G.R. No. L-18965 (1964)]. the latter [AGBAYANI].

Basis: Under Art. 1530, when the buyer of the goods


Actual or Constructive Delivery becomes insolvent, the unpaid seller who has parted with
the possession of the goods at any time while they are in
The extraordinary responsibility of the common carrier ends transit, may resume the possession of the goods as he
when, subject to Art. 1738, the goods are delivered would have had if he had never parted with the possession.
actually or constructively by the carrier to:
1. The consignee; or When the right of stoppage in transitu is exercised, the
common carrier holds the goods in the capacity of an
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

ordinary bailee or warehouseman upon the theory that the Any of the following or similar stipulations shall be
exercise of the right of stoppage in transitu terminates the considered unreasonable, unjust and contrary to public
contract of carriage. Hence, only ordinary diligence is policy:
required [AGBAYANI]. 1. That the goods are transported at the risk of the owner
or shipper;
Stipulation for Limitation of 2. That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
Liability 3. That the common carrier need not observe any
diligence in the custody of the goods;
There are two possible stipulations limiting the liability of 4. That the common carrier shall exercise a degree of
the common carrier: diligence less than that of a good father of a family, or
a. Stipulation limiting the common carrier’s liability as to of a man of ordinary prudence in the vigilance over the
the diligence required; movables transported;
b. Stipulation limiting the common carrier’s liability as to 5. That the common carrier shall not be responsible for
the amount of liability. the acts or omission of his or its employees;
6. That the common carrier’s liability for acts committed
An agreement limiting the common carrier’s liability for by thieves, or of robbers who do not act with grave or
delay on account of strikes or riots is also valid [Art. 1748, irresistible threat, violence or force, is dispensed with
NCC]. or diminished;
7. That the common carrier is not responsible for the
loss, destruction, or deterioration of goods on account
a. As to Diligence Required of the defective condition of the car, vehicle, ship,
airplane or other equipment used in the contract of
A stipulation between the common carrier and the shipper carriage [Art. 1745, NCC].
or owner limiting the liability of the former for the loss,
destruction, or deterioration of the goods to a degree less The following stipulations are also void:
than extraordinary diligence shall be valid, provided it be: 1. Stipulation exempting the common carrier from any
1. In writing, signed by the shipper or owner; and all liability for loss or damage occasioned by its
2. Supported by a valuable consideration other than the own negligence;
service rendered by the common carrier; and 2. Stipulation providing for an unqualified limitation of
3. Reasonable, just and not contrary to public policy [Art. such liability to an agreed stipulation [Heacock v.
1744, NCC]. Macondray, G.R. No. L-16598 (1921)].

Limitation of Liability to Fixed Amount


A stipulation that the common carrier’s liability is limited to
the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value, is
binding [Art. 1749, NCC].

A contract fixing the sum that may be recovered by the


owner or shipper for the loss, destruction or deterioration of
the goods is valid if:
1. It is reasonable and just under the circumstances; and
2. It has been fairly and freely agreed upon [Art. 1750,
NCC].

While a passenger may not have signed the plane ticket, he


is nevertheless bound by the provision thereof; such
provisions have been held to be part of the contract of
carriage and valid and binding upon the passenger
regardless of the latter’s lack of knowledge or assent to the
regulation. It is what is known as a contract of adhesion
wherein one party imposes a ready-made form of contract
on the other. The one who adheres to the contract is in
reality free to reject it entirely. A contract limiting liability
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

upon an agreed valuation does not offend against the For instance, a balikbayan box or suitcase is passenger’s
policy of the law forbidding one from contracting against baggage. However, 10,000 cans of corned beef is not
his own negligence [Ong Yiu v. CA, G.R. No. l-40597 considered as passenger baggage. They are considered as
(1979)]. goods. They are not part of the contract of carriage [of
passenger]. A separate contract of carriage [or bill of
[However], the fact that the conditions are printed at the lading] must be entered into in order to transport them.
back of the ticket stub in letters so small that they are hard These goods will then be transported whether or not a
to read would not warrant the presumption that the person is physically traveling with them [AGBAYANI].
[shipper] was aware of those conditions such that he had
“fairly and freely agreed” to those conditions [Shewaram v. There are two kinds of passenger’s baggage, which are
PAL, G.R. No. L-20099 (1966)]. governed differently:
a. Passenger baggage in the custody of the passenger
Factors Affecting Agreement (or carry-on luggage); and
The effect of these stipulations is subject to the following b. Passenger baggage not in the custody of the
provisions: passenger (or checked-in luggage).
1. An agreement limiting the common carrier’s liability
may be annulled by the shipper or owner if the The liability is greater for baggage that is in the custody of
common carrier refused to carry the goods unless the the carrier, or checked-in baggage, as compared to those
former agreed to such stipulation [Art. 1746, NCC]. in the possession of the passenger.
2. If the common carrier, without just cause, delays the
transportation of the goods or changes the stipulated
or usual route, the contract limiting the common
carrier’s liability cannot be availed of in case of the
loss, destruction, or deterioration of the goods [Art. a. Checked-In baggage
1747, NCC]. The limitation may be availed of if the
delay or change of route was due to a just cause. The provisions of Arts 1733-1753 shall apply to
3. The fact that the common carrier has no competitor passenger’s baggage which is not in his personal custody
along the line or route, or a part thereof, to which the or in that of his employee [Art. 1754, NCC].
contract refers shall be taken into consideration on
the question of whether or not a stipulation limiting In other words, the rules governing the responsibility of a
the common carrier’s liability is reasonable, just and common carrier in the transportation of goods just
in consonance with public policy [Art. 1751, NCC]. discussed apply. Thus, extraordinary diligence is required.
4. Even when there is an agreement limiting the liability
of the common carrier in the vigilance over the goods,
the common carrier is disputably presumed to have Baggage in Possession of Passengers
been negligent in case of their loss, destruction or
deterioration [Art. 1752, NCC]. As to baggage other than checked-in baggage, they are
governed by Arts 1998, and 2000-2003, concerning the
responsibility of hotel-keepers [Art. 1754, NCC].
Limitation of Liability in Absence of
Declaration of Greater Value Art. 1998, as applied by analogy, the baggage of
passengers in their personal custody or in that of their
A stipulation that the common carrier’s liability is limited to employees, while being transported, are regarded as
the value of the goods appearing in the bill of lading, necessary deposits. The common carriers are responsible
unless the shipper or owner declares a greater value, is as depositaries, provided that:
binding [Art. 1749, NCC]. 1. Notice was given to them, or to their employees, of the
effects brought by the passengers; and
Liability for Baggage of 2. The passengers take the precautions which the
common carrier advised relative to the care and
Passengers vigilance of their baggage.

Baggage are things that a passenger will bring with him In case of loss or injury to the baggage of passengers in
consistent with a temporary absence from where he lives. their personal custody, or in that of their employees, while
Passenger’s baggage must have a direct relationship with being transported, the carrier is liable if the loss or injury is
the passenger who is traveling. caused by:
1. His servants;
2. His employees;
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

3.
4.
Strangers [Art. 2000, NCC]; or
A thief or robber done without the use of arms or Safety of Passengers
irresistible force [Art. 2001, NCC].
1. Liability, in general
The carrier is not liable if loss or injury is caused by:
1. Force majeure [Art 2000, NCC]; Under Philippine law, the liability of the common carrier
2. Theft or robbery with the use of arms or irresistible with respect to the safety of passengers, in general, are as
force[Art 2001, NCC]; follows:
3. The acts of the passenger, his family, servants, or 1. A common carrier is bound to carry the passengers
visitors; safely as far as human care and foresight can provide,
4. The character of the baggage [Art 2002, NCC]. using the utmost diligence of very cautious persons,
with a due regard for all the circumstances [Art. 1755,
The following provisions also figure in determining the NCC].
liability of the common carrier: 2. In case of death of or injuries to passengers, common
1. The fact that passengers are constrained to rely on the carriers are presumed to have been at fault or to have
vigilance of the common carrier shall be considered in acted negligently, unless they prove that they
determining the degree of care required of him [Art observed extraordinary diligence [Art. 1756, NCC].
2000, NCC].
2. The common carrier cannot free himself from Note: It is not enough that the accident was caused by force
responsibility by posting notices to the effect that he is majeure, the common carrier must still prove that it was not
not liable for the articles brought by the passenger. negligent in causing the injuries resulting from such
3. Any stipulation whereby the responsibility of the accident. [Bachelor Express v. CA, G.R. No. 85691 (1990)]
common carrier as set forth in Articles 1998-2001 is Bachelor Express illustrates that force majeure is not itself
suppressed or diminished shall be void [Art. 2003, a defense; the exercise of the diligence required by law is
NCC]. the defense.

Void Stipulations
General rule: The responsibility of a common carrier for the
safety of passengers cannot be dispensed with or lessened
by stipulation by the posting of notices, by statements on
tickets, or otherwise [Art. 1757, NCC].

Exception: When a passenger is carried gratuitously, a


stipulation limiting the common carrier’s liability for
negligence is valid [Art 1758, NCC].

Exception to the exception: Even when a passenger is


carried gratuitously, a stipulation limiting the common
carrier’s liability for willful acts or gross negligence is
invalid [Art 1758, NCC].

The reduction of fare does not justify any limitation of the


common carrier’s liability [Art. 1758, NCC].

