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Common Carriers
Art. 1732, Civil Code. Common carriers are persons,
corporations, firms or associations engaged in the business
of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to
the public.
Elements of a common carrier (Art 1732):
(1) Persons, corporations, firms, associations
(2) Engaged in the business of carrying or transporting
(3) Passengers, goods, OR both
(4) By land, water, air
(5) For compensation
(6) Offering their services to the public
The provision (Art. 1732) makes no distinction between one
whose principal business activity is the carrying of persons
or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as “a sideline”) (Fabre v.
CA, 1996).
Private respondent is properly characterized as a common
carrier even though he merely "back-hauled" goods for
other merchants from Manila to Pangasinan, although such
back-hauling was done on a periodic or occasional rather
than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of
goods for others. There is no dispute that private
respondent charged his customers a fee for hauling their
goods; that fee frequently fell below commercial freight
rates is not relevant here (De Guzman v. CA, 1988).
Art. 1732 makes no distinction:
(1) Between one whose principal business activity is the
carrying of persons or goods or both, and one who does
such carrying only as an ancillary activity (Fabre vs. CA)
(2) 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
(3) Between a carrier offering its services to the general
public and who offers services or solicits business only
from a narrow segment of the general population (De
Guzman vs. CA)
There is no doubt that petitioner, engaged in the business of
transporting petroleum products from the Batangas
refineries via pipeline, is a common carrier. It is engaged in
the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It
undertakes to carry for all persons indifferently, that is, to all
persons who choose to employ its services, and transports
the goods by land and for compensation. The fact that
petitioner has a limited clientele does not exclude it from
the definition of a common carrier. (First Phil. Industrial v.
CA, 1998)
The true test for a common carrier is not the quantity or
extent of the business actually transacted, or the number
and character of the conveyances used in the activity, but
whether the undertaking is a part of the activity engaged in
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by the carrier that he has held out to the general public as
his business or occupation. If the undertaking is a single
transaction, not a part of the general business or occupation
engaged in, as advertised and held out to the general
public, the individual or the entity rendering such service is a
private, not a common, carrier. The question must be
determined by the character of the business actually carried
on by the carrier, not by any secret intention or mental
reservation it may entertain or assert when charged with the
duties and obligations that the law imposes.
Applying these considerations to the case before us, there is
no question that the Pereñas as the operators of a school
bus service were: (a) engaged in transporting passengers
generally as a business, not just as a casual occupation; (b)
undertaking to carry passengers over established roads by
the method by which the business was conducted; and (c)
transporting students for a fee. Despite catering to a limited
clientèle, the Pereñas operated as a common carrier
because they held themselves out as a ready transportation
indiscriminately to the students of a particular school living
within or near where they operated the service and for a fee.
(Sps. Teodoro v. Sps. Nicolas, 2012)
What are the elements of a common carrier?
(1) It is engaged in the business of carrying or transporting
goods for others as a public employment, or passengers,
or both
(2) It is for compensation or for hire
(3) It is operated generally as a business and not as a
casual occupation
(4) It holds out to the public as ready to engage in the
transportation of goods of the kind to which his business is
confined (cf. First Phil. Industrial v. CA)
A public carrier shall remain as such, notwithstanding the
charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as
in the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew, as in
a bareboat or demise, that a common carrier becomes
private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a shipowner in a
time or voyage charter retains possession and control of the
ship, although her holds may, for the moment, be the
property of the charterer. (Planters Products v CA, 1993)
Carriers: Persons or corporations who undertake to
transport or convey goods, property or persons, from one
place to another, gratuitously or for hire, and are classified
as private or special carriers, and common or public carriers
(Agbayani, Commercial Laws of the Philippines)
Private Carriers: Those who transport or undertake to
transport in a particular instance for hire or reward
(Agbayani)
Differences between a Common Carrier and a Private Carrier
(Agbayani):
Life Property
Availability
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Holds himself out in Agrees in some special case cautious persons, with a due regard for all the
common, that is, to all with some private individual circumstances (Art 1755)
(3) Does not require common carriers to exercise all the
persons who choose to to carry for hire
care, skill, and diligence of which the human mind can
employ him, as ready to carry conceive. Nor such as will free the transportation of
for hire passengers from all possible perils.
Binding effect
Note: A common carrier is not an insurer of the safety of the
Bound to carry all who offer Not bound to carry for any passengers and is not absolutely and at all events to carry
and tender reasonable reason, such goods as it is them safely and without injury
compensation for carrying accustomed to carry, unless
REASONS
them it enters into a special
Nature of business of common carriers and the exigencies
agreement to do so of public policy
Diligence required
LIABILITIES OF COMMON CARRIERS
Extraordinary diligence Ordinary diligence GOODS
General rule:
Governing law
(1) Common carriers are responsible for the loss,
(1) Civil Code Obligations and contracts destruction, or deterioration of the goods. (Art. 1734) In
(2) Code of Commerce and fact, they are liable even in those cases where the cause
special laws: If not of the loss or damage is unknown. (Agbayani)
regulated by the Civil (2) Cause of action: breach of contract (culpa contractual)
Code, rights and (3) Moreover, if the goods are lost, destroyed, or
obligations of common deteriorated, common carriers are presumed to have
carriers shall be governed been at fault or to have acted negligently. (Art 1735)
by the Code of
Commerce and by Exceptions (common carrier not liable):
special laws (Art.1766 (1) If loss, destruction, or deterioration of goods is due to
Civil Code). any of the following causes:
(3) Law of the country to (a) Flood, storm, earthquake, lightning, or other natural
which the goods are to disaster or calamity;
be transported, IF (b) Act of the public enemy in war, whether international or
regarding liability for civil;
loss, destruction, or (c) Act of omission of the shipper or owner of the goods;
deterioration of goods (d) The character of the goods or defects in the packing or
in the containers;
Regulation (e) Order or act of competent public authority (Art. 1734).
A public service, therefore Not subject to regulation as
subject to regulation a common carrier Note: The presumption of negligence DOES NOT apply in
these cases.
DILIGENCE REQUIRED OF COMMON CARRIERS (2) If it exercised extraordinary diligence.
Art. 1733, Civil Code. Common carriers, from the nature of
their business and for reasons of public policy, are bound to PASSENGERS
observe extraordinary diligence in the vigilance over the General rule:
goods and for the safety of the passengers transported by Art. 1755, Civil Code. A common carrier is bound to carry the
them, according to all the circumstances of each case. passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons,
Such extraordinary diligence in the vigilance over the goods with a due regard for all the circumstances.
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. 1756, Civil Code. In case of death of or injuries to
passengers, common carriers are presumed to have been at
DILIGENCE REQUIRED fault or to have acted negligently, unless they prove that they
Extraordinary diligence observed extraordinary diligence as prescribed in Arts 1733
and 1755.
DEFINITION
(1) Rendering service with the greatest skill and utmost Common carriers are also responsible for the safety of the
foresight (Agbayani) following persons (even though they are not passengers):
(2) Carrying passengers safely as far as human care and (1) For the safety of members of the crew or the
foresight can provide, using the utmost diligence of very complement operating the carrier since any omission,
lapse, or neglect on the part of the common carrier will
certainly result to the damage, prejudice, injuries, and
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even death to all aboard, passengers and crew
members alike. (PAL v. CA)
(2) For the safety of stevedores if their presence onboard
was called for by the contract of carriage. It is liable if it
knew and consented to the stevedores’ presence. (Sulpicio
v. CA (1995))
Exception (common carrier not liable): If accident was caused
by force majeure AND the common carrier exercised
extraordinary diligence in safeguarding the passengers (or
goods) (Bachelor Express v. CA)
PRINCIPLES AS TO THE LIABILITY OF COMMON CARRIERS
(1) The liability of a carrier is contractual and arises upon
breach of its obligation. There is breach if it fails to exert
extraordinary diligence according to all circumstances of
each case;
(2) A carrier is obliged to carry its passenger with the
utmost diligence of a very cautious person, having due
regard for all the circumstances;
(3) A carrier is presumed to be at fault or to have acted
negligently in case of death of, or injury to, passengers,
it being its duty to prove that it exercised extraordinary
diligence; and
(4) The carrier is not an insurer against all risks of travel.
(Isaac v. A.L. Ammen)
PRESUMPTION OF NEGLIGENCE
The mere proof of delivery of goods in good order to a
carrier, and of their arrival at the place of destination in bad
order, makes out a prima facie case against the carrier, so
that if no explanation is given as to how the injury occurred,
the carrier must be held responsible. It is incumbent upon
the carrier to prove that the loss was due to accident or
some other circumstance inconsistent with its
liability. (Ynchausti Steamship v Dexter and Unson, 1920)
KABIT SYSTEM
A person who has been granted a certificate of public
convenience allows another person who owns motor
vehicles to operate under such franchise for a fee.
