Transportation Law Notes

TRANSPORTATION LAW
Morillo Notes
association must be citizens of the Philippines. (Art. XII,
Sec. 11, Constitution)
TRANSPORTATION LAW 5. In times of national emergency, when the public interest
MORILLO NOTES so requires, the State may, during the emergency and
under reasonable terms prescribed by it, temporarily
USEC. Roberto Lim Syllabus
take over or direct the operation of any privately owned
public utility or business affected with public interest.
(Art. XII, Sec. 17, Constitution)
Governing Laws on Transportation:
6. The State, may, in the interest of national welfare or
1. Coastwise Shipping:
defense, establish and operate vital industries and, upon
a. Primary Law: (Arts. 1732-1766, NCC) payment of just compensation, transfer to public
b. Suppletory: Code of Commerce ownership utilities and other private enterprises to be
2. Carriage from Foreign Ports to Philippine Ports: operated by the Government. (Art. XII, Sec. 18,
a. Primary Law: Civil Code of the Constitution)
Philippines 7. The State shall regulate or prohibit monopolies when the
b. Suppletory: public interest so requires. No combinations in restraint
i. Code of Commerce, all matters of trade or unfair competition shall be allowed. (Art. XII,
not regulated by the Civil Code; Sec. 19, Constitution)
ii. Carriage of Goods by Sea Act
3. Carriage from Philippine Ports to Foreign Ports:
- The laws of the country to which the goods are
to be transported. (Art. 1753, NCC) PART 1. COMMON CARRIERS
4. Overland Transportation:
a. Primary Law: NCC
b. Suppletory: Code of Commerce
5. Air Transportation: PUBLIC UTILITIES
a. Civil Code of the Philippines VEHICLES
b. Code of Commerce (C.A. 146, As Amended)
c. Warsaw Convention
d. Chicago Convention; Convention on
International Civil Aviation which was Definition of Public Service:
signed on December 7, 1944 - It includes every person that now or hereafter may own,
e. RA 9497 (Civil Aviation Authority Act of operate, manage, or control in the Philippines, for hire or
2008) compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for
Note: Under Sec. 3, RA 9497, “Civil Aviation” refers to the operation general purposes, any common carrier, railroad, street
of any civil aircraft for the purpose of general aviation operations, railway, traction railway, subway motor vehicle, either for
aerial work or commercial air transport operations. freight or passenger, or both with or without fixed route
and whether may be its classification, freight or carrier
RA 776 (An Act to Reorganize the Civil Aeronautics Board and the service of any class, express service, steamboat or
Civil Aeronautics Association) was passed on June 20, 1952
steamship line, pontines, ferries, and water craft, engaged
in the transportation of passengers or freight or both,
shipyard, marine railways, marine repair shop,
CONSTITUTIONAL [warehouse] wharf or dock, ice plant, ice-refrigeration
PROVISIONS plant, canal, irrigation system, gas, electric light, heat and
power water supply and power, petroleum, sewerage
system, wire or wireless communications system, wire or
1. No franchise, certificate, or any other form of wireless broadcasting stations and other similar public
authorization for the operation of a public utility shall be services. (Sec. 13(b), CA 141)
granted except to citizens of the Philippines or to - Provided, however, That a person engaged in agriculture,
corporations or associations organized under the laws of not otherwise a public service, who owns a motor vehicle
the Philippines at least 60% of whose capital is owned and uses it personally and/or enters into a special
by such citizens, nor shall such franchise, certificate, or contract whereby said motor vehicle is offered for hire or
authorization be exclusive in character or for a longer compensation to a third party/ies engaged in agriculture
period than 50 years. (Art. XII, Sec. 11, Constitution) not itself or themselves a public service, for operation by
2. Neither shall any such franchise or right be granted the latter for a limited time and for a specific purpose
except under the condition that it shall be subject to directly connected with the cultivation of his or their farm,
amendment, alteration, or repeal by the Congress when the transportation, processing, and marketing of
the common good requires. (Art. XII, Sec. 11, agricultural products of such third party/ies shall not be
Constitution) considered as operating a public service for the purposes
3. The State shall encourage equity participation in public of this Act. (Sec. 13(b), CA 141)
utilities by the general public. (Art. XII, Sec. 11,
Constitution) Public Service vs. Public Utility:
4. The participation of foreign investors in the governing - The term “public service” is anything defined under
body of any public utility enterprise shall be limited to Section 13 (b), of CA 141 while the term “public utility”
their proportionate share in its capital, and all the refers to a business or service of public consequence
executive and managing officers of such corporation or such as electricity, gas, water, transportation, telephone
TRANSPORTATION LAW NOTES 1