Duration of Liability
As in the contract of carriage for goods, the perfection of
the contract of carriage of passengers does not necessarily
coincide with the commencement of the duty of
extraordinary diligence. It may occur at the same time or
later.

Based on jurisprudence, the duty that the carrier of


passengers owes to its patrons extends to persons
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

boarding the cars as well as those alighting therefrom [Del the situation in view, will increase the peril by accelerating
Prado v. Manila Electric Company, G.R. No. L-29462 the speed of the car before he is planted safely on the
(1929)]. platform [Del Prado v. Manila Electric Company, G.R. No. L-
29462 (1929)].
This is also reflected in [Art. 17, Warsaw Convention], which
applies to international air carriage. It provides that the Thus, it is the duty of common carriers of passengers to
liability of a common carrier for injury to the passenger stop their conveyances at a reasonable length of time in
lasts from embarkation to disembarkation, including the order to afford passengers an opportunity to board and
period when the passenger is on board the aircraft. enter, and they are liable for injuries suffered by boarding
passengers resulting from the sudden starting up or jerking
In maritime commerce, [Art. 698, Code of Commerce] of their conveyances while they are doing so [Dangwa
relates to the period of the voyage: Transportation v. CA, G.R. No. 95582 (1991)].
a. In case a voyage already begun should be interrupted:
1. The passengers shall be obliged to pay the fare in With respect to carriage of passengers by trains, the
proportion to the distance covered; and extraordinary responsibility of common carriers
2. If the interruption is due to a fortuitous event, commences the moment the person who purchases the
without right to recover for losses and damages; ticket from the carrier presents himself at the proper place
if caused by the captain exclusively, with a right and in a proper manner to be transported with a bona fide
to indemnity. intent to ride the coach [AQUINO citing Vda. de Nueca, et
b. If the interruption should be caused by the disability of al. vs. Manila Railroad Company].
the vessel, and a passenger should agree to await the
repairs: Similarly, with respect to carriage of passengers by sea, the
1. He may not be required to pay any increased duty of the carrier commences as soon as the person with
price of passage; but bona fide intention of taking passage places himself in the
2. His living expenses during the stay shall be for his care of the carrier or its employees and is accepted as
own account. passenger. [AQUINO]
c. In case of delay in the departure of the vessel, the
passengers have: Arrival at Destination
1. The right to remain on board;
2. If the delay is not due to a fortuitous event or As to the termination of the duty of the common carrier, it
force majeure, with the right to be furnished with has been held that the relation of carrier and passenger
food for the account of the vessel; does not cease at the moment the passenger alights from
3. If the delay should exceed ten days: the carrier’s vehicle at a place selected by the carrier at the
i. Passengers requesting the same shall be point of destination, but continues until the passenger has
entitled to the return of the fare; and had a reasonable time or a reasonable opportunity to leave
ii. If it is due exclusively to the fault of the the carrier’s premises. What is a reasonable time or a
captain or ship agent, they may also reasonable delay within this rule is to be determined from
demand indemnity for losses and all the circumstances:
damages. 1. A person who, after alighting from a train, walks along
the station platform is considered still a passenger;
A vessel exclusively devoted to the transportation of 2. A passenger, who has alighted at his destination and
passengers must take them directly to the port or ports of is proceeding by the usual way to leave the company’s
destination, no matter what the number of passengers may premises, but before actually doing so is halted by the
be, making all the stops indicated in its itinerary. report that his brother, a fellow passenger, has been
shot, and he in good faith and without intent of
a. Waiting for Carrier or Boarding of engaging in the difficulty, returns to relieve his brother,
Carrier is deemed reasonably and necessarily delayed and
thus continues to be a passenger entitled as such to
As to the commencement of the duty of the common the protection of the railroad and company and its
carrier, it was held that the duty that the carrier of agents [La Mallorca v. CA, G.R. No. L-20761 (1966)].
passengers owes to its patrons extends to persons
boarding the cars as well as to those alighting therefrom. In The reasonableness of time should be made to depend on
this connection, however, a person boarding a moving car the attending circumstances of the case, such as the kind
must be taken to assume the risk of injury from boarding of common carrier, the nature of its business, the customs
the car under the conditions open to his view, but he cannot of the place, and so forth, and therefore precludes a
fairly be held to assume the risk that the motorman, having consideration of the time element per se without taking
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

into account such other factors. The primary factor to be reasonable connection between the act and the contract of
considered is the existence of a reasonable cause as will carriage.
justify the presence of the victim on or near the petitioner’s
vessel. Note: The employee must be on duty at the time of the act.

In the case of a shipper, the passengers of vessels are It is enough that the assault happens within the course of
allotted a longer period of time to disembark from the ship the employee’s duty. It is no defense for the carrier that the
than other common carriers such as a passenger bus, since act was done in excess of authority or in disobedience of
such vessels are capable of accommodating a bigger the carrier’s orders. The carrier’s liability here is absolute in
volume of both passenger and baggage as compared to the the sense that it practically secures the passengers from
capacity of a regular commuter bus. Consequently, a ship assaults committed by its own employees [Maranan v.
passenger will need at least an hour as is the usual Perez, G.R. No. L-22272 (1967)].
practice, to disembark from the vessel and claim his
baggage whereas a bus passenger can easily get off the Exception: A common carrier is not responsible for acts
bus and retrieve his luggage in a very short period of time falling under force majeure.
[Aboitiz Shipping v. CA, G.R. No. 84458 (1989)].
When a party is unable to fulfill his obligation because of
The relation of carrier and passenger continues until the force majeure, the general rule is that he cannot be held
latter has been landed at the port of destination and has liable for damages for non-performance [Japan Airlines vs.
left the carrier’s premises. Hence, the carrier necessarily CA, G.R. No. 118664 (1998)].
would still have to exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of its Note: In order to be exempted from liability due to a
stranded passengers until they have reached their final fortuitous event, a common carrier must still prove that it
destination [PAL v. CA, G.R. No. L-82619 (1993)]. was not negligent in causing the death or injury resulting
from an accident. In other words, there must be a complete
Note: Despite the Court’s pronouncement in PAL v. CA, note exclusion of human agency from the cause of injury or
that common carriers are bound to observe extraordinary death. Hence, it was held that, under the circumstances,
diligence in the ‘safety’ of its passengers. The law does not the explosion of the new tire may not be considered a
mention the words ‘comfort’ and ‘convenience.’ fortuitous event as there are human factors involved in the
situation [Yobido v. CA, G.R. No. 113003 (1997)].
Liability for Acts of Others
Other Passengers and Strangers
a. Employees General Rule: A common carrier is not liable for injuries
inflicted by strangers or co-passengers.
General rule: Common carriers are liable for the death of or
injuries to passengers through the negligence or willful acts Exception: A common carrier is responsible for injuries
of the former’s employees, although such employees may suffered by a passenger on account of the willful acts or
have acted beyond the scope of their authority or in negligence of other passengers or of strangers, if the
violation of the orders of the common carriers. common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented
This liability does not cease even upon proof that they or stopped the act or omission [Art. 1763, NCC].
exercised all the diligence of a good father of a family in the
selection and supervision of their employees [Art. 1759, Note: The law speaks of injuries suffered by the passenger
NCC]. but not death. However, there appears to be no reason why
the common carrier should not be held liable under such
This liability cannot be eliminated or limited by stipulation, circumstances. The word “injuries” should be interpreted to
by the posting of notices, by statements on the tickets or include death [AGBAYANI (1987)].
otherwise [Art. 1760, NCC].
Under Art. 1763, a tort committed by a stranger which
Ratio: The servant is clothed with delegated authority and causes injury to a passenger does not accord the latter a
charged with the duty to execute the carrier’s undertaking cause of action against the carrier. The negligence for
to carry the passenger safely [AGBAYANI]. Also, the defense which a common carrier is held responsible is the negligent
of diligence in the selection and supervision of employees omission by the carrier’s employees to prevent the tort from
does not obtain because the liability is not based on quasi- being committed when the same could have been foreseen
delict, but on culpa contractual. However, there must be a and prevented by them. Further, when the violation of the
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