Thus, for the safety of passengers and the public who may
have been wronged and deceived through the
baneful kabit system, the registered owner of the vehicle is
not allowed to prove that another person has become the
owner so that he may be thereby relieved of responsibility.
(Lim v. CA, 2002)
Vigilance over Goods
EXEMPTING CAUSES
(1) Natural disaster
Requisites:
(a) The natural disaster must have been the proximate and
only cause of the loss (Art 1739)
(b) The common carrier must exercise DUE diligence to
prevent or minimize the loss before, during and after the
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occurrence of the flood, storm or natural disaster (Art
1739)
(c) The common carrier must not have negligently incurred
delay (Art 1740)
(d) The shipment was at shipper’s risk (Art 361, Code of
Commerce)
The master is responsible for the safe & proper stowage of
the cargo, & there is no doubt that by the general maritime
law he is bound to secure the cargo safely under deck. If the
master carries goods on deck without the consent of the
shipper, he does it at his own risk. If they are damaged or
lost in consequence of their being thus exposed, he cannot
protect himself from responsibility by showing that they
were damaged or lost by the dangers of the seas. But, when
the shipper consents to his goods being carried on deck, he
takes the risks of any damage or loss sustained as a
consequence of their being so carried. (Martini v. Macondray,
1919).
Fire may not be considered a natural disaster/calamity. This
must be so as it arises almost invariably from some act of
man or by human means. It does not fall within the category
of an act of God unless caused by lightning or by other
natural disaster/calamity. It may even be caused by the
actual fault or privity of the carrier. (Eastern Shipping Lines
v. IAC, 1987)
If between the delay or refusal of the common carrier to
transport the goods and the loss of the goods due to an act
of God there intervened the shipper’s negligence, thus
causing a break in the chain of causation between the act of
God which caused the loss and the common carrier’s fault,
the act of God is the proximate cause of the loss and the
carrier’s delay or refusal is merely the remote cause.
(Agbayani) (In this case, the natural disaster is not the only
cause, therefore, not an exempting cause)
(2) Act of public enemy
Requisites:
(a) The act of the public enemy was committed either in an
international or civil war. (Art. 1734)
(b) The act of the public enemy must have been the
proximate and only cause (Art. 1739)
(c) The common carrier must exercise due diligence to
prevent or minimize the loss before, during and after the
act of the public enemy causing the loss, destruction or
deterioration of the goods. (Art. 1739)
(3) Act or omission of shipper
Requisites:
The act or omission of the shipper must have been the
proximate and only cause of the loss, destruction, or
deterioration of the goods (Art 1741)
If the shipper owner merely contributed to the loss,
destruction or deterioration of the goods, the proximate
cause being the negligence of the common carrier, then the
common carrier shall be liable for the damages, which shall,
however, be equitably reduced. (Art 1741)
(4) Character of goods
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Requisites:
(1) The loss, destruction, or deterioration of the goods is
due to the character of the goods or defects in the
packing or in the containers (Art 1739)
(2) The common carrier must exercise due diligence to
forestall or lessen the loss (Art 1739)
Damage When to Claim
Ascertainable from package Upon receipt of goods
Not ascertainable from Within 24 hours upon receipt
package
What happens if no claim has been brought after the lapse of
the periods mentioned or after payment of transportation
charges? NO claim shall be admitted against the carrier
with regard to the condition in which the goods transported
were delivered. (Art 366, Code of Commerce)
If the fact of improper packing is known to the carrier or its
servants or apparent upon ordinary observation, but (the
carrier) accepts the goods notwithstanding such condition,
it is not relieved of liability for loss or injury resulting
therefrom. (Southern Lines v. CA, 1962)
(5) Order of competent authority
Requisites:
(1) There must be an order or act of competent public
authority (Art. 1734)
(2) The said public authority must have had the power to
issue the order. (Art. 1743)
The intervention of the municipal officials was not of a
character that would render impossible the fulfillment by
the carrier of the obligation. The petitioner was not duty
bound to obey the illegal order (of the mayor) to dump into
the sea the scrap iron. There is absence of sufficient proof
that the issuance of the order was attended with such force
or intimidation as to completely overpower the will of
petitioner’s employees. The mere difficulty in the fulfillment
of the obligation is not force majeure. (Ganzon v. CA, 1988)
J. Melencio-Herrera, Dissent: Through the “order or act” of
“competent public authority,” the performance of the
contractual obligation was rendered impossible.
Apparently, the seizure and destruction of the goods was
done under legal process or authority so that petitioner
should be freed from responsibility.
REQUIREMENT OF ABSENCE OF NEGLIGENCE
Art. 1739, Civil Code. In order that the common carrier may be
exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss.
Loss of a ship and of its cargo, in a wreck due to accident or
force majeure must, as a general rule, fall upon their
respective owners, except in cases where the wrecking or
stranding of the vessel occurred through the malice,
carelessness, or lack of skill on the part of the captain or
because the vessel put to sea is insufficiently repaired and
prepared.
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The carrier is exempt from liability if he is able to prove that
the loss or destruction of the merchandise was due to
accident and force majeure and not to fraud, fault, or
negligence on the part of the captain or owner of the ship.
(Tan Chiong Sian v Inchausti, 1912)
ABSENCE OF DELAY
Art. 1740, Civil Code. If the common carrier negligently incurs
in delay in transporting the goods, a natural disaster shall
not free such carrier from responsibility.
DUE DILIGENCE TO PREVENT OR LESSEN THE LOSS
Art. 1739, Civil Code. In order that the common carrier may be
exempted from responsibility, the natural disaster must have
been the proximate and only cause of the loss. However, the
common carrier must exercise due diligence to prevent or
minimize loss before, during and after the occurrence of
flood, storm or other natural disaster in order that the
common carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods. The same duty is
incumbent upon the common carrier in case of an act of the
public enemy referred to in Article 1734, No. 2.
Art. 1742, Civil Code. Even if the loss, destruction or
deterioration of the goods should be caused by the character
of the goods or the faulty nature of the packing or of the
containers the common carrier must exercise due diligence
to forestall or lessen the loss.
(1) For natural disasters and acts of public enemy, the
common carrier must have exercised due diligence to
prevent or minimize loss, before, during and after the
occurrence of flood, storm, or other natural disaster to
be exempted from liability. (Art. 1739)
(2) For faulty nature of packing or loss due to the character
of the goods, the common carrier must have exercised
due diligence to forestall or lessen the loss. (Art. 1742)
CONTRIBUTORY NEGLIGENCE
Art. 1741, Civil Code. If the shipper or owner merely contributed
to the loss destruction or deterioration of the goods the
proximate cause thereof being the negligence of the
common carrier the latter shall be liable in damages which
however shall be equitably reduced.
DURATION OF LIABILITY
When is the contract of transportation perfected? A contract
of transportation is consensual in nature; therefore it is
perfected upon the meeting of the minds of the parties.
(Art. 1305)
But, when does the carrier’s extraordinary responsibility
begin? It only begins from the time the goods are
unconditionally placed in the possession of and received by
the carrier for transportation. (Art 1736)
When does carrier’s extraordinary responsibility terminate?
(1) Until the same are delivered actually or constructively by
the carrier to the consignee or to the person who has a
right to receive them (without prejudice to the provisions
of Article 1738) (Art. 1736)
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(2) When the goods are temporarily unloaded or stored in
transit by reason of the exercise of the shipper or owner
of his right of stoppage in transitu.
(3) Until the consignee has been advised of the arrival of
the goods at the place of destination and has had
reasonable opportunity to remove them or dispose of
them from the warehouse of the carrier at the place of
destination (Art. 1738)
DELIVERY OF GOODS TO COMMON CARRIER
The liability of the carrier as common carrier begins with the
actual delivery of the goods for transportation and not
merely with the formal execution of a receipt or bill of lading;
the issuance of a bill of lading is not necessary to complete
delivery and acceptance. Even where it is provided by
statute that liability commences with the issuance of the bill
of lading actual delivery and acceptance are sufficient to
bind the carrier. (Compania Maritima v. Insurance Company
of North America, 1964).