TRANSPORTATION LAW
Morillo Notes
or telegraph service. Simply stated, a public utility required by the law. (Diaz, Transportation Law (2018) p.
provides a service or facility needed for present day living 323)
which cannot be denied to anyone who is willing to pay
for it. (NAPOCOR vs. CA and Cepalco, GR no. 112702, Requirements for the issuance of CPC:
September 26, 1997) 1. The applicant must be a citizen of the Philippines, or a
- Public utilities are privately owned and operated business corporation or co-partnership, association or joint-
whose services are essential to the general public. They stock company constituted and organized under the
are enterprises, which specially cater to the needs of the laws of the Philippines, at least 60% of its stock or
public and conduce to their comfort and convenience. paid up capital must belong entirely to citizens of the
(KMU vs. Garcia Jr., GR no. 115381, December 23, 1994) Philippines;
2. The applicant must be financially capable of
Public Nature: undertaking the proposed service and meeting the
responsibilities incident to its operations; and
RADIO COMMUNICATION vs. PT&TC
184 SCRA 517
3. The applicant must prove that the operation of the
public service proposed and the authorization to do
It was well within the powers of the public respondent to business will promote the public interest in a proper
authorize the installation by the private respondent network of and suitable manner.
radio communications systems in Catarman, Samar and San
Jose, Mindoro. Under the circumstances of this case, the mere PRIOR OPERATOR RULE:
fact that the petitioner possesses a franchise to put up and - The rule is established by the weight of authority
operate a radio communications system in certain areas is not an
that the owner or operator of an automobile owes
insuperable obstacle to the public respondent's issuing the
proper certificate to an applicant desiring to extend the same
the duty to an invited guest to exercise reasonable
services to those areas. The Constitution mandates that a care in its operation, and not unreasonably to
franchise cannot be exclusive in nature nor can a franchise be expose him to danger and injury by increasing the
granted except that it must be subject to amendment, alteration, hazard of travel. This rule, as frequently stated by
or even repeal by the legislature when the common good so the courts, is that an owner of an automobile owes
requires. (Art. XII, sec. 11 of the 1986 Constitution). There is an a guest the duty to exercise ordinary or reasonable
express provision in the petitioner's franchise which provides care to avoid injuring him. Since one riding in an
compliance with the above mandate R.A. 2036, sec. 15).
automobile is no less a guest because he asked for
In view of the foregoing, we find no reason to disturb the public
the privilege of doing so, the same obligation of
respondent's findings of fact, and conclusions of law insofar as care is imposed upon the driver as in the case of
the private respondent was authorized to operate in Catarman, one expressly invited to ride" (Lara vs. Valencia,
Samar and San Jose, Mindoro. As a rule, the Commission's GR no. L-9907, June 30, 1958)
findings of fact, if supported by substantial evidence, are
conclusive upon this Court. We may modify or ignore them only
when it clearly appears that there is no evidence to support
REGULATION OF
reasonably such a conclusion. (Halili v. Daplas, 14 SCRA 14). The
petitioner has not shown why the private respondent should be TRANSPORTATION INDUSTRY
denied the authority to operate its services in Samar and
Mindoro. It has not overcome the presumption that when the
public respondent disturbed the petitioner's monopoly in certain DEPARTMENT OF TRANSPORTATION
areas, it was doing so pursuant to public interest and the (EO 125; EO 125-A)
common good.
Mandate of the Department of Transportation:

- The Ministry shall be the primary policy, planning,
LTO vs. CITY OF BUTUAN
322 SCRA 805 programming, coordinating, implementing, regulating,
and administrative entity of the Executive Branch of the
Tricycles are a popular means of transportation, specially in the government in the promotion, development and
countryside. They are, unfortunately, being allowed to drive along regulation of dependable and coordinated networks of
highways and principal thoroughfares where they pose hazards transportation and communication system, as well as in
to their passengers arising from potential collisions with buses, the fast, sale, efficient and reliable postal, transportation
cars and jeepneys. and communication services. (Sec. 4, EO, 125)
The operation of tricycles within a municipality may be regulated
by the Sangguniang Bayan. In this connection, the Sangguniang Objectives of the Department of Transportation:
concerned would do well to consider prohibiting the operation of a. Promote the development of dependable and
tricycles along or across highways invite collisions with faster coordinated networks of transportation and
and bigger vehicles and impede the flow of traffic. communication systems;
b. Guide government and private investment in the
The need for ensuring public safety and convenience to development of the country’s inter-model
commuters and pedestrians alike is paramount. It might be well, transportation and communication system in a
indeed, for public officials concerned to pay heed to a number of
most practical, expeditious, and orderly fashion for
provisions in our laws that can warrant in appropriate cases an
incurrence of criminal and civil liabilities. maximum safety, service and cost-effectiveness;
c. Impose appropriate measure so that technical,
economic and other condition for the continuing
Certificate of Convenience (CPC): economic viability of the transportation and
- It is an authorization granted by the LTFRB for the communication entities are not jeopardized and do
operation of land transportation services for public use as