contract is due to the willful acts of strangers, the degree of a. Actual or compensatory damages;
care essential to be exercised by the common carrier for the b. Moral damages;
protection of its passenger is only that of a good father of a c. Exemplary damages;
family [Pilapil v. CA, G.R. No. 52159 (1989)]. d. Nominal, temperate, and liquidated damages;
e. Attorney’s fees.
Manufacturers of Equipment
a. Actual or Compensatory Damages
In case of mechanical defects, it was held that while a
carrier is not an insurer of the safety of the passengers, it Actual or compensatory damages refer to adequate
should nevertheless be held to answer for the laws its compensation for such pecuniary loss suffered as duly
equipment if such flaws were at all discoverable. In this proved [Art. 2199, NCC].
connection, the manufacturer of the defective appliance is
considered in law the agent of the carrier, and the good Under Art. 2201, the liability for damages include:
repute of the manufacturer will not relieve the carrier from 1. In case the common carrier acted in good faith:
liability. The rationale of the carrier’s liability is the fact a. The natural and probable consequence of the
that the passenger has no privity with the manufacturer of breach of the obligation; and
the defective equipment; hence, he has no remedy against b. Those which the parties have foreseen or could
him, while the carrier usually has [Necesito vs. Paras, G.R. have reasonably foreseen at the time the
No. L-10605 (1958)]. obligation was constituted;
2. In case of fraud, bad faith, malice or wanton attitude,
Contributory Negligence all damages which may be reasonably attributed to
the non-performance of the obligation.
The passenger must observe the diligence of a good father In case of death, actual damages also include:
of a family to avoid injury to himself [Art. 1761, NCC]. 1. Loss of earning capacity, unless the deceased had no
earning capacity at the time of death; and
The contributory negligence of the passenger does not bar 2. Support for a period not exceeding five years [Art.
recovery of damages for his death or injuries, if the 2206, NCC].
proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably In the absence of a showing that common carrier’s
reduced [Art. 1762, NCC]. attention was called to the special circumstances requiring
prompt delivery of a passenger’s luggage, the common
It is negligence per se for a passenger on a railroad to carrier cannot be held liable for the cancellation of
voluntarily or inadvertently protrude his arm, hand, elbow, passenger’s contracts [for exhibition of films] as it could
or any other part of his body through the window of a not have foreseen such an eventuality when it accepted the
moving car beyond the outer edge of the window or outer luggage for transit [Pan-Am World Airways v. IAC, G.R. No.
surface of the car, so as to come in contact with objects or 70462 (1988)].
obstacles near the track; no recovery can be had for an
injury which but for such negligence would not have been
sustained [Isaac v. A.L. Ammen, G.R. No. L-9671 (1957)].
In this case, the negligence of the passenger was not
contributory, but was the proximate cause of the injury.
Hence, the common carrier was exempted from liability. Moral Damages
Moral damages, though incapable of pecuniary
Extent of Liability for Damages computation, if they are the proximate result of the
common carrier’s wrongful act or omission, may be
Damages recoverable from common carriers, both in cases recovered [Art. 2217, NCC].
of carriage of passengers and goods, shall be awarded in
accordance with Title XVIII concerning Damages. In cases of breach of contract of carriage, moral damages
may be recovered where:
Art. 2206, on liability, in case of death, for loss of earning 1. The common carrier acted fraudulently;
capacity, support, and moral damages for mental anguish, 2. The common carrier acted in bad faith [Art. 2220,
shall also apply to the death of a passenger caused by the NCC];
breach of contract by a common carrier [Art. 1764, NCC]. 3. Death of a passenger resulted even in the absence of
bad faith or fraud [Art. 2206, NCC].
Thus, the damages recoverable are:
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Bad faith contemplates a state of mind affirmatively its amount cannot, from the nature of the case, be proved
operating with furtive design or with some motive of self- with certainty [Art. 2224, NCC].
interest or will or for ulterior purpose [Air France v.
Carrascoso, G.R. No. L-21438 (1966)]. In the case of Philtranco v Paras [G.R. No. 161909(2012)],
the Supreme Court upheld the award of temperate
When it comes to contracts of common carriage, damages by the CA. Paras failed to show receipts of at
inattention and lack of care on the part of the carrier least two surgeries as well as rehabilitative therapy.
resulting in the failure of the passenger to be Nonetheless, the CA was convinced that Paras should not
accommodated in the class contracted for amounts to bad suffer from the lack of definite proof of his actual expenses
faith or fraud which entitles the passenger to the award of for the surgeries and rehabilitative therapy. As the records
moral damages in accordance with Art. 2220 [Ortigas v. indicated, Paras was first rushed for emergency treatment
Lufthansa, G.R. No. L-28773 (1975)]. to the San Pablo Medical Center in San Pablo City, Laguna,
and was later brought to the National Orthopedic Hospital
Willful and deliberate overbooking on the part of the airline in Quezon City where he was diagnosed to have suffered a
carrier constitutes bad faith. Under Section 3, Economic dislocated hip, fracture of the fibula on the right leg,
Regulations No. 7 of the Civil Aeronautics Board, fracture of the small bone of the right leg, and closed
overbooking, which does not exceed ten percent, is not fracture on the tibial plateau of the left leg. He underwent
considered as deliberate and therefore does not amount to surgeries on March 4, 1987 and April 15, 1987 to repair
bad faith [United Airlines v. CA, G.R. No. 124110 (2001)]. the fractures. Thus, the CA awarded to him temperate
damages of P50,000.00 in the absence of definite proof of
Exemplary Damages his actual expenses towards that end.

In a contract of carriage, exemplary damages may be Liquidated damages are those damages agreed upon by
awarded if the common carrier acted in wanton, fraudulent, the parties to a contract, to be paid in case of breach
reckless, oppressive, or malevolent manner [Art. 2232, thereof [Art. 2226, NCC].
NCC].
Attorney’s Fees
Exemplary damages serves as an instrument to serve the
ends of law and public policy by reshaping socially Under Art. 2208, as applicable to a contract of carriage,
deleterious behaviors, specifically, in the case, to compel attorney’s fees and expenses of litigation may be recovered
the common carrier to control their employees, to tame in the following cases:
their reckless instincts, and to force them to take adequate 1. When exemplary damages are awarded;
care of human beings and their property [Mecenas v. CA, 2. When the common carrier’s act or omission has
G.R. No. 88052 (1989)]. compelled the plaintiff to litigate with third persons or
to incur expenses to protect his interest;
Nominal, Temperate, and Liquidated 3. Where the common carrier acted in gross and evident
bad faith in refusing to satisfy the plaintiff’s valid, just
Damages and demandable claim;
4. In any other case where the court deems it just and
Nominal damages are adjudicated in order that a right of equitable that attorney’s fees and expenses of
the plaintiff, which has been violated by the defendant, litigation should be recovered.
may be vindicated or recognized, not for the purpose of
indemnifying the plaintiff for any loss suffered by him [Art.
2221, NCC]. It may be awarded in case of breach of
contract of carriage and in every case where any property
right has been invaded [Art. 2222, NCC].

A violation of the passenger’s right to be treated with


courtesy in accordance with the degree of diligence
required by law to be exercised by every common carrier
entitles the passenger to nominal damages [Saludo v. CA,
G.R. No. 95536 (1922)].

Temperate or moderate damages, which are more than


nominal but less than compensatory damages, may be
recovered when some pecuniary loss has been suffered but
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Bill of Lading
Delivery of Goods
Bill of lading – a written acknowledgement, signed by the
master of a vessel or other authorized agent of the carrier, The goods should be delivered to the consignee or any
that he has received the described goods from the shipper, other person to whom the bill of lading was validly
to be transported on the expressed terms to the described transferred or negotiated.
place of destination, and to be delivered there to the
designated consignee or parties [70 Am. Jur. 2d 924]. The carrier is duty bound to deliver the goods in the same
condition in which, according to the bill of lading, they were
It is not, however, indispensable for the creation of a found at the time of there were received, without damage or
contract of carriage [Compania Maritima v Insurance Co., impairment [Art. 363, COC].
G.R. No. L-18965 (1964)]
a. Period of Delivery
In the absence of a bill of lading, disputes shall be
determined by the legal proofs which the parties may Delivery should be made within the period fixed for the
present in support of their respective claims, according to delivery of the goods as stipulated in the bill of lading [Art.
the general provisions established in the Code of 370, COC].
Commerce for commercial contracts [Art. 354, Code of
Commerce]. In case of failure to deliver, the carrier shall pay the
indemnity agreed upon in the bill of lading, neither the
The bill of lading becomes effective usually upon its shipper nor consignee being entitled to anything else.
delivery to and acceptance by the shipper [ Aquino,
Essentials of Transportation & Public Utilities Law (2011)]. Should there be no period previously fixed, the carrier is
bound to forward the goods in the first shipment of the
In the absence of fraud, concealment, or improper conduct, same or similar merchandise which he may make to the
it is presumed that the stipulations of the bill are known to point of delivery. Should he not do so, he shall be liable for
the shipper, and he is generally bound by his acceptance damages cause by the delay [Art. 358, COC].
whether he reads the bill or not [Magellan Mfg. Marketing
Corp. v. CA, G.R. No. 95529 (1991)]. If no indemnity is fixed and there is delay, the carrier shall
be liable for the damages which may have been caused by
1. Three-Fold Character the delay [Art. 370, COC].