The liability and responsibility of the carrier commence on
their actual delivery to, or receipt by the carrier or an
authorized agent, of the goods. (Cia. Maritima v. Insurance
Co. of NA)
ACTUAL OR CONSTRUCTIVE DELIVERY
Art. 1736, Civil Code. The extraordinary responsibility of the
common carrier lasts from the time the goods are
unconditionally placed in the possession of and received by
the carrier for transportation until the same are delivered
actually or constructively by the carrier to the consignee or to
the person who has a right to receive them without prejudice
to the provisions of Article 1738.
Delivery: Unconditionally placing the goods in the
possession of the carrier AND the carrier receiving them for
transportation
What if the goods are only for safekeeping? If the common
carrier received the goods not for transportation but only for
safekeeping, where the goods have already been purchased
by the shipper and ready for transportation, then the duty of
extraordinary diligence has not yet started.
What does “unconditionally placed” in Art. 1736 mean? It
means that the shipper cannot get the goods back from the
common carrier at will.
To whom should the goods be delivered?
(1) Consignee
(2) Person who has a right to receive them - includes
agents, brokers, and the like.
Delivery of the cargo to the customs authorities is not delivery
to the consignee or “to the person who has a right to receive
them” as contemplated in Article 1736 because in such case
the goods are still in the hands of the Government and the
owner cannot exercise dominion over them. However, the
parties may agree to limit the liability of the carrier
considering that the goods still have to go through the
inspection of the customs authorities before they are
actually turned over to the consignee. This is a situation
where we may say that the carrier losses control of the goods
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because of a custom regulation and it is unfair that it be
made responsible for what may happen during the
interregnum. (Lu Do v. Binamira, 1957)
TEMPORARY UNLOADING OR STORAGE
Art. 1737, Civil Code. The common carrier's duty to observe
extraordinary diligence over the goods remains in full force
and effect even when they are temporarily unloaded or stored
in transit unless the shipper or owner has made use of the
right of stoppage in transitu.
General rule: Extraordinary diligence over the goods remains
even when the goods are temporarily unloaded or stored in
transit.
Exception: Shipper or owner made use of the right of
stoppage in transit.
What is stoppage in transitu? Act by which the unpaid
vendor of goods stops their progress and resumes
possession of them constructively while they are in the
course of transit from him to the purchaser, and not yet
actually delivered to the latter (Agbayani)
Basis: Art. 1530, Civil Code. When the buyer of the goods
becomes insolvent, the unpaid seller who has parted with
the possession of the goods at any time while they are in
transit, may resume the possession of the goods as he
would have had if he had never parted with the possession.
When the right of stoppage in transitu is exercised, the
common carrier holds the goods in the capacity of an
ordinary bailee or warehouseman upon the theory that the
exercise of the right of stoppage in transitu terminates the
contract of carriage. Hence, only ordinary diligence is
required. (Agbayani)
STIPULATION FOR LIMITATION OF LIABILITY
Art. 1747, Civil Code. 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.
Can limitation on liability be availed of by a common carrier
which delayed the transportation of the goods or changed the
stipulated or usual route?
(1) If with just cause, YES.
(2) If without just cause, NO.
Art. 1748, Civil Code. An agreement limiting the common
carrier's liability for delay on account of strikes or riots is
valid.
Art. 1752, Civil Code. 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 been negligent in case of their loss, destruction or
deterioration.
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VOID STIPULATIONS
Art. 1744, Civil Code. A stipulation between the common
carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods
to a degree less than extraordinary diligence shall be valid,
provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745, Civil Code. Any of the following or similar
stipulations shall be considered unreasonable, unjust and
contrary to public policy:
(1) That the goods are transported at the risk of the owner
or shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence
in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family, or of
a man of ordinary prudence in the vigilance over the
movables transported;
(5) That the common carrier shall not be responsible for the
acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or
other equipment used in the contract of carriage.
Art. 1751, Civil Code. The fact that the common carrier has no
competitor along the line or route, or a part thereof, to which
the contract refers shall be taken into consideration on the
question of whether or not a stipulation limiting the common
carrier's liability is reasonable, just and in consonance with
public policy.
Kinds of Stripulations Limiting Liability
(Heacock v. Macondray, 42 Phil 205)
Exempting the common carrier from any Void
and all liability for loss or damage
occasioned by its own negligence
Providing for an unqualified limitation of Void
such liability to an agreed stipulation
Limiting the liability of the common carrier Valid
to an agreed valuation unless the shipper
declares a higher value and pays a higher
rate of freight
Stipulations on Degree of Diligence
No diligence to be observed Void
Less than Diligence of a good father of a Void
family
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Less than Extraordinary diligence Valid, if 3
requisites in
Art. 1744 are
satisfied
LIMITATION OF LIABILITY TO FIXED AMOUNT
Art. 1749, Civil Code. 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. 1734, Civil Code. A contract fixing the sum that may be
recovered by the owner or shipper for the loss, destruction or
deterioration of the goods is VALID if it is reasonable and just
under the circumstances and has been fairly and freely agreed
upon.
There are two requisites that must be fulfilled in order that
the liability of PAL be limited according to the stipulations
behind the ticket stub:
(1) That the contract is just and reasonable under the
circumstances
(2) That the contract was fairly and freely agreed upon (Art.
1750)
The fact that the conditions are printed at the back of the
ticket stub in letters so small that they are hard to read would
not warrant the presumption that plaintiff was aware of
those conditions such that he had “fairly and freely agreed”
to those conditions. (Shewaram v. PAL, 1966)
While the passenger had not 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 upon an agreed
valuation does not offend against the policy of the law
forbidding one from contracting against his own
negligence. (Ong Yiu v. CA, 1979)
LIMITATION OF LIABILITY IN ABSENCE OF DECLARATION
OF GREATER VALUE
Art. 1749, Civil Code. 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.
LIABILITY FOR BAGGAGE OF PASSENGERS
(Asked in 1997 and 1998)
What is a passenger baggage? Things that a passenger will
bring with him consistent with a temporary absence from
where he lives. Passenger baggage must have a direct
relationship w
with the passenger who is traveling.
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E.g., A balikbayan box or suitcase is passenger baggage.
However, “10,000 cans of corned beef”, for example, is not
considered as passenger baggage. They are considered as
goods. If you carry goods with you, you cannot bring them
with you as part of your (passenger) contract of carriage.
You will need to get a separate contract of carriage (“bill of
lading”) in order to transport them. These goods will then
be transported whether or not you are physically traveling
with them. (Agbayani)
What are the kinds of passenger baggage and the laws
applicable to them?
(1) Passenger baggage in the custody of the passenger (e.g.
carry-on luggage): These are considered as necessary
deposits. Arts. 1998, 2000-2003 apply.
(2) Passenger baggage not in the custody of the passenger
(e.g. checked-in luggage): Arts. 1733-1753 on
extraordinary diligence apply.
The liability is greater for baggage that is in the custody of
the carrier in contrast if such is in the possession of the
passenger.
CHECKED-IN BAGGAGE
Art. 1754, Civil Code. The provisions of Articles 1733 to 1753
shall apply to the passenger's baggage which is not in his
personal custody or in that of his employee. As to other
baggage, the rules in Articles 1998 and 2000 to 2003
concerning the responsibility of hotel-keepers shall be
applicable.
BAGGAGE IN POSSESSION OF PASSENGERS
Art. 1998, Civil Code. The deposit of effects made by the
travellers in hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall be responsible
for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the
guests and that, on the part of the latter, they take the
precautions which said hotel-keepers or their substitutes
advised relative to the care and vigilance of their effects.
Under Art. 1998, the baggage of passengers in their
personal custody or in that of their employees while being
transported shall be regarded as necessary deposits. The
common carrier shall be responsible for such baggage as
depositaries (i.e. like hotel-keepers), provided that:
1) Notice was given to them or to their employees, AND that
2) The passengers take the precautions which said carriers
advised relative to the care and vigilance of their baggage.
(Agbayani)
Art. 2000, Civil Code. The responsibility referred to in the two
preceding articles shall include the loss of, or injury to the
personal property of the guests caused by the servants or
employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force
majeure. The fact that travellers are constrained to rely on
the vigilance of the keeper of the hotels or inns shall be
considered in determining the degree of care required of
him.
PAGE 56
BAR OPERATIONS COMMISSION
Art. 2001, Civil Code. The act of a thief or robber, who has
entered the hotel, is not deemed force majeure, unless it is
done with the use of arms or through an irresistible force.
Art. 2002, Civil Code. The hotel-keeper is not liable for
compensation if the loss is due to the acts of the guest, his
family, servants or visitors, or if the loss arises from the
character of the things brought into the hotel.