2 TRANSPORTATION LAW NOTES

TRANSPORTATION LAW
Morillo Notes
not encourage inefficiency and distortion of traffic telecommunications facilities in areas not adequately
patronage; served by the private sector in order to render such
d. Develop an integrated plan for a nationwide domestic and overseas services that are necessary with
transmission system in accordance with the due consideration for advances in technology;
national and international telecommunication k. Establish and prescribe rules and regulations for the
service requirement including, among others, radio operation and maintenance of a nationwide postal
and television broadcast relaying, leased channel system that shall include mail processing, delivery
services and data transmission; services, money order services and promotion of
e. Guide government and private investment in the philately;
establishment, operation and maintenance of an l. Establish and prescribe rules and regulations for
international switching system for incoming and issuance of certificates of public convenience for public
outgoing telecommunication services; land transportation utilities, such as motor vehicles,
f. Encourage the development of a domestic trimobiles and railways;
telecommunication industry in coordination with m. Establish and prescribe rules and regulations for the
the concern entities particularly, the manufacture of inspection and registration of air and land transportation
communications, electronics equipment and facilities, such as motor vehicles, trimobiles, railways and
components to complement and support as much aircrafts;
as possible, the expansion, development, n. Establish and prescribe rules and regulations for the
operation and maintenance of the nationwide issuance of licenses to qualified motor vehicle drivers,
telecommunications network; conductors, and airmen;
g. Provide for a safe, reliable and efficient postal o. Establish and prescribe the corresponding rules and
system for the country. regulations for the enforcement of laws governing land
transportation, air transportation and postal services,
Powers and Functions of the Department: including the penalties for violations thereof, and for the
a. Formulate and recommend national policies and deputation of appropriate law enforcement agencies in
guidelines for the preparation and implementation of pursuance thereof;
integrated and comprehensive transportation and p. Determine, fix and/or prescribe charges and/or rates
communications systems at the national, regional and pertinent to the operation of public air and land
local levels; transportation utility facilities and services, except such
b. Establish and administer comprehensive and integrated rates and/or charges as may be prescribed by the Civil
programs for transportation and communications, and Aeronautics Board under its charter, and, in cases where
for this purpose, may call on any agency, corporation, or charges or rates are established by international bodies
organization, whether public or private, whose or associations of which the Philippines is a participating
development programs include transportation and member or by bodies or associations recognized by the
communications as an integral part thereof, to Philippine government as the proper arbiter of such
participate and assist in the preparation and charges or rates;
implementation of such program; q. Establish and prescribe the rules, regulations,
c. Assess, review and provide direction to transportation procedures and standards for the accreditation of driving
and communication research and development schools;
programs of the government in coordination with other
institutions concerned; AIR TRANSPORTATION
d. Administer and enforce all laws, rules and regulations in (EO 125-A; RA 776)
the field of transportation and communications;
e. Coordinate with the Department of Public Works and CIVIL AERONAUTICS BOARD (CAB):
Highways in the design, location, development,
rehabilitation, improvement, construction, maintenance Powers and Duties of the CAB:
and repair of all infrastructure projects and facilities of 1. Except as otherwise provided therein, the CAB shall
the Department. However, government corporate entities have the power to regulate the economic aspect of air
attached to the Department shall be authorized to transportation, and shall have the general supervision
undertake specialized telecommunications, ports, and regulation of, the jurisdiction and control over, air
airports and railways projects and facilities as directed carriers, general sales agents, cargo sales agents, and
by the President of the Philippines or as provided by law; air freight forwarders as well as their property, property
f. Establish, operate and maintain a nationwide postal rights, equipment, facilities and franchise, insofar as
system that shall include mail processing, delivery may be necessary for the purpose of carrying out the
services, and money order services and promote the art provision of this Act (EO 125);
of philately; 2. To authorize any type of charters whether domestic or
g. Issue certificates of public convenience for the operation international and special air services or flight under
of public land and rail transportation utilities and such terms and conditions as in its judgment public
services; interest requires.
h. Accredit foreign aircraft manufacturers and/or 3. Notwithstanding the existence of bilateral air
international organizations for aircraft certification in agreement, the CAB is authorized to grant any foreign
accordance with established procedures and standards; airline increase in frequencies and/or capacities on
i. Establish and prescribe rules and regulations for international routes when in its judgment the national
identification of routes, zones and/or areas of operations interest requires it, provided that the utilization of the
of particular operators of public land services; increase frequencies and capacities is not more than
j. Establish and prescribe rules and regulations for the 30 days. All grants of frequencies and/or capacities
establishment, operation and maintenance of such shall be subject to the approval of the President;