a. Receipt as to the quantity and description of the Period of delivery is Delivery must be made
goods shipped; stipulated within period fixed
b. Contract to transport and deliver the goods to the Delivery must be made
consignee or other person therein designated, on the through the first shipment
terms specified in such instrument; and Period of delivery is NOT of the same or similar
c. Document of title, which makes it a symbol of the stipulated merchandise. If not made
goods. on the first shipment, delay
arises.
The bill of lading constitutes the legal evidence of the
contract of transportation, and all disputes between the Indemnity for delay is fixed Liability is limited to the
parties regarding the execution and performance of the in Bill of Lading stipulation
contract shall be decided by the contents of the bill of Liable for all damages which
Indemnity for delay NOT
lading issued by the carrier. The law admits no exceptions may have been caused by
fixed
other than the falsity and material error in its drafting [Art. the delay.
353, Code of Commerce]
Delivery Without Surrender of Bill of
Bill of Lading is covered by the Parol Evidence Rule in which
the terms of the contract are rendered conclusive upon the
Lading
parties and evidence aliunde is not admissible to vary or
contradict a complete and enforceable agreement After the contract has been complied with, the bill of lading
embodied in a document, subject to well defined which the carrier has issued shall be returned to him, and
exceptions [Magellan Mfg. Marketing Corp. v. CA, G.R. No. by virtue of the exchange of this title with the thing
95529 (1991)]. transported, the respective obligations and actions shall be
considered cancelled, unless in the same act the claim
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

which the parties may wish to reserve be reduced to writing, b. At the time of receipt, if the indications damage can
exception being made of the provisions of Art. 366, on be so ascertained (i.e., patent damage).
period for filing claims [Art. 353, par. 2, COC].
But the Court in [Aboitiz v Insurance Company of North
If, in case of loss or for any other reason whatsoever, the America, GR No. 168402(2008)] made a pro hac vice
consignee cannot return, upon receiving the merchandise, ruling, in that even if the notice was given more than 24 hrs
the bill of lading subscribed by the carrier, he shall give after the receipt of the goods, the notice requirement was
said carrier a receipt for the goods delivered. This receipt held nevertheless to have been complied with, due to the
produces the same effects as the return of the bill of lading peculiar circumstances: “Provisions specifying a time to
[Art. 353, par. 3, COC]. give notice of damage to common carriers are ordinarily to
be given a reasonable and practical, rather than a strict
The surrender of the original bill of lading is not a condition construction. We give due consideration to the fact that the
precedent for a common carrier to be discharged of its final destination of the damaged cargo was a school
contractual obligation. If surrender of the original bill of institution where authorities are bound by rules and
lading is not possible, acknowledgment of the delivery by regulations governing their actions. Understandably, when
signing the delivery receipt suffices [National Trucking and the goods were delivered, the necessary clearance had to
Forwarding Corp v Lorenzo Shipping Corp, G.R. No. be made before the package was opened. Upon opening
153563 (2005)]. and discovery of the damaged condition of the goods, a
report to this effect had to pass through the proper
Refusal of Consignee to Take Delivery channels before it could be finalized and endorsed by the
institution to the claims department of the shipping
The consignee may refuse to take delivery in the following company.”
cases:
1. If only part of the goods transported should be No claim whatsoever shall be admitted against the carrier
delivered, when he proves that he cannot make use with regard to the condition in which the goods transported
thereof without the others [Art. 363, COC]. were delivered:
2. When the goods are rendered useless for purposes of a. After the periods mentioned have elapsed; or
sale or consumption in the use for which they are b. After the transportation charges have been paid.
properly destined, in which case the consignee may
demand payment of the goods at current market The periods mentioned commence upon delivery of cargo
prices [Art. 365, COC]; to the consignee at the place of destination.
3. In case part of the goods is in good condition and
separation is possible, the consignee may refuse to Thus, Art. 366 is limited to cases of claims for damage to
receive only the damaged goods [Art. 365, COC]. goods actually turned over by the carrier and received by
4. Where the delay is through the fault of the carrier [Art. the consignee. It does not apply to misdelivery of goods.
371, COC].
Failure to file a claim bars recovery [Aquino (2011)].
In case of dispute as to the condition of the goods, the
same shall be examined by experts appointed by the Ratio: The rule protects the carrier by affording it an
parties, and the third one, in case of disagreement, opportunity to make an investigation of a claim while the
appointed by the judicial authority. matter is still fresh and easily investigated so as to
safeguard itself from false and fraudulent claims [UCPB
If the persons interested should not agree with the report, General Ins. Co., Inc. v. Aboitiz Shipping, G.R. No. 168433
said judicial authority shall order the deposits of the (2009)].
merchandise in a safe warehouse, and the parties
interested shall make use of their rights in the proper The validity of a contractual limitation of time for filing a
manner. [Art. 367, COC]. suit against a carrier that is shorter than the statutory
period has been generally held valid as such stipulation
merely affects the shipper’s remedy and does not affect the
Period for Filing Claims liability of the carrier. In the absence of any statutory
limitation and subject only to the requirement on the
Pursuant to Art. 366, Code of Commerce, a claim, on reasonableness of the stipulated limitation period, the
account of damage found upon opening the packages, parties to a contract of carriage may fix by agreement a
must be made against the carrier: shorter time for the bringing of suit on a claim for the loss of
a. Within 24 hours, if the indications of the damage or damage to the shipment than that provided by the
cannot be ascertained from the exterior of the statute of limitations. Such limitation is not contrary to
packages (i.e., latent damage); or public policy for it does not in any way defeat the complete
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

vestiture of the right to recover, but merely requires the transport, but nothing contracts for carriage of
assertion of that right by action at an earlier period than stops parties from goods by sea to Philippine
would be necessary to defeat it through the operation of the stipulating that COGSA ports in foreign trade
ordinary statute of limitations. [PHILAMGEN v. Sweet Lines, applies in their contract)
Inc., G.R. No. 87434 (1992)]. File claim for apparent loss: upon receipt
File claim within 24 hours File claim within 3 days
The value of the goods stated in the bill of lading is from delivery if damage or from delivery if damage or
conclusive between the parties, and the shipper is not loss is not apparent loss is not apparent
allowed to prove a higher value [Art. 372, COC]. It is only Filing of the claim is
when the carrier’s fault is so gross as to amount to actual mandatory; condition
fraud that the actual amount of the losses an damages Not mandatory
precedent for filing of
suffered may be proved by the shipper against the carrier. action for damages
Prescriptive period to file Prescriptive period to file
Horses, vehicles, vessels and equipment used by the carrier an action: 10 years from an action: 1 year from
serves as liens for the payment of the value of the goods breach (if bill of discharge of goods, or date
which the carrier must pay in case of loss or misplacement lading/written when they should have
[Art. 372, COC]. receipt/contract is issued), been delivered.
6 years if only through oral 1 year period may be
Period for Filing Actions contract extended by stipulation.

a. Overland Transportation and False Declaration of Contents


Coastwise Shipping If the carrier has a well-founded suspicion of falsity in the
declaration of the contents of the package, the carrier may
The general rules under the Civil Code on extinctive examine it. If the declaration should be correct,
prescription apply. Thus, action for damages must be filed examination and repacking expenses shall be defrayed by
in court: the carrier, and in the contrary, by the shipper [Art. 357,
1. Within 6 years, if a bill of lading was not issued [Art. COC].
1145, NCC].
2. Within 10 years, if a bill of lading was issued [Art.
1146, NCC].
International Carriage of Goods by Sea
Suit must be brought within one year:
1. After delivery of the goods; or
2. From the date when the goods should have been
delivered.

Otherwise, the carrier and the ship shall be discharged


from all liability in respect of loss or damage.

The absence of notice shall not affect or prejudice the right


of the shipper to bring suit within one year after the delivery
of the goods or the date when the goods should have been
delivered [Section 3(6), Carriage of Goods by Sea Act].

The period for filing the claim is one year, in accordance


with the Carriage of Goods by Sea Act. The COGSA, as
adopted and embodied in CA No. 65, applies because it is
a special law, and, as such, prevails over the general
provisions of the Civil Code on prescription of actions
[Maritime Agencies & Services, Inc. v. CA, G.R. No. 77638
(1990) ].

Code of Commerce COGSA


Primarily governs domestic Applicable law for all
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Admiralty and Maritime Commerce A charter party is a consensual contract which can be
dissolved by means of indemnity for losses and damages;
while a bill of lading is a real contract which exists only
Concept after delivery of the goods to be transported is made.
The concept of admiralty, as distinguished from overland
transportation, depends on: Liabilities arising from breach is identical to overland
3. Size of the vessel; and transport.
4. Size of the body of water over which such vessel
traverses. TOWAGE is not a charter party. It is a contract for the hire of
services by which a vessel is engaged to tow another vessel
Under B.P. 129, jurisdiction over admiralty cases depends from one port to another for consideration.
on the amount, and not on the nature of the claim. Hence,
jurisdiction is with the MTC if the amount of the claim does In modern maritime law and usage, there are three
not exceed Php 300,000 outside Metro Manila or Php distinguishable types of charter parties:
400,000 in Metro Manila. Otherwise, jurisdiction is with a. Bareboat or demise charter;
the RTC. b. Time charter; and
c. Voyage or trip charter [Litonjua Shipping, Inc. v.
Vessel National Seamen Board, G.R. No. L-51910 (1989)].
Vessels are those engaged in navigation, whether
coastwise or on the high seas destined for the services of Note: Both time and voyage charters are said to be
the industry or maritime commerce. contracts of affreightment, where a common or public
carrier is not converted into a private carrier.
The word ‘vessel’ used in the Code of Commerce was not
intended to include all ships, craft, or floating structures of CONTRACT OF AFFREIGHTMENT – one in which the owner of
every kind without limitation [Lopez v. Duruelo, G.R. No. L- the vessel leases part or all of its space to haul goods for
29166 (1928)]. others. It is a contract for special service to be rendered by
the owner of the vessel and under such contract the general
Vessels are considered personal or movable property [Art. owner retains the possession, command and navigation of
585]; but they partake to a certain extent, of the nature and the ship, the charterer or freighter merely having use of the
conditions of real property, on account of their value and space in the vessel in return for his payment of the charter
importance in the world of commerce. hire. If the charter is a contract of affreightment, which
leaves the general owner in possession of the ship as owner
Vessel of domestic ownership and of more than 15 tons for the voyage, the rights, responsibilities of ownership rest
gross is required to acquire a certificate of Philippine on the owner and the charterer is usually free from liability
register. The purpose of the certificate is declare the to third persons in respect of the ship [Puromines Inc. v. CA,
nationality of a vessel engaged in trade with foreign nations G.R. No. 91228 (1993)].
and to enable her to assert that nationality wherever found.
BAREBOAT DISTINGUISHED FROM CONTRACT OF
1. Charter Parties AFFREIGHTMENT
Demise or Bareboat Contract of Affreightment
Charterer becomes liable Owner remains liable as
CHARTER PARTY – a contract by virtue of which the owner or
to others caused by its carrier and must answer for
agent of a vessel binds himself to transport merchandise or
negligence any breach of duty
persons for a fixed price.
Charterer regarded as
Charterer is not regarded as
owner pro hac vice for the
It is a contract whereby the whole or part of the ship is let by owner
voyage
the owner to a merchant or other person for a specified
time or use for the conveyance of goods, in consideration of Owner of vessel
The vessel owner retains
the payment of freight [Caltex v. Sulpicio Lines, G.R. No. relinquishes possession,
possession, command, and
131166 (1999)]. command, and navigation
navigation of the ship
to charterer
BILL OF LADING DISTINGUISHED FROM A CHARTER PARTY Common carrier is Common carrier is not
A charter party is a complete contract, while a bill of lading converted to private carrier converted to private carrier
is a private receipt which the captain gives to accredit that
such goods belong to such persons. Persons who make a charter
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