Art. 2003, Civil Code. The hotel-keeper cannot free himself
from responsibility by posting notices to the effect that he is
not liable for the articles brought by the guest. Any
stipulation between the hotel-keeper and the guest whereby
the responsibility of the former as set forth in articles 1998 to
2001 is suppressed or diminished shall be void.
In case of loss or injury to the baggage of passengers in their
personal custody or in that of their employees while being
transported:
(1) The carrier is LIABLE if the loss or injury is caused by:
(a) his servants OR
(b) employees OR
(c) strangers (Art. 2000)
(d) thief or robber done without the use of arms or
irresistible force (Art 2001)
(2) The carrier is NOT LIABLE, if loss or injury is caused by:
(a) force majeure (Art. 2000),
(b) theft or robbery by a stranger with the use of arms or
irresistible force (Art 2001),
(c) the acts of the guests, his family, servants, or visitors
(Art 2002)
(d) the character of the things brought into the hotel (Art
2002)
Safety of Passengers
(Asked in 1997 and 2001)
VOID STIPULATIONS
Art. 1757, Civil Code. The responsibility of a common carrier
for the safety of passengers as required in Articles 1733 and
1755 cannot be dispensed with or lessened by stipulation by
the posting of notices, by statements on tickets, or otherwise.
Art. 1758, Civil Code. When a passenger is carried
gratuitously, a stipulation limiting the common carrier's
liability for negligence is valid, but not for willful acts or gross
negligence.
The reduction of fare does not justify any limitation of the
common carrier's liability.
General rule: Stipulations limiting liability are void.
Exception: Gratuitous carriage except for willful acts or
gross negligence.
 UP COLLEGE OF LAW TRANSPORTATION LAWS
Under Art. 1758, the common carrier and the passenger
may validly stipulate to limit the carrier’s liability for
negligence in cases of gratuitous carriage, but the parties
cannot stipulate to entirely eliminate liability of common
carrier. (Agbayani)
carrier
DURATION OF LIABILITY
Art. 17, Warsaw Convention. The carrier is liable for damage
sustained in the event of the death or wounding of a
passenger or any other bodily injury suffered by a passenger,
if the accident which caused the damage so sustained took
place on board the aircraft or in the course of any of the
operations of embarking or disembarking.
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events or to force majeure. If the delay should exceed ten
days, passengers requesting the same shall be entitled to
the return of the fare; and if it is due exclusively to the fault
of the captain or ship agent, they may also demand
indemnity for losses and damages. A vessel exclusively
devoted to the transportation of passengers must take them
directly to the port or ports of destination, no matter what
the number of passengers may be, making all the stops
indicated in its itinerary.
Does the duty of extraordinary diligence occur right at the
perfection of the contract of transportation? The perfection of
the contract of carriage does not necessarily coincide with
the commencement of the duty of extraordinary diligence. It
may occur at the same time or later.
WAITING FOR CARRIER OR BOARDING OF CARRIER
It is the duty of common carriers of passengers to stop their
conveyances at a reasonable length of time in order to afford
passengers an opportunity to board and enter, and they are
liable for injuries suffered by boarding passengers resulting
from the sudden starting up or jerking of their conveyances
while they are doing so. (Dangwa Transportation v. CA (1991)
A person boarding a moving car must be taken to assume
the risk of injury from boarding the car under the conditions
open to his view, but he cannot fairly be held to assume the
risk that the motorman, having the situation in view, will
increase the peril by accelerating the speed of the car
before he is planted safely on the platform.
The duty that the carrier of passengers owes to its patrons
extends to persons boarding the cars as well as those
alighting therefrom. (Del Prado v. Manila Railroad, 1929)
PAGE 57
BAR OPERATIONS COMMISSION
ARRIVAL AT DESTINATION
When does relationship of common carrier and passenger
terminate? It does not cease at the moment that the
passenger alights from the common carrier’s vehicle at a
place selected by the carrier at the point of destination, but
continues until the passenger has had reasonable time or a
reasonable opportunity to leave the carrier’s premises. What
is a reasonable time or a reasonable delay within this rule is
to be determined from all the circumstances. (La Mallorca v.
CA, 1966)
The reasonableness of time should be made to depend on
the attending circumstances of the case, such as the kind of
common carrier, the nature of its business, the customs of the
place, and so forth, and therefore precludes a consideration
of the time element per se without taking into account such
other factors. The primary factor to be considered is the
existence of a reasonable cause as will justify the presence of
the victim on or near the petitioner’s vessel.
It is of common knowledge that by the very nature of
petitioner's business as a shipper, the passengers of vessels
are allotted a longer period of time to disembark from the
ship than other common carriers such as a passenger bus.
Such vessels are capable of accommodating a bigger
volume of both passenger and baggage as compared to the
capacity of a regular commuter bus (as in the La Mallorca
case). Consequently, a ship passenger will need at least an
hour as is the usual practice, to disembark from the vessel
and claim his baggage whereas a bus passenger can easily
get off the bus and retrieve his luggage in a very short
period of time. (Aboitiz v. CA)
Does the duty of extraordinary diligence get interrupted?
What we said in one case once again must be stressed, i.e.,
the relation of carrier and passenger continues until the latter
has been landed at the port of destination and has left the
carrier's premises. Hence, PAL necessarily would still have
to exercise extraordinary diligence in safeguarding the
comfort, convenience and safety of its stranded passengers
until they have reached their final destination. (PAL v CA,
1993)
LIABILITY FOR ACTS OF OTHERS
EMPLOYEES
Art. 1759, Civil Code. Common carriers are liable for the death
of or injuries to passengers through the negligence or willful
acts of the former's employees, although such employees
may have acted beyond the scope of their authority or in
violation of the orders of the common carriers. This liability of
the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
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UP COLLEGE OF LAW TRANSPORTATION LAWS
act was done in excess of authority or in disobedience of the
carrier's orders. The carrier's liability here is absolute in the
sense that it practically secures the passengers from
assaults committed by its own employees. (Note: The
employee must be on duty at the time of the act.)
Accordingly, it is the carrier’s strict obligation to select its
drivers and similar employees with due regard not only to
their technical competence and physical ability, but also, no
less important, to their total personality, including their
patterns of behavior, moral fibers, and social attitude.
(Maranan v. Perez, 1967)
Reason for making the common carrier liable for acts of
employees: The servant is clothed with delegated authority
and charged with the duty to execute the carrier’s
undertaking to carry the passenger safely. (Agbayani)
Diligence in the selection and supervision of employees: NOT
a defense. Liability is based on culpa contractual.
What is the common carrier’s responsibility for acts of
employees? The common carrier is responsible even beyond
the scope of authority and in violation of orders, different
from the rule in quasi-delicts under Art. 2180, which
exempts the employer if it was done outside of
employment. However, there must be a reasonable
connection between the act and the contract of carriage.
OTHER PASSENGERS AND STRANGERS
Art. 1763, Civil Code. A common carrier is responsible for
injuries suffered by a passenger on account of the willful acts
or negligence of other passengers or of strangers, if the
common carrier's employees through the exercise of the
diligence of a good father of a family could have prevented or
stopped the act or omission.
Notice that the law speaks of injuries suffered by the
passenger but not his death. However, there appears to be
no reason why the common carrier should not be held liable
under such circumstances. The word “injuries” should be
interpreted to include death. (Agbayani)
In consideration of the right granted to it by the public to
engage in the business of transporting passengers and
goods, a common carrier does not give its consent to
become an insurer of any and all risks to passenger and
goods. It merely undertakes to perform certain duties to the
public as the law imposes, and holds itself liable for any
breach thereof.
Under Art. 1763, a tort committed by a stranger which
causes injury to a passenger does not accord the latter a
cause of action against the carrier. The negligence for which
a common carrier is held responsible is the negligent omission
by the carrier's employees to prevent the tort from being
committed when the same could have been foreseen and
prevented by them. Further, when the violation of the
contract is due to the willful acts of strangers, as in the
instant case, the degree of care essential to be exercised by
the common carrier for the protection of its passenger is
only that of a good father of a family. (Pilapil v. CA, 1989)
PAGE 58
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What is the common carrier’s responsibility for acts of
strangers? In Pilapil v. CA (1989), referring to the act of a
stranger causing the death of a passenger, the standard of
diligence is only ordinary diligence. In Bachelor Express v. CA
(1990), the Court held that the common carrier has a duty of
extraordinary diligence for the injury caused by the act of a
co-passenger.
Culpa Aquiliana
Culpa Contractual
(Quasi-Delict)
Art. 1759 Art. 2180
Carrier is directly and Carrier and employee are
primarily liable solidarily liable as joint tort-
feasors
No defense of due diligence Defense of due diligence in
in the selection and the selection and supervision
supervision of employees of employees is available
EXTENT OF LIABILITY FOR DAMAGES
Art. 1761, Civil Code. The passenger must observe the
diligence of a good father of a family to avoid injury to
himself.
Art. 1762, Civil Code. The contributory negligence of the
passenger does not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the negligence of
the common carrier, but the amount of damages shall be
equitably reduced.
When a passenger dies or is injured, the presumption is that
the common carrier is at fault or that it acted negligently
(Article 1756). This presumption is only rebutted by proof on
the carrier's part that it observed the "extraordinary
diligence" required in Article 1733 and the "utmost diligence
of very cautious persons" required in Article 1755 (Article
1756). (Spouses Landingin v. PANTRANCO, 1970)
It is negligence per se for a passenger on a railroad
voluntarily or inadvertently to protrude his arm, hand,
elbow, or any other part of his body through the window of a
moving car beyond the outer edge of the window or outer
surface of the car, so as to come in contact with objects or
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 Transportation, 1975)
While the carrier is not an insurer of the safety of the
passengers, it should nevertheless be held answerable for
the flaws of its equipment, if such flaws were discoverable.
The rationale for the common carrier’s liability for
manufacturing defects is the fact that the passenger has
neither choice nor control over the carrier in the selection
and use of the equipment and appliances in use by the
carrier. Having no privity whatever with the manufacturer or
vendor of the defective equipment, the passenger has no
remedy against him. (Necesito v. Paras, 1958)
UP COLLEGE OF LAW TRANSPORTATION LAWS BAR OPERATIONS COMMISSION

Art. 1764, Civil Code. Damages in cases comprised in this What this Court considers as bad faith is the willful and
Section shall be awarded in accordance with Title XVIII of this deliberate overbooking on the part of the airline carrier. The
Book, concerning Damages. Article 2206 shall also apply to above-mentioned law (Sec. 3, Economic Regulations No. 7
the death of a passenger caused by the breach of contract by of the Civil Aeronautics Board) clearly states that when the
a common carrier. overbooking does not exceed ten percent (10%), it is not
considered as deliberate and therefore does not amount to
DAMAGES RECOVERABLE bad faith. (United Airlines v. CA, 2001)
(1) Actual or compensatory damages – adequate
compensation for such pecuniary loss suffered as duly (3) Exemplary damages – if the defendant acted in a
proved. wanton, fraudulent, reckless, oppressive, or malevolent
manner (Art. 2232)
General rule: Recoverable
(4) Nominal, temperate, and liquidated
Exception: Not recoverable by law or stipulation (Art. 2199) (a) Nominal – to vindicate or recognize a right that has
been violated or invaded
Actual Damages include: (b) Temperate – for pecuniary loss suffered, the amount of
(1) Loss of earning capacity (Art. 2206) which, from the nature of the case, cannot be provided
(2) Support (Art. 2206) with certainty
(c) Liquidated – agreed upon by the parties to a contract
Art. 2201:
Act Done Liability of Obligor (5) Attorney’s Fees and Interest

In good faith Only natural and probable

consequences of the breach,
which have could have
reasonably been foreseen Bill of Lading
In bad faith, fraud, malice or All damages which may be
wanton attitude reasonably attributed to Definition: It is a written acknowledgement, signed by the
breach master of a vessel or other authorized agent of the carrier,
that he has received the described goods from the shipper,
to be transported on the expressed terms to the described
In the absence of a showing that petitioner's attention was place of destination, and to be delivered there to the
called to the special circumstances requiring prompt designated consignee or parties. (70 Am Jur 2d 924)
delivery of private respondent Pangan's luggage, petitioner-
carrier cannot be held liable for the cancellation of private It is not indispensable for the creation of a contract of
respondents' contracts as it could not have foreseen such an carriage. (Compania Maritima v. Insurance Company of
eventuality when it accepted the luggage for transit. (Pan- North America, 12 SCRA 213)
Am World Airways v. IAC, 1988)
When effective: Usually upon its delivery to and acceptance
(2) Moral damages - incapable of pecuniary estimation;
by the shipper (Aquino, Essentials of Transportation &
should be proximate result of wrongful act or omission (Art.
Public Utilities Law)
2217)
It is presumed that the stipulations of the bill are, in the
General rule: NOT recoverable
absence of fraud, concealment, or improper conduct, known
to the shipper, and he is generally bound by his acceptance
Exceptions:
whether he reads the bill or not. (Magellan Mfg. Marketing
(1) Defendant acted fraudulently (Art. 2220)
Corp. v. CA (1991))
(2) Defendant acted in bad faith (Art. 2220)
THREE-FOLD CHARACTER
Note: Bad faith – a state of mind affirmatively operating
(1) Receipt as to the quantity and description of the goods
with furtive design or with some motive of self-interest or
shipped;
will or for ulterior purpose; must be established by clear and
(2) Contract to transport and deliver the goods to the
convincing evidence
consignee or other person therein designated, on the
terms specified in such instrument; and
(3) Mishap resulted in death of a passenger (Art. 2206)
(3) Document of title, which makes it a symbol of the goods
When it comes to contracts of common carriage, inattention DELIVERY OF GOODS
and lack of care on the part of the carrier resulting in the The goods should be delivered to the consignee or any
failure of the passenger to be accommodated in the class other person to whom the bill of lading was validly
contracted for amounts to bad faith or fraud which entitles transferred or negotiated.
the passenger to the award of moral damages in
accordance with Article 2220 of the Civil Code. (Ortigas v.
Lufthansa, 1975)

PAGE 59
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PERIOD OF DELIVERY
Rule: Period fixed for the delivery of the goods as stipulated
in the Bill of Lading. (Art. 370, Code of Commerce)
If there is no stipulation:
(1) Within a reasonable time (Art. 370, Code of Commerce)
(2) Carrier is bound to forward the goods in the first
shipment of the same or similar goods which he may
make to the point of delivery (Art. 358, Code of
Commerce)
Effect of non-compliance: The carrier shall pay the indemnity
agreed upon in the bill of lading. If no indemnity is fixed, the
carrier shall be liable for the damages which may have been
caused by the delay. (Art. 370, Code of Commerce)
DELIVERY WITHOUT SURRENDER OF BILL OF LADING
If in case of loss or for any other reason whatsoever, the
consignee cannot return, upon receiving the merchandise,
the bill of lading subscribed by the carrier, he shall give said
carrier a receipt for the goods delivered, this receipt
producing the same effects as the return of the bill of
lading. (Art. 353. (2) (3), Code of Commerce)
REFUSAL OF CONSIGNEE TO TAKE DELIVERY
When consignee may refuse to receive goods
(1) When the consignee proves that he cannot make use of
the goods without the others (partial delivery) (Art. 363,
Code of Commerce)
(2) When goods are rendered useless for purposes of sale
or consumption in the use for which they are properly
destined. (Effect: consignee may demand payment of
the goods at current market prices) (Art. 365, Code of
Commerce)
(3) In case part of the goods is in good condition, the
consignee may refuse to receive only the damaged
goods if separation is possible. (Art. 365, Code of
Commerce)
(4) Where the delay is through the fault of the carrier. (Art.
371, Code of Commerce)
In case of dispute as to the condition of the goods, the same
shall be examined by experts appointed by the parties, and
the third one, in case of disagreement, appointed by the
judicial authority.
If the persons interested should not agree with the report,
said judicial authority shall order the deposits of the
merchandise in a safe warehouse, and the parties interested
shall make use of their rights in the proper manner. (Art.
367, Code of Commerce)
PERIOD FOR FILING CLAIMS
Damage When to Claim
Patent damage
(Ascertainable from
Claim for damages must be
made upon receipt of
package) delivery (oral or written)
Latent damage Claim for damages may be
(Only upon opening the made within 24 hours upon
package) receipt of delivery.
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After such periods OR transportation charges have been
paid, no more claims for damages will be entertained. (Art.
366, Code of Commerce)
Non-filing of the claim bars recovery. (Aquino)
Art. 366 is limited to cases of claims for damage to goods
actually turned over by the carrier and received by the
consignee. It does not apply to misdelivery of goods.
(Aquino)
Purpose: The rule protects the carrier by affording it an
opportunity to make an investigation of a claim while the
matter is still fresh and easily investigated so as to
safeguard itself from false and fraudulent claims. (UCPB
General Insurance Co., Inc. vs. Aboitiz Shipping, 2009)
The period prescribed in Art. 366 may be subject to
modification by agreement of the parties. (PHILAMGEN v.