a. Owner or owners of the vessel, either in whole or in the owner of the vessel in all important aspects during the
part, who have legal control and possession of the duration of the charter [Puromines Inc. v. CA, G.R. No.
vessel; 91228 (1993)].
b. Charterer may subcharter entire vessel to 3rd person
only if not prohibited in original charter [Art 679, Time Charter
COC];
c. Ship agent if authorized by the owner/s or given such Time charter – a contract for the use of a vessel for a
power in the certificate of appointment [Art 598, specified period of time or for the duration of one or more
COC]; or specified voyages.
d. Captain in the absence of the ship agent or consignee
and only if he acts in accordance with the instructions In this case, the owner of a time-chartered vessel retains
of the agent or owner and protects the latter’s interest possession and control through the master and crew, who
[Art 609, COC]. remain his employees. What the time charterer acquires is
the right to utilize the carrying capacity and facilities of the
Requisites for a valid charter party vessel and to designate her destinations during the term of
a. Consent of the contracting parties; the charter [Litonjua Shipping Co., Inc. v. National Seamen
b. Existing vessel which should be placed at the Board, G.R. No. L-51910(1898)].
disposition of the shipper;
c. Freight; and
d. Compliance with the formal requisites under Article Voyage or Trip Charter
652 of the Code of Commerce which include the
requirement that the charter party must be in (a) In a voyage charter, the vessel is leased for a single or
writing, (b) drawn in duplicate, and (c) signed by the particular voyage. The master and crew remain the employ
parties [AQUINO (2016)]. of the owner of the vessel [Litonjua Shipping Co., Inc. v.
National Seamen Board, G.R. No. L-51910(1898)].
a. Bareboat or Demise Charter
Liability of Ship Owners and
In a bareboat or demise charter, the ship owner leases to
the charterer the whole vessel, transferring to the latter the
Shipping Agents
entire command, possession and consequent control over
the vessel’s navigation, including the master and the crew, The persons participating in maritime commerce are the
who thereby become the charterer’s “servants” [AQUINO following:
(2011)]. a. Ship owners or ship agents
b. Captains and masters
To create a demise, the owner of a vessel must completely c. Other officers and crew
and exclusively relinquish possession, command and d. Supercargoes
navigation thereof to the charterer, anything short of such a
complete transfer is a contract of affreightment (time or Ship Owner - has possession, control and management of
voyage charter party) or not a charter party at all. the vessel and the consequent right to direct her navigation
and receive freight earned and paid, while his possession
Although a charter party may transform a common carrier continues; he is the person who is primarily liable for
into a private one, the same, however, is not true in a damages sustained in the operation of the vessel, based on
contract of affreightment on account of the distinctions the provisions of the Code of Commerce.
between a contract of affreightment and a demise or
bareboat charter [Puromines Inc. v. CA, G.R. No. 91228 Ship Agent - the person entrusted with the provisioning of a
(1993)]. vessel, or who represents her in the port in which she
happens to be [Art. 586, COC].
Note: In a bareboat or demise charter, the common carrier
is converted to private carrier. Based on the definition of the ship agent in the Code of
Commerce, it is evident that the ship agent is jointly and
The charterer, to whom the owner of the vessel severally liable with the owner. The joint and several liability
relinquishes, completely and exclusively, the possession, applies both for breach of contract and extra-contractual
command and navigation of the vessel, by virtue of a obligation such as tort. The ship agent, even though he is
demise charter, is considered the owner pro hac vice. He not the owner, is liable in every way to the creditor for
mans and equips the vessel and assumes all responsibility losses and damages, without prejudice to the right of the
for navigation, management and operation. He thus acts as owner, the vessel and its equipment and freight [AQUINO
(2016)].
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

The captain shall be liable to the agent, and the latter to


Captains - those who govern vessels that navigate the high third persons [Art. 618, COC]:
seas or ships of large dimensions and importance, 1. For all the damages suffered by the vessel and his
although they may be engaged in coastwise trade. cargo by reason of want of skill or negligence on his
part;
Masters - those who command smaller ships engaged 2. For all the thefts committed by the crew, reserving his
exclusively in coastwise trade. In maritime commerce, right of action against the guilty parties;
masters and captains are the same. 3. For the losses, fines, and confiscations imposed on
account of violation of the laws and regulations of
Crew - a person on board who is involved in highly technical customs, police, health, and navigation;
tasks and in manning of the vessel (e.g. master, mate). 4. For the losses and damages caused by mutinies on
board the vessel, or by reason of faults committed by
Complement - a person, not a crew, who is not directly the crew in the service and defense of the same, if he
involved in the manning of the vessel (e.g. cook). does not prove that he made full use of his authority to
prevent or avoid them;
Supercargo - a person on board the vessel, who functions 5. For those arising by reason of an undue use of powers
as an agent of the owner of the goods shipped as cargo on and non-fulfillment of the obligations which are his;
a vessel, who has charge of the cargo on board, sells the 6. For those arising by reason of his going out of his
same to the best advantage in the foreign markets, buys course or taking a course which he should not have
cargo to be brought back on the return voyage of the ship, taken without sufficient cause, in the opinion of the
and comes home with it. officers of the vessel at a meeting with the shippers or
supercargoes who may be on board;
The powers and liabilities of the captain shall cease, when 7. For those arising by reason of his voluntarily entering a
there is a supercargo, with regard to that part of the port other than that of his destination;
administration legitimately conferred upon the latter, but 8. For those arising by reason of non-observance of the
shall continue in force for all acts which are inseparable provisions contained in the regulations on situation of
from his authority and office [Art. 649, COC]. lights and maneuvers for the purpose of preventing
collisions.
The ship owner or ship agent is liable:
a. For the acts of the captain, unless the latter exceeds Limited Liability Rule
his authority [Art. 586, COC].
b. For contracts entered into by the captain to repair, THE DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE)
equip and provision the vessel, provided that the The real and hypothecary nature of maritime law simply
amount claimed was invested for the benefit of the means that the liability of the carrier in connection with
vessel [Art. 586, COC]. losses related to maritime contracts is confined to the
c. For the indemnities in favor of third persons which may vessel, which is hypothecated for such obligations or which
arise from the conduct of the captain in the care of the stands as the guaranty for their settlement.
goods transported, as well as for the safety of
passengers transported [Art. 587, COC]. It has its origin by reason of the conditions and risks
d. For damages to third persons for tort or quasi-delict attending maritime trade in its earliest years when such
committed by the captain, except collision with trade was replete with innumerable and unknown hazards
another vessel [Art. 1759, NCC] since vessels had to go through largely uncharted waters to
e. For damages in case of collision due to the fault, ply their trade. It was designed to offset such adverse
negligence, or want of skill of the captain, sailing conditions and to encourage people and entities to venture
mate, or any other member of the complement [Art. into maritime commerce despite the risks and the
826, COC]. prohibitive cost of shipbuilding.

a. Liability for Acts of Captain Thus, the liability of the vessel owner and agent arising
from the operation of such vessel were confined to the
Three (3) distinct roles of a captain: vessel itself, its equipment, freight, and insurance, if any,
1. General agent of the ship owner; which limitation served to induce capitalists into effectively
2. Commander and technical director of the vessel; wagering their resources against the consideration of the
3. Representative of the country under whose flag he large profits attainable in the trade [Aboitiz Shipping Corp.
navigates [Inter-Orient Marine Enterprises v. NLRC, v. General Accident Fire and Life Assurance Corp., G.R. No.
G.R. No. 115286 (1994)]. 100446 (1993)].
Thus, under the doctrine of abandonment:
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