Sweetlines, Inc.)
Commencement of period: Upon delivery of cargo to the
consignee at the place of destination. (Aquino)
PERIOD FOR FILING ACTIONS
OVERLAND TRANSPORTATION AND COASTWISE SHIPPING
The general rule under the Civil Code on extinctive
prescription applies. Action for damages must be filed in
court:
(1) Within 6 years, if bill of lading was not issued (Art. 1145,
Civil Code)
(2) Within 10 years, if bill of lading was issued (Art. 1146,
Civil Code)
INTERNATIONAL CARRIAGE OF GOODS BY SEA
In any event, the carrier and the ship shall be discharged
from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the date
when the goods should have been delivered.
The absence of a 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. (Sec. 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. This was adopted
and embodied by our legislature in Com. Act No. 65 which,
as a special law, prevails over the general provisions of the
Civil Code on prescription of actions. (Maritime Agencies &
Services, Inc. v. CA)
Maritime Commerce
CHARTER PARTIES
What is a charter party? A charter party is a contract by
virtue of which the owner or agent of a vessel binds himself
to transport merchandise or persons for a fixed price.
UP COLLEGE OF LAW TRANSPORTATION LAWS
It is a contract by which the owner or agent of the vessel
leases for a certain price the whole or portion of a vessel for
the transportation of the goods or persons from one port to
another.
Is towage considered a charter party? 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 from one port to
another for consideration.
A contract whereby the whole or part of the ship is let by the
owner to a merchant or other person for a specified time or
use for the conveyance of goods, in consideration of the
payment of freight. (Caltex v. Sulpicio Lines, 1999)
BAREBOAT/DEMISE CHARTER
In a bareboat or demise charter, the shipowner leases to the
charterer the whole vessel, transferring to the latter the
entire command, possession and consequent control over
the vessel's navigation, including the master and the crew,
who thereby become the charterer's "servants." (Aquino)
To create a demise, the owner of a vessel must completely
and exclusively relinquish possession, command and
navigation thereof to the charterer, anything short of such a
complete transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all.
(Puromines v. CA)
Although a charter party may transform a common carrier
into a private one, the same however is not true in a
contract of affreightment on account of the distinctions
between a contract of affreightment and a demise or
bareboat charter. (Puromines, Inc. v. Court of Appeals)
Note: In a bareboat or demise charter, the common carrier is
converted to private carrier.
Owner Pro Hac Vice – demise charter to whom the owner of
the vessel has completely and exclusively relinquished
possession, command and navigation of the vessel. In this
kind of charter, the charterer mans and equips the vessel
and assumes all responsibility for navigation, management
and operation. He thus acts as the owner of the vessel in all
important aspects during the duration of the charter.
TIME CHARTER
A time charter is a contract for the use of a vessel for a
specified period of time or for the duration of one or more
specified voyages.
In this case, the owner of a time-chartered vessel retains
possession and control through the master and crew, who
remain his employees. What the time charterer acquires is
the right to utilize the carrying capacity and facilities of the
vessel and to designate her destinations during the term of
the charter. (Litonjua Shipping Co., Inc. vs. National Seamen
Board (1989))
VOYAGE/TRIP CHARTER
In a voyage charter, the vessel is leased for a single or
particular voyage. The master and crew remain the employ
of the owner of the vessel. (Litonjua Shipping Co., Inc. vs.
National Seamen Board)
PAGE 61
BAR OPERATIONS COMMISSION
Note: Both time and voyage charters are said to be
contracts of affreightment.
A contract of affreightment is one in which the owner of the
vessel leases part or all of its space to haul goods for others.
It is a contract for special service to be rendered by the
owner of the vessel and under such contract the general
owner retains the possession, command and navigation of
the ship, the charterer or freighter merely having use of the
space in the vessel in return for his payment of the charter
hire. (Puromines vs. CA)
Note: In a contract of affreightment, the common carrier is
NOT converted into a private carrier.
LIABILITY OF SHIP OWNERS AND SHIPPING AGENTS
The shipowner has possession, control and management of
the vessel and the consequent right to direct her navigation
and receive freight earned and paid, while his possession
continues; he is the person who is primarily liable for
damages sustained in the operation of the vessel, based on
the provisions of the Code of Commerce. (Aquino)
Ship agent is the person entrusted with the provisioning of a
vessel, or who represents her in the port in which she
happens to be. (Art. 595, Code of Commerce)
Extent of Liability: The ship agent, even though he is not the
owner, is liable in every way to the creditor for losses and
damages, without prejudice to his right against the owner,
the vessel and its equipment and freight. (Aquino)
LIABILITY FOR ACTS OF CAPTAIN
(1) The owner of a vessel and the agent shall be civilly liable
for the acts of the captain and for the obligations
contracted by the latter to repair, equip, and provision
the vessel. (Art. 586, Code of Commerce)
(2) The agent shall also be civilly liable for the indemnities
in favor of third persons which arise from the conduct of
the captain in the care of the goods which the vessel
carried.
(3) Damages to vessel and to cargo due to lack of skill and
negligence.
(4) Losses, fines, and confiscations imposed an account of
violation of customs, police, health, and navigation laws
and regulations.
(5) Those caused by the misuse of the powers.
(6) For those arising by reason of his voluntarily entering a
port other than that of his destination.
(7) For those arising by reason of non-observance of the
provisions contained in the regulations on situation of
lights and maneuvers for the purpose of preventing
collisions. (Art. 618)
Exception: Abandonment of the vessel (Art. 587, Code of
Commerce)
Note: The owner or agent shall not be liable for the
obligations contracted by the captain if the latter exceeds
his powers and privileges. However, if the amounts claimed
were made use of for the benefit of the vessel, the owner or
agent shall be liable. (Art. 588, Code of Commerce)
UP COLLEGE OF LAW TRANSPORTATION LAWS
EXCEPTIONS TO LIMITED LIABILITY
Doctrine of limited liability (Hypothecary Rule)
The real and hypothecary nature of maritime law simply
means that the liability of the carrier in connection with
losses related to maritime contracts is confined to the
vessel, which is hypothecated for such obligations or which
stands as the guaranty for their settlement.
It has its origin by reason of the conditions and risks
attending maritime trade in its earliest years when such
trade was replete with innumerable and unknown hazards
since vessels had to go through largely uncharted waters to
ply their trade. It was designed to offset such adverse
conditions and to encourage people and entities to venture
into maritime commerce despite the risks and the
prohibitive cost of shipbuilding.
Thus, the liability of the vessel owner and agent arising from
the operation of such vessel were confined to the vessel
itself, its equipment, freight, and insurance, if any, which
limitation served to induce capitalists into effectively
wagering their resources against the consideration of the
large profits attainable in the trade. (Aboitiz Shipping Corp.
vs. General Accident Fire and Life Assurance Corp. (1993))
Applicable in the following cases: The agent shall be civilly
liable for the indemnities in favor of third persons which
arise from the conduct of the captain in the care of the
goods which the vessel 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.
587, Code of Commerce)
The owners of a vessel shall be civilly liable in the proportion
of their contribution to the common fund, for the results of
the acts of the captain, referred to in Article 587.
Each part owner may exempt himself from this liability by
the abandonment before a notary of the part of the vessel
belonging to him. (Art. 590, Code of Commerce)
In case of collision, the liability of the shipowner shall be
understood as limited to the value of the vessel with all her
appurtenances and all the freight earned during the voyage.
(Art. 837, Code of Commerce)
Liability for wages of the captain and the crew and for
advances made by the ship agent if the vessel is lost by
shipwreck or capture (Art. 643, Code of Commerce)
If the shipowner or agent may in any way be held civilly
liable at all for injury to or death of passengers arising from
the negligence of the captain in cases of collisions or
shipwrecks, his liability is merely co-extensive with his
interest in the vessel such that a total loss thereof results in
its extinction. In arriving at this conclusion, the fact is not
ignored that the ill-fated S.S. Negros, as a vessel engaged
in interisland trade, is a common carrier, and that the
relationship between the petitioner and the passengers who
died in the mishap rests on a contract of carriage. But
assuming that petitioner is liable for a breach of contract of
carriage, the exclusively "real and hypothecary nature" of
maritime law operates to limit such liability to the value of the
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vessel, or to the insurance thereon, if any. In the instant case
it does not appear that the vessel was insured. (Yangco v.
Laserna et al., 1941)
Exceptions to the Doctrine of Limited Liability
(1) Claims under the Workmen’s Compensation (Abueg vs.
San Diego)
(2) Expenses for repairing, provisioning and equipping the
vessel
(3) There is an actual finding of negligence on the part of
the vessel owner or agent (Aboitiz Shipping vs. General
Accident Fire and Life Assurance Corp.)
(4) Vessel is insured (Vasquez vs. CA)
(5) Vessel is not abandoned or there was no total loss.
(6) Collision between two negligent vessels
ACCIDENTS AND DAMAGES IN MARITIME COMMERCE
AVERAGES
The following shall be considered averages:
1. All extraordinary or accidental expenses incurred during
the navigation for the preservation of the vessel or
cargo, or both.
2. All damages or deterioration the vessel may suffer from
the time she puts to sea from the port of departure until
she casts anchor in the port of destination, and those
suffered by the merchandise from the time it is loaded in
the port of shipment until it is unloaded in the port of
consignment. (Art. 806, Code of Commerce)
KINDS
(1) Particular or Simple Average
(2) Gross or General Average
SIMPLE AVERAGE
Particular or simple Averages shall include all damages and
expenses caused to the vessel or cargo that did not inure to
the common benefit and profit of all persons interested in
the vessel and her cargo. (Art. 809, Code of Commerce)
The owner of the goods which gave rise to the expense or
suffered the damage shall bear this average. (Art. 810,
Code of Commerce)
GENERAL AVERAGE
General or gross averages shall include all the damages
and expenses which are deliberately caused in order to save
the vessel, her cargo, or both at the same time, from a real
and known risk. (Art. 811, Code of Commerce)
Requisites for general average
1. There must be a common danger. This means, that both
the ship and the cargo, after it has been loaded, are
subject to the same danger, whether during the voyage,
or in the port of loading or unloading, that the danger
arises from the accidents of the sea, dispositions of the
authority, or faults of men, provided that the
circumstances producing the peril should be
ascertained and imminent or may rationally be said to
be certain and imminent. This last requirement excludes
measures undertaken against a distant peril.
2. That for the common safety, part of the vessel or of the
cargo or both is sacrificed deliberately.
UP COLLEGE OF LAW TRANSPORTATION LAWS
3. That from the expenses or damages caused follows the
successful saving of the vessel and cargo.
4. That the expenses or damages should have been
incurred or inflicted after taking proper legal steps and
authority. (Magsaysay, Inc. v. Agan, 1955)
The gross or general average shall be borne by those who
benefited from the sacrifice. These include the shipowner
and the owners of the cargoes that were saved.
Contribution may also be imposed on the insurers of the
vessel or cargoes that were saved, as well as lenders on
bottomry or respondentia. (PD 1460, as amended)
Cases of general average
(1) The goods or cash invested in the redemption of the
vessel or cargo captured by enemies, privateers, or
pirates, and the provisions, wages, and expenses of the
vessel detained during the time the arrangement or
redemption is taking place.
(2) The goods jettisoned to lighten the vessel, whether they
belong to the vessel, to the cargo, or to the crew, and
the damage suffered through said act by the goods
kept.
(3) The cables and masts which are cut or rendered useless,
the anchors and the chains which are abandoned in
order to save the cargo, the vessel, or both.
(4) The expenses of removing or transferring a portion of
the cargo in order to lighten the vessel and place her in
condition to enter a port or roadstead, and the damage
resulting therefrom to the goods removed or
transferred.
(5) The damage suffered by the goods of the cargo through
the opening made in the vessel in order to drain her and
prevent her sinking.
(6) The expenses caused through floating a vessel
intentionally stranded for the purpose of saving her.
(7) The damage caused to the vessel which it is necessary
to break open, scuttle, or smash in order to save the
cargo.
(8) The expenses of curing and maintaining the members of
the crew who may have been wounded or crippled in
defending or saving the vessel.
(9) The wages of any member of the crew detained as
hostage by enemies, privateers, or pirates, and the
necessary expenses which he may incur in his
imprisonment, until he is returned to the vessel or to his
domicile, should he prefer it.
(10) The wages and victuals of the crew of a vessel chartered
by the month during the time it should be embargoed or
detained by force majeure or by order of the
Government, or in order to repair the damage caused for
the common good.
(11) The loss suffered in the value of the goods sold at
arrivals under stress in order to repair the vessel
because of gross average.
(12) The expenses of the liquidation of the average. (Art. 811,
Code of Commerce)
(13) If in lightening a vessel on account of a storm, in order
to facilitate her entry into a port or roadstead, part of her
cargo should be transferred to lighters or barges and be
lost, the owner of said part shall be entitled to
indemnity, as if the loss has originated from a gross
average (Art. 817, Code of Commerce)
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(14) If, as a necessary measure to extinguish a fire in a port;
roadstead; creek, or bay, it should be decided to sink any
vessel, this loss shall be considered gross average, to
which the vessels saved shall contribute.
Procedure for recovery
1. Assembly and deliberation with the sailing mate and
other officers
2. Resolution of the captain adopted
2. Hearing of the persons interested. In case an interested
person should not be heard, he shall not contribute to
the gross average. (Art. 813, Code of Commerce)
3. Resolution to be entered in the log book, stating the
motives and reasons therefore as well as the votes and
reason for disagreement. (Art. 814, Code of Commerce)
4. Minutes to be signed by all the persons present or in
urgent cases, the captain.
5. Captain shall deliver one copy of the minutes to the
maritime judicial authority of the first port he may
make within 24 hours (Art. 814, Code of Commerce)
6. Captain shall ratify the minutes under oath. (Art. 814,
Code of Commerce)
COLLISION (ASKED IN 1995, 1998)
Collision is an impact or sudden contact between two
moving vessels. (Aquino)
Allision is the striking of a moving vessel against one that is
stationary.
Zones in collision
(1) First Division covers all the time up to the moment when
the risk of collision may be said to have begun. Here,
each vessel is free to direct its course as it deems best.
(2) Second Division covers the time between the moment
when the risk of collision begins and the moment when
it has become a practical certainty. Burden is on the
vessel required to keep away and avoid the danger.
(3) Third Division covers the time of actual contact. The
vessel which has forced the privileged vessel into danger is
responsible even if the privileged vessel has committed an
error within that zone. (A. Urrutia & Co. vs. Baco River
Plantation Co.)
NOTE: Liability in collision cases is negligence-based. The
person who caused the injury is both civilly and criminally
liable. (Aquino)
Specific rules under the Code of Commerce
(1) One vessel at fault. The owner of the vessel at fault shall
indemnify the losses and damages suffered, after an
expert appraisal. (Art. 826, Code of Commerce)
(2) Both vessels at fault. Each shall suffer its own damages,
and both shall be solidarily responsible for the losses
and damages occasioned to their cargoes. (Art. 826,
Code of Commerce)
(3) Inscrutable fault. (If it cannot be decided which of the
two vessels was the cause of the collision).. Each shall
bear his own damage and both shall be jointly
responsible for the losses and damages suffered by their
cargoes. (Art. 828, Code of Commerce) (Asked in the ‘97)
(4) Due to fortuitous event. Each vessel and its cargo shall
bear its own damages. (Art. 830, Code of Commerce)
UP COLLEGE OF LAW TRANSPORTATION LAWS
(5) By reason of fortuitous event, vessel properly anchored
and moored collides with another. The injury occasioned
shall be looked upon as particular average to the vessel
run into. (Article 832, Code of Commerce)
(6) Third vessel at fault. The owner of the third vessel shall
indemnify the losses and damages caused, the captain
thereof being civilly liable to said owner. (Art. 831, Code
of Commerce)
What is arrival under stress? Arrival under stress is the arrival
of a vessel at the nearest and most convenient port instead
of the port of destination, if during the voyage the vessel
cannot continue the trip to the port of destination.
It is lawful when the inability to continue voyage is due to
lack of provisions, well-founded fear of seizure, privateers,
pirates, or accidents of the sea disabling it to navigate. (Art.
819, Code of Commerce)
It is unlawful when:
(1) Lack of provisions due to negligence to carry according
to usage and customs;
(2) Risk of enemy not well known or manifest
(3) Defect of vessel due to improper repair; and
(4) Malice, negligence, lack of foresight or skill of captain.
(Art. 820, Code of Commerce)
What is shipwreck? Shipwreck denotes loss/wreck of a vessel
at sea as a consequence of running against another vessel
or thing at sea or on coast where the vessel is rendered
incapable of navigation.
If the wreck was due to malice, negligence or lack of skill of
the captain, the owner of the vessel may demand indemnity
from said captain. (Art. 841)
CARRIAGE OF GOODS BY SEA ACT (COGSA)
(COMMONWEALTH ACT No. 65)
APPLICATION
COGSA is a special law that governs all contracts of
carriage of goods by sea between or to and from the
Philippine ports.