1. The agent shall be civilly liable for the indemnities in


favor of third persons which arise from the conduct of
Accidents and Damages in
the captain in the care of the goods which the vessel Maritime Commerce
carried, but he may exempt himself therefrom by
abandoning the vessel with all her equipment and the
freight he may have earned during the voyage [Art.
a. Averages
587, COC];
2. The owners of a vessel shall be civilly liable in the The following shall be considered averages:
proportion of their contribution to the common fund, 1. All extraordinary or accidental expenses incurred
for the results of the acts of the captain, referred to in during the navigation for the preservation of the vessel
Art. 587. Each part owner may exempt himself from or cargo, or both;
this liability by the abandonment before a notary of 2. All damages or deterioration the vessel may suffer
the part of the vessel belonging to him [Art. 590, from the time she puts to sea from the port of
COC]. departure until she casts anchor in the port of
3. In case of collision, the liability of the ship owner shall destination, and those suffered by the merchandise
be understood as limited to the value of the vessel from the time it is loaded in the port of shipment until
with all her appurtenances and all the freight earned it is unloaded in the port of consignment [Art. 806,
during the voyage [Art. 837, COC]. COC].
4. If the vessel and her freight should be totally lost, by
reason of capture or wreck, all rights of the crew to There are two kinds of averages:
demand any wages whatsoever shall be extinguished, 1. Particular or simple average; and
as well as the agent for the recovery of the advances 2. Gross or general average.
made [Art. 643, COC].
Averages pertain to expenses and damages:
If the ship owner or agent may in any way be held civilly 1. Expense – to constitute an average, an expense must
liable at all for injury to or death of passengers arising from be:
the negligence of the captain in cases of collisions or a. Extraordinary or accidental
shipwrecks, his liability is merely co-extensive with his b. Incurred during the voyage, and
interest in the vessel such that a total loss thereof results in c. Incurred in order to preserve the vessel, the
its extinction. This is based on the exclusively “real and cargo, or both.
hypothecary nature” of maritime law, which operates to 2. Damages or Deterioration – to constitute and average,
limit such liability to the value of the vessel, or to the it must:
insurance thereon, if any. [Yangco v. Laserna, G.R. No. L- a. Have been suffered from the time the vessel put
47447 (1941)] to sea from the port of departure until it casts
anchor in the port of destination, and
b. Have been suffered by the merchandise from the
Exceptions to the Limited Liability Rule time they are loaded in the port of shipment until
they are unloaded in the port of consignment.
1. Claims under the Workmen’s Compensation Act
[Abueg v. San Diego, G.R. No. L-773 (1946)]; PARTICULAR AVERAGE
2. Expenses for repairing, provisioning and equipping the Particular or simple averages shall include all damages
vessel [Government v Insular Maritime, G.R. No. L- and expenses caused to the vessel or cargo that did not
21495 (1924)]; inure to the common benefit and profit of all persons
3. There is an actual finding of negligence on the part of interested in the vessel and her cargo [Art. 809, COC].
the vessel owner or agent [Aboitiz Shipping v. General
Accident Fire and Life Assurance Corp., G.R. No. The owner of the goods which gave rise to the expense or
100446 (1993) ]; suffered the damage shall bear this average [Art. 810,
4. Vessel is insured, to the extent of the insurance COC].
proceeds [Vasquez v. CA, G.R. No. L-42926 (1985)];
5. There was no total loss and the vessel is not GENERAL AVERAGE
abandoned [Yangco v. Laserna, G.R. No. L-47447 General or gross averages shall include all the damages
(1941)]; and expenses which are deliberately caused in order to
6. Collision between two negligent vessels. save the vessel, her cargo, or both at the same time, from a
real and known risk [Art. 811, COC].

The gross or general average shall be borne by those who


benefited from the sacrifice. These include the ship owner
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

and the owners of the cargoes that were saved. 8. The expenses of curing and maintaining the members
Contribution may also be imposed on the insurers of the of the crew who may have been wounded or crippled in
vessel or cargoes that were saved, as well as lenders on defending or saving the vessel;
bottomry or respondentia. 9. The wages of any member of the crew detained as
hostage by enemies, privateers, or pirates, and the
Requisites necessary expenses which he may incur in his
1. There must be a common danger; imprisonment, until he is returned to the vessel or to
2. That for the common safety, part of the vessel or of the his domicile, should he prefer it;
cargo or both is sacrificed deliberately; 10. The wages and victuals of the crew of a vessel
3. That from the expenses or damages caused follows chartered by the month during the time it should be
the successful saving of the vessel and cargo; and embargoed or detained by force majeure or by order of
4. That the expenses or damages should have been the Government, or in order to repair the damage
incurred or inflicted after taking proper legal steps and caused for the common good;
authority [Magsaysay, Inc. v. Agan, G.R. No. L-6393 11. The loss suffered in the value of the goods sold at
(1955)]. arrivals under stress in order to repair the vessel
because of gross average;
Common danger means both the ship and the cargo, after 12. The expenses of the liquidation of the average [Art.
it has been loaded, are subject to the same danger, 811];
whether during the voyage, or in the port of loading or 13. If in lightening a vessel on account of a storm, in order
unloading, that the danger arises from the accidents of the to facilitate her entry into a port or roadstead, part of
sea, dispositions of the authority, or faults of men, provided her cargo should be transferred to lighters or barges
that the circumstances producing the peril should be and be lost, the owner of said part shall be entitled to
ascertained and imminent or may rationally be said to be indemnity, as if the loss has originated from a gross
certain and imminent. This last requirement excludes average [Art. 817];
measures undertaken against a distant peril [ Magsaysay, 14. If, as a necessary measure to extinguish a fire in a
Inc. v. Agan, G.R. No. L-6393 (1955)]. port; roadstead; creek, or bay, it should be decided to
sink any vessel, this loss shall be considered gross
Note: When a vessel is stranded unintentionally, the average, to which the vessels saved shall contribute.
damages incurred cannot constitute general averages.
Jettison
Cases of general average The captain shall direct the jettison, and shall order the
1. The goods or cash invested in the redemption of the goods cast overboard in the following order:
vessel or cargo captured by enemies, privateers, or 1. Goods on deck - beginning with those which
pirates, and the provisions, wages, and expenses of embarrass the maneuver or damage the vessel,
the vessel detained during the time the arrangement preferring if possible, the heaviest ones with the least
or redemption is taking place; utility and value;
2. The goods jettisoned to lighten the vessel, whether 2. Goods below the upper deck - always beginning with
they belong to the vessel, to the cargo, or to the crew, those of the greatest weight and smallest value, to the
and the damage suffered through said act by the amount and number absolutely indispensable [Art.
goods kept; 815].
3. The cables and masts which are cut or rendered
useless, the anchors and the chains which are To include the goods jettisoned in the general or gross
abandoned in order to save the cargo, the vessel, or average, the existence of the cargo or goods must be
both; proved:
4. The expenses of removing or transferring a portion of 1. For cargo – by means of bill of lading;
the cargo in order to lighten the vessel and place her 2. For good belonging to the vessel – by means the
in condition to enter a port or roadstead, and the inventory prepared prior to departure [Art. 816].
damage resulting therefrom to the goods removed or
transferred; Jason clause
5. The damage suffered by the goods of the cargo Jason clause is a provision in the contract of carriage that
through the opening made in the vessel in order to requires the cargo owners to contribute in general average
drain her and prevent her sinking; though the event which gave rise to the sacrifice or
6. The expenses caused through floating a vessel expenditure may have been due to the fault of one of the
intentionally stranded for the purpose of saving her; parties to the adventure [Rule D, York Antwerp Rules].
7. The damage caused to the vessel which it is necessary Although the Code of Commerce provisions on averages are
to break open, scuttle, or smash in order to save the still in force, the parties may, by stipulation in the charter
cargo; party or any written agreement, agree that the York-Antwerp
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

Rules shall be applied. In addition, the York-Antwerp Rules


may also be used to solve controversies where no provision In some respect, however, the rules that apply to quasi-
in the Code of Commerce is in point because said rules delict cannot be applied to collision cases. For example,
embody the custom of maritime states [AQUINO (2016)]. the view is that the doctrine of last clear chance and the
rule on contributory negligence cannot be applied in
Procedure for recovery collision cases because of Art. 827 of the Code of
1. Assembly and deliberation with the sailing mate and Commerce.
other officers;
2. Resolution of the captain adopted; Thus if both vessels were negligently operated, it does not
3. Hearing of the persons interested. In case an matter if the other has the last clear chance of avoiding the
interested person should not be heard, he shall not injury because under Article 827, each must suffer its own
contribute to the gross average[Art 813, COC]; damage if both of them are negligent [C.B. Williams v.
4. Resolution to be entered in the log book, stating the Teodoro Yanco, G.R. No. L-8325 (1914)].
motives and reasons therefore as well as the votes and
reason for disagreement[Art 814, COC]; Similarly, proof that the plaintiff was negligent will bar
5. Minutes to be signed by all the persons present or in recovery from the defendant in collision cases even if the
urgent cases, the captain; plaintiff’s negligence can be classified as merely
6. Captain shall deliver one copy of the minutes to the contributory [Gorgonio De Sarasola v. Yu Biao Sontua, G.R.
maritime judicial authority of the first port he may No. 22630 (1925)].
make within 24 hours [Art. 814, COC];
7. Captain shall ratify the minutes under oath [Art. 814, Classes of Collision:
COC]. 1. Fortuitous - none was at fault;
2. Culpable - one or more vessels were at fault;
Collisions 3. Inscrutable Fault - it cannot be determined which of
the vessels was at fault.
Collision is an impact or sudden contact between two
moving vessels [AQUINO (2011)]. FORTUITOUS
When it is due to a fortuitous event or force majeure, each
Allision is the striking of a moving vessel against one that is vessel and its cargo shall bear its own damages [Art. 830,
stationary. COC].