Application of laws
(1) If the common carrier is coming to the Philippines:
First: Civil Code
Second: COGSA (in foreign trade)
Third: Code of Commerce
(2) If the private carrier is coming to the Philippines:
First: COGSA
Second: Code of Commerce
Third: Civil Code (excluding rules on common carriers)
(3) If the private or common carrier is from the Philippines
to a foreign country: Apply the law of the foreign country
(Art. 1753, CC) UNLESS the parties make COGSA
applicable.
Hierarchy of laws
(1) Art. 1766, CC (COGSA as only in matters not regulated
by this Code) this notwithstanding the fact that COGSA
is a special law. Goods in a foreign country shipped to
the Philippines are governed by the Civil Code.
(2) Art. 1753, CC
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NOTICE OF LOSS OR DAMAGE
Notice of claim and the general nature of the loss or
damage must be given in writing to the carrier or his agent
at the port of discharge before or at the time of the removal
of the goods. (Sec. 3 (6), COGSA)
If damage is not patent or cannot be ascertained from the
package, the shipper should file the claim with the carrier
within three days from delivery (compare with Code of
Commerce rules, see discussion on Period for Filing Claims
above).
First, the provision of COGSA provides that the notice of
claim need not be given if the state of the goods, at the time
of their receipt, has been the subject of a joint inspection or
survey. Prior to unloading the cargo, an Inspection Report
as to the condition of the goods was prepared and signed by
representatives of both parties. Second, as stated in the
same provision, a failure to file a notice of claim within three
days will not bar recovery if it is nonetheless filed within one
year. This one-year prescriptive period also applies to the
shipper, the consignee, the insurer of the goods or any legal
holder of the bill of lading. "Inasmuch as the neither the
Civil Code nor the Code of Commerce states a specific
prescriptive period on the matter, the COGSA—which
provides for a one-year period of limitation on claims for
loss of, or damage to, cargoes sustained during transit--
may be applied suppletorily to the case at bar." (Belgian
Overseas v. Philippine First Insurance, 2002)
PERIOD OF PRESCRIPTION (ASKED IN 1992, 1995, 2000, 2004)
In any event the carrier and the ship shall be discharged
from all liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or the
date when the goods should have been delivered.
The absence of a 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. (Sec. 3 (6))
Clearly, the coverage of the Act includes the insurer of the
goods. Otherwise, what the Act intends to prohibit after the
lapse of the one-year prescriptive period can be done
indirectly by the shipper or owner of the goods by simply
filing a claim against the insurer even after the lapse of one
year. (Filipino Merchants Insurance, Inc. v. Alejandro, 1986):
The period for filing the claim is one year, in accordance
with the Carriage of Goods by Sea Act. This was adopted
and embodied by our legislature in Com. Act No. 65 which,
as a special law, prevails over the general provisions of the
Civil Code on prescription of actions. (Maritime Agencies &
Services, Inc. v. CA, 1990)
LIMITATION OF LIABILITY
Under Sec. 4(5), the limit is set at a maximum of $500 per
package or customary freight unit.
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
is the real value of goods. (Aquino)
UP COLLEGE OF LAW TRANSPORTATION LAWS
Under the Sec. 4(5), the liability limit is set at $500 per
package or customary freight unit unless the nature and
value of such goods is declared by the shipper. This is
deemed incorporated in the bill of lading even if not
mentioned in it. (Eastern Shipping vs. IAC, 150 SCRA 463).
The Civil Code does not limit the liability of the common
carrier to a fixed amount per package. In all matters not
regulated by the Civil Code, the right and the obligations of
common carriers shall be governed by the Code of
Commerce and special laws. Thus, the COGSA, which is
suppletory to the provisions of the Civil Code, supplements
the latter by establishing a statutory provision limiting the
carrier's liability in the absence of a shipper's declaration of
a higher value in the bill of lading. In the case before us,
there was no stipulation in the Bill of Lading limiting the
carrier's liability. Neither did the shipper declare a higher
valuation of the goods to be shipped. Petitioners' liability
should be computed based on US$500 per package and
not on the per metric ton price declared in the Letter of
Credit. (Belgian Overseas v. Philippine First Insurance, 2002)
The Warsaw Convention
APPLICABILITY
(1) All international carriage of persons, baggage, or cargo
performed by aircraft for reward.
(2) Gratuitous carriage by aircraft performed by an air
transport undertaking (Art. 1, No. 1, WC)
INTERNATIONAL AIR TRANSPORTATION
Transportation by air between points of contact of two high
contracting parties, or those countries that have acceded to
the Convention, wherein the place of departure and the
place of destination are situated:
(1) Within the territories of two High Contracting Parties
regardless of whether or not there be a break in the
transportation or a transshipment; OR
(2) Within the territory of a single High Contracting Party if
there is an agreed stopping place within a territory
subject to the sovereignty, mandate or authority of
another power, even though the power is not a party to
the Convention. (Sec. 1, No. 2, WC)
A carriage to be performed by several successive air carriers is
deemed, for the purposes of this Convention, to be one
undivided carriage, if it has been regarded by the parties as a
single operation, whether it had been agreed upon under
the form of a single contract or of a series of contracts. (Sec.
1, No. 3, WC)
PERIOD COVERED
The period during which the baggage or goods are in
charge of the carrier, whether in an airport or on board an
aircraft, or, in the case of a landing outside an airport, in any
place whatsoever. (Sec. 18, WC)
LIABILITY OF CARRIER FOR DAMAGES
(1) Death or injury of a passenger if the accident causing it
took place
(a) on board the aircraft,
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(b) in the course of the operations of embarking,
(c) in the course of disembarking, or
(d) when there was delay (Sec. 17 and 19, WC);
(2) Destruction, loss, or damage to any baggage or goods
that are checked in, if damage occurred
(a) during the transportation by air, or
(b) when there was delay (Sec. 18 and 19, WC)
Transportation by air is the period during which the baggage
or goods are in the charge of the carrier whether in an
airport or on board an aircraft, or in case of a landing
outside an airport, in any place whatsoever. (Sec. 18, WC)
(3) Delay in the transport by air of passengers, baggage or
goods.
LIMITATION OF LIABILITY
LIABILITY TO PASSENGERS
General rule: 250,000 francs per passenger
Exception: Agreement to a higher limit (Art. 22(1), WC)
LIABILITY FOR CHECKED BAGGAGE
General rule: 250 francs per kg
Exception: In case of special declaration of value and
payment of a supplementary sum by consignor, carrier is
liable to not more than the declared sum unless it proves
the sum is greater than actual value. (Art. 22(2), WC)
LIABILITY FOR HAND-CARRIED BAGGAGE
General rule: 5,000 francs per passenger (Art. 22(3), WC)
(1) An agreement relieving the carrier from liability or fixing
a lower limit is null and void. (Art. 23, WC)
(2) Carrier is not entitled to the foregoing limit if the
damage is caused by willful misconduct or default on its
part. (Art. 25)
(3) The right to damages under the WC is extinguished
after 2 years from the date of arrival at the destination
or from the date on which the aircraft ought to have
arrived, or from the date on which the carriage stopped.
(Art. 29(1), WC)
Note: The Guatemala Protocol of 1971 increased the limit for
passengers to $100,000 and $1,000 for baggage. However,
the Supreme Court noted in Santos III v. Northwest Orient
Airlines, G.R. No. 101538, June 23, 1992, that the Guatemala
Protocol is still ineffective. (Sundiang and Aquino)
The WC should be deemed a limit of liability only in those
cases where the cause of death or injury to person, or
destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any willful
misconduct, bad faith, recklessness, or otherwise improper
conduct on the part of any official or employee for which the
carrier is responsible; and there is otherwise no special or
extraordinary form of resulting injury. (Alitalia v. CA)
WILLFUL MISCONDUCT
When can a common carrier not avail itself of this limitation?
(1) Willful misconduct (Art. 25, WC)
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(2) Default amounting to willful misconduct (Art. 25, WC)

(3) Accepting passengers without ticket (Art. 3, No. 2, WC)
(4) Accepting goods without airway bill or baggage without
baggage check. Carrier guilty of willful misconduct
cannot avail of the provisions limiting liability but may
still invoke other provisions of the WC. (see Art. 25)

Receipt by the person entitled to the delivery of baggage or

cargo without complaint is prima facie evidence that the
same have been delivered in good condition and in
accordance with the document of carriage. (Art. 26, WC).

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