The steamer’s greater facility of maneuvering over a sail When, by reason of force majeure, a vessel properly
vessel means it has the greater ability to avoid collisions; anchored and moored collides with another, the injury
so as a general rule, when meeting a sailing vessel, whether occasioned shall be looked upon as particular average to
close hauled or with the wind free, the sail vessel has a the vessel run into [Art. 832, COC].
right to keep her course, and it is the duty of the steamer to
adopt precautions as will avoid the sail vessel […] Subject CULPABLE
to the general rules of evidence in collision cases as to the When only one vessel is at fault, the owner of the vessel at
burden of proof, in the case of a collision between a steam fault shall indemnify the losses and damages suffered,
vessel and a sail vessel, the presumption is against the after an expert appraisal.
steam vessel, and she must show that she took the proper
measures to avoid a collision. [A. Urrutia & Co. v. Baco When both vessels are at fault , each shall suffer its own
River Plantation Co, G.R. No. L-7675. [1913)]. damages, and both shall be solidarily responsible for the
losses and damages occasioned to their cargoes [Art. 826,
When 2 power-driven vessels are meeting head on, or COC].
nearly head on, so as to involve risk of collision, each shall
alter her course to starboard (right side), so that each may Note: The ship owners cannot successfully maintain an
pass on the port (left) side of the other. [ Smith Bell and Co. action against the other for the loss or injury to his vessel.
v. CA, G.R. No. L-56294 (1991)].
When a third vessel at fault, the owner of the third vessel
Note: Although the liability with respect to collision is not shall indemnify the losses and damages caused, the
governed by quasi-delict, liability in collision cases is still captain thereof being civilly liable to said owner [Art. 831,
negligence based. In other words, courts are still called COC].
upon to determine the negligence of the persons involved
in order to impose liability. The person who caused the INSCRUTABLE FAULT
injury is both civilly and criminally liable [AQUINO (2016)]. In case of inscrutable fault, that is, if it cannot be decided
which of the two vessels was the cause of the collision,
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

each shall bear his own damage and both shall be jointly insufficiently repaired and equipped, the ship agent or the
responsible for the losses and damages suffered by their shippers may demand indemnity from said captain. [Art.
cargoes [Art. 828, COC]. 841, COC].

Arrival under stress Salvage


Arrival under stress is the arrival of a vessel at the nearest Salvage is defined as the service which one person renders
and most convenient port instead of the port of destination, to the owner of a ship or goods, by his own labor, preserving
if during the voyage the vessel cannot continue the trip to the goods or the ship which the owner or those entrusted
the port of destination. with the care of them have either abandoned in distress at
sea, or are unable to protect and secure. It is founded on
It is lawful when the inability to continue voyage is due to equity and is compensation for actual services rendered.
[Art 819, COC]:
1. Lack of provisions; Three elements are necessary to a valid salvage claim:
2. Well-founded fear of seizure, privateers, or pirates; or 1. A marine peril;
3. Any accident of the sea disabling it to navigate. 2. Service voluntarily rendered when not required as an
existing duty or from a special contract; and
It is unlawful when [Art 820, COC]: 3. Success, in whole or in part, or that the service
1. The lack of provisions should arise from the failure to rendered contributed to such success [Erlanger &
take the necessary provisions for the voyage, Galinger v. Swedish East Asiatic Co. Ltd, G.R. No. L-
according to usage and custom, or if they should have 10051 (1916)].
been rendered useless or lost through bad stowage or
negligence in their care; The goods saved from the wreck shall be specially bound
2. The risk of enemies, privateers, or pirates should not for the payment of the expenses of the respective salvage,
have been well known or manifest, and based on and the amount thereof must be paid by the owners of the
positive and justifiable facts; former before they are delivered to them [Art. 842].
3. The injury to the vessel should have been caused by
reason of her not being repaired, rigged, equipped, Where a personal action is brought by the salvor against
and arranged in a convenient manner for the voyage, the owner of the ship, the liability of the latter is limited to
or by reason of some erroneous order of the captain; such part of the salvage compensation due for the entire
or service as is proportionate to the value of the ship.
4. Malice, negligence, want of foresight, or lack of skill
on the part of the captain is the reason for the act Derelict Required
causing the damage.
The requirement of Section 1 of the Salvage Law that the
The captain has the duty to continue the voyage without vessel sought to be salvaged is shipwrecked beyond the
delay after the cause of the arrival under stress has ceased, control of the crew or abandoned, is present when the
otherwise, he shall be liable for damages caused by the vessel is considered a derelict AQUINO (2016)].
delay [Art. 825, COC].
A derelict is defined as a ship or her cargo which is
abandoned and deserted at sea by those who were in
Note: Expenses for arrival under stress are particular
charge of it, without any hope of recovering it (sine spe
averages Art. 821, COC].
recuperandi), or without any intention of returning it (sine
animo revertendi)
Shipwrecks
If those in charge left with the intention of returning, or of
Shipwreck denotes loss or wreck of a vessel at sea as a procuring assistance, the property is derelict, but if they
consequence of running against another vessel or thing at quitted the property with the intention of finally leaving it, it
sea or on coast where the vessel is rendered incapable of is derelict, and a change of their intention and an attempt
navigation. to return will not change its nature [Erlanger & Galinger v.
Swedish East Asiatic Co. Ltd, G.R. No. L-10051 (1916)]
The losses and deterioration suffered by the vessel and her
cargo shall be individually for the account of the owners Distinction between salvage and towage:
[Art. 840, COC].
Towage – a vessel is engaged to tow another vessel from
If the wreck was due to malice, negligence or lack of skill of one port to another for consideration.
the captain, or because the vessel put to sea was
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

In contract for towage, the crew does not have any interest Under Section 3(6), COGSA, a failure to file a notice of
or rights with the remuneration pursuant to the contract; claim within three (3) days will not bar recovery if it is
only the owner of the towing vessel is entitled to nonetheless filed within one year. This one-year prescriptive
remuneration. period also applies to the shipper, the consignee, the
insurer of the goods or any legal holder of the bill of lading.
Salvage – a person preserves the goods or the ship which Inasmuch as the neither the Civil Code nor the Code of
the owner either abandoned in distress at sea, or is unable Commerce states a specific prescriptive period on the
to protect and secure. matter, the COGSA may be applied [Belgian Overseas
Chartering and Shipping v. Philippine First Ins. Co, G.R. No.
In salvage, the crew of the salvaging ship is entitled to 143133 (2002)].
salvage, and can look to the salvage vessel for its share
[Barrios v. Go Thong, G.R. No. L-17192 (1963)]. Note: In the Warsaw Convention, as well as the Code of
Commerce, the notice requirement is a condition
Carriage of Goods by Sea Act precedent for the right of action against the shipowner to
accrue.

a. Application Period of Prescription


COGSA [Commonwealth Act No. 65] is a special law that
The carrier and the ship shall be discharged from all
governs all contracts of carriage of goods by sea between
liability in respect of loss or damage unless suit is brought
or to and from the Philippine ports.
within one year after delivery of the goods or the date when
the goods should have been delivered.
Its application is according to the following scheme:
Common Carrier Private carrier
The absence of a notice shall not affect or prejudice the
Coming to the Philippines from foreign trade* right of the shipper to bring suit within one year after the
1. New Civil Code 1. COGSA delivery of the goods or the date when the goods should
(Common Carriers) 2. Code of Commerce have been delivered [Section 3 (6), COGSA].
2. COGSA 3. New Civil Code
3. Code of Commerce (Provisions NOT on COGSA, as a special law, prevails over the general
common carriers, i.e. provisions of the Civil Code on prescription of actions
torts, contracts) [Maritime Agencies & Services, Inc. v. CA, G.R. No. 77638
From Philippines to foreign country (1990)].
Apply laws of such foreign country [1753, NCC]

* Nothing stops parties from stipulating that COGSA shall


Limitation of Liability
primarily apply; even domestic carriers can stipulate such.
With respect to vessels destined for foreign ports, the Under Section 4(5), COGSA, the limit is set at a maximum
COGSA does not apply unless parties make it applicable. of $500 per package or customary freight unit.

Under Art. 1766, in all matters not regulated by the Civil This is deemed incorporated in the bill of lading even if not
Code, the rights and obligations of common carriers shall mention therein [Eastern Shipping Lines v. IAC, G.R. No. L-
be governed by the Code of Commerce and special laws. 69044 (1987)].
Thus, although a special law, COGSA only applies when the
Civil Code has no provision dealing with the matter. The declaration made by the shipper stating an amount
bigger than $500 per package will make the carrier liable
for such bigger amount, but only if the amount so declared
Notice of Loss or Damage is the real value of goods [AQUINO (2011)].
Notice of claim and the general nature of the loss or The Civil Code does not limit the liability of the common
damage must be given in writing to the carrier or his agent carrier to a fixed amount per package. In all matters not
at the port of discharge before or at the time of the removal regulated by the Civil Code, the right and the obligations of
of the goods [Section 3(6), COGSA]. common carriers shall be governed by the Code of
Commerce and special laws. Thus, the COGSA, which is
If damage is not patent or cannot be ascertained from the suppletory to the provisions of the Civil Code, supplements
package, the shipper should file the claim with the carrier the latter by establishing a statutory provision limiting the
within three days from delivery. carrier’s liability in the absence of a shipper’s declaration
of a higher value in the bill of lading. [Belgian Overseas
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Chartering and Shipping v. Philippine First Ins. Co, G.R. No. may not be required to pay any increased price of
143133 (2002)] passage, but his living expenses during the delay
shall be for his own account [Art. 698, COC].
3. In case of delay in the departure, the passengers have
Special Contracts of Maritime a right to remain on board and to be furnished food,
Commerce unless the delay is due to accidental cause or to force
majeure. If the delay exceeds 10 days, the
passengers are entitled to the return of the fare upon
a. Loans on Bottomry and request. If the delay is due to the sole fault of the
Respondentia captain or ship agent, they may demand indemnity for
losses and damages.
Loan on bottomry is a contract in the nature of a mortgage, 4. To be taken directly to the port or ports of destination,
by which the owner of the ship borrows money for the use, making all the stops indicated in its itinerary [Art. 698,
equipment and repair of the vessel and for a definite term, COC].
and pledges the ship as a security for its repayment, with
maritime or extraordinary interest on account of the
maritime risks to be borne by the lender, it being stipulated
that if the ship be lost in the course of the specific voyage
or during the limited time, by any of the perils enumerated
in the contract, the lender shall also lose his money.

Loan on respondentia is one made on the goods laden on


board the ship, and which are to be sold or exchanged in
the course of the voyage, the borrower’s personal
responsibility being deemed the principal security for the
performance of the contract, which is therefore called
respondentia. The lender must be paid his principal and
interest, though the ship perishes, provided that the goods
are saved.

Passengers on Sea Voyage


The right to passage issued to a specified person is non-
transferrable without the consent of the captain or of the
consignee [Art. 695, COC].

Rights of passengers include:


1. In case of suspension of voyage
a. If through the sole fault of the captain or ship
agent, the passengers shall be entitled to have
their passage refunded and to recover for losses
and damages.
b. If due to accidental cause or force majeure, the
passengers shall only be entitled to the return of
the passage money [Art. 697, COC].
2. In case of interruption of voyage
a. If due to fortuitous event or force majeure, the
passengers shall be obliged to pay only the fare
in proportion to their distance covered, without
right to recover for losses or damages.
b. If due to the sole fault of the captain, the
passengers shall be obliged to pay only the fare
in proportion to their distance covered, with a
right to indemnity.
c. If due to the disability of the vessel and the
passenger should agree to await the repairs, he
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

The Warsaw Convention transshipment, any damage is presumed, subject to proof


to the contrary, to have been the result of an event which
took place during the transportation by air. [Art. 18, WC].
1. Applicability
The Warsaw Convention does not provide for an exclusive
The Warsaw Convention applies to: enumeration of instances when the carrier is liable. It does
a. All international carriage of persons, baggage, or not provide an absolute limit of liability and it does not
cargo performed by aircraft for reward; preclude the application of the Civil Code and other
b. Gratuitous carriage by aircraft performed by an air pertinent local laws in the determination of the extent of
transport undertaking [Art. 1(1), Warsaw Convention]. liability of the common carrier. [Philippine Airlines v. CA,
G.R. No. (1996)] Hence, a complaint for quasi-delict can
International air carriage or international air transport still be filed even if the filing is beyond the prescriptive
means transportation by air between points of contact of period provided for under the Convention so long as it is
two high contracting parties, or those countries that have within the prescriptive period of four years under the Civil
acceded to the Warsaw Convention, wherein the place of Code. [Villanueva]
departure and the place of destination are situated:
a. Within the territories of two high contracting parties, Notice of claim with the international carrier is a mandatory
regardless of whether or not there be a break in the or condition precedent under the Warsaw Convention.
transportation or a transshipment; or a. Baggage: within 3 days from receipt; in case of delay,
b. Within the territory of a single high contracting party, if within 14 days from the time the baggage was placed
there is an agreed stopping place within a territory at the disposal of the passenger
subject to the sovereignty, mandate or authority of b. Goods: within 7 days from delivery
another power, even though the power is not a party to
the Convention [Art. 1(2), WC]. In case of an action for damage to passenger baggage, the
case must be filed in court within two years.
A carriage to be performed by several successive air
carriers is deemed, for the purposes of the Convention, to Limitation of Liability
be one undivided carriage, if it has been regarded by the
parties as a single operation, whether it had been agreed With respect to the following limitations of liability, Art. 23,
upon under the form of a single contract or of a series of Warsaw Convention provides that any provision tending to
contracts [Art. 1(3), WC]. relieve the carrier of liability or to fix a lower limit than that
which is laid down shall be null and void, but the nullity of
The carrier is liable for damages for: any such provision does not involve the nullity of the whole
a. Death or injury of a passenger if the accident causing contract.
it took place:
1. On board the aircraft; Also, under Art. 25, WC:
2. In the course of the operations of embarking or a. The carrier shall not be entitled to avail himself of the
disembarking; or provisions which exclude or limit his liability, if the
3. When there was delay [Art. 17 and 19, WC]; damage is caused by his willful misconduct or by such
b. Destruction, loss, or damage to any baggage or goods default on his part as is considered to be equivalent to
that are checked in, if damage occurred: willful misconduct;
1. During the transportation by air; or b. Similarly the carrier shall not be entitled to avail
2. When there was delay [Art. 18 and 19, WC]; himself of the said provisions, if the damage is caused
c. Delay in the transport by air of passengers, baggage as aforesaid by any agent of the carrier acting within
or goods [Art. 19, WC]. the scope of his employment.
The carriage by air contemplated comprises the period in Under Art. 29, WC, the right to damages under the WC is
which the baggage or goods are in charge of the carrier, extinguished after two years from the date of arrival at the
whether in an airport or on board an aircraft, or, in the case destination or from the date on which the aircraft ought to
of a landing outside an airport, in any place whatsoever. have arrived, or from the date on which the carriage
stopped. The method of calculating the period of limitation
It does not cover any transportation by land, by sea, or by shall be determined by the law of the court seized of the
river performed outside an airport. case.
If transportation takes place in the performance of a Sec. 22(2), WC does not operate as an exclusive
contract by air, for the purpose of loading, delivery, or enumeration of the instances of an airline’s liability, or as
U.P. LAW BOC TRANSPORTATION LAWS COMMERCIAL LAW

an absolute limit of the extent of that liability. The or delay in its transport is not attributable to or attended by
Convention’s provisions do not regulate or exclude the any willful misconduct, bad faith, recklessness, or
following areas: otherwise improper conduct on the part of any official or
a. Liability for other breaches of the contract by the employee for which the carrier is responsible; and there is
carrier; otherwise no special or extraordinary form of resulting
b. Misconduct of its officers and employees; and injury [Alitalia v. IAC, G.R. No. 71929 (1990)]
c. For some particular or exceptional type of damage (i.e.
moral, nominal, temperate or exemplary damages)
[Alitalia v. IAC, G.R. No. 71929 (1990)]
Willful Misconduct
A common carrier may not avail of the limitation in the
a. Liability to Passengers following cases:
a. Willful misconduct;
General rule: In the carriage of passengers, the liability of b. Default amounting to willful misconduct [Art. 25, WC];
the carrier for each passenger is limited to 250,000 francs c. Accepting passengers without ticket [Art. 3(2), WC];
passenger. d. Accepting goods without airway bill or baggage
without baggage check.
Exception: By special contract, the carrier and the
passenger may agree to a higher limit [Art. 22(1), WC]. Receipt by the person entitled to the delivery of baggage or
cargo without complaint is prima facie evidence that the
Liability for Checked Baggage same have been delivered in good condition and in
accordance with the document of carriage [Art. 26, WC].
General rule: In the carriage of baggage and goods, the
liability of the carrier is limited to 250 francs per kilogram. Jurisdiction
Exception: The limit does not apply when the consignor has An action for damages must be brought at the option of the
made, at the time when the package was handed over to plaintiff:
the carrier, a special declaration of the value at delivery a. Before the court of the domicile of the carrier;
and has paid a supplementary sum if the case so requires. b. The court of its principal place of business;
In that case the carrier will be liable to pay a sum not c. The court where it has a place of business through
exceeding the declared sum, unless he proves that that which the contract had been made; or
sum is greater than the actual value to the consignor at d. The court of the place of destination [Art. 28 (2) WC].
delivery [Art. 22(2), WC].
When a passenger buys a roundtrip ticket, the place of
Liability for Hand-Carried Baggage destination is the place of first departure. E.g. In a round-
trip ticket from San Francisco – Manila, the place of
As regards hand-carried baggage, the liability of the carrier destination is San Francisco [Santos III v Northwest
is limited to 5,000 francs per passenger [Art. 22(3), WC]. Airlines, supra].

The Guatemala Protocol of 1971 increased the limit for It is settled that allegations of tortious conduct committed
passengers to $100,000 and to $1,000 for baggage. against an airline passenger during the course of the
However, the Supreme Court noted in [ Santos III v. international carriage do not bring the case outside the
Northwest Orient Airlines, G.R. No. 101538(1992)], that ambit of the Warsaw Convention [Lhuillier v. British
the Guatemala Protocol is still ineffective [Sundiang and Airways, G.R. No. 171092 (2010)].
Aquino (2013)].
Note: The Montreal Convention adds a 5th jurisdiction:
The Warsaw Convention should be deemed a limit of residence of the plaintiff.
liability only in those cases where the cause of death or
injury to person, or destruction, loss or damage to property