TRANSPORTATION LAW
Morillo Notes
4. To approve or disapprove increase and/or decrease of WATER TRANSPORTATION
capital, lease, purchase, sales of aircraft or air carrier (EO 125; EO 125-A)
engaged in air commerce, consolidation, merger,
purchase, lease and acquisition and control of MARITIME INDUSTRY AUTHORITY (MARINA):
operating contracts between domestic air carriers,
between domestic and foreign air carriers, or between Functions:
domestic air carriers or any persons engaged in any - The MARINA oversees the promotion and
phase of aeronautics. development of the maritime industry, and also
provides effective regulation of shipping
LAND TRANSPORTATION enterprises. Since its establishment in June 1994,
(EO 125-A; Admin. Code) MARINA was granted the authority to issue
Certificates of Public Convenience (CPC),
LAND TRANSPORTATION OFFICE (LTO): permitting the operation of domestic and overseas
water carriers. Other functions of the agency
Functions: include the registration of vessels, the issuance of
a. Inspection and Registration of Motor Vehicles licenses, the addressing of safety concerns
b. Issuance of Licenses and Permits pertaining to vessel construction, and the
c. Enforcement of Land Transportation Rules and enforcement of maritime law.
Regulation
d. Adjudication of Traffic Cases PHILIPPINE PORTS AUTHORITY:
e. Collection of Revenues for the Government
Functions:
LAND TRANSPORTATION FRANCHISING 1. To formulate in coordination with the National
AND REGULATORY BOARD (LTFRB): Economic and Development Authority a
comprehensive and practicable Port Development
Functions: for the State and to program its implementation,
a. To prescribe and regulate routes of service, renew and update the same annually in
economically viable capacities and zones or areas coordination with other national agencies;
of operation of public land transportation services 2. To supervise, control, regulate, construct, maintain,
provided by motorized vehicles in accordance with operate, and provide such facilities or services as
the public land transportation development plans are necessary in the ports vested in, or belonging
and programs approved by the Department of to PPA;
Transportation and Communications; 3. To prescribe rules and regulation, procedures, and
b. To issue, amend, revise, suspend or cancel guidelines governing the establishment,
Certificates of Public Convenience or permits construction, maintenance, and operations of all
authorizing the operation of public land other ports, including private ports in the country;
transportation services provided by motorized 4. To license, control, regulate, supervise any
vehicles, and to prescribe the appropriate terms construction or structure within any Port District;
and conditions therefore; 5. To provides services (whether on its own, by
c. To determine, prescribe and approve and contract, or otherwise) within the Port District and
periodically review and adjust, reasonable fares, the approaches thereof, including but not limited to
rates and other related charges, relative to the berthing, towing, mooring, moving, slipping, or
operation of public land transportation services docking any vessel; loading or discharging any
provided by motorized vehicles; vessel; and, sorting, weighing, measuring,
d. To issue preliminary or permanent injunction, warehousing, or otherwise, handling goods.
whether prohibitory or mandatory, in all cases in 6. To exercise control of or administer any foreshore
which it has jurisdiction, and in which cases the rights or leases which may be vested in PPA from
pertinent provisions of the Rules of Court shall time to time;
apply; 7. To coordinate with the Bureau of Lands or any
e. To punish for contempt of the Board, both direct other government agency or corporation, in the
and indirect, in accordance with the pertinent development of any foreshore area;
provisions of, and the penalties prescribed by, the 8. To control, regulate and supervise pilotage and the
Rules of Court; conduct of pilots in any Port District;
f. To issue subpoena and subpoena duces tecum 9. To provide or assist in the provision of training
and summon witnesses to appear in any programs and training facilities for its staff of port
proceedings of the Board, to administer oaths and operators and users for the efficient discharge of
affirmations; its functions, duties, and responsibilities; and
g. To conduct investigations and hearings of 10. To perform such acts or provide such services as
complaints for violation of the public service laws may be deemed proper or necessary to carry out
on land transportation and of the Board’s rules and and implement the provisions of the PD, including
regulations, orders, decisions and/or rulings and to the adoption of necessary measures to remedy
impose fines and/or penalties for such violations; congestion in any government port, and in
coordination with the Bureau of Customs in the
case of ports of entry (as amplified by Exec. Order
No. 513).


TRANSPORTATION LAW
Morillo Notes
2. Carrier:
- Common carriers are persons, corporations, firms, or
CONTRACT OF associations engaged in the business of carrying or
TRANSPORTATION transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services
to the public. (Art. 1732, NCC)
DEFINITION OF CONTRACT OF TRANSPORTATION 3. Consignee:

- The person to whom the goods are to be delivered
Contract of Transportation: who may be:
- There is a contract of transportation when a person a. The shipper himself as in the case where the
obligates himself to transport persons or property from goods will be delivered to one of the branch
one place to another for a consideration. (Aquino & offices of the shipper; or
Hernando (2016) p.3) b. Any 3 person, natural or juridical, who is not a
rd
party to the contract. (Aquino & Hernano (2016),

p. 4-5)
PARTIES TO A CONTRACT OF TRANSPORTATION
Note: The consignee is bound by the agreement between the
shipper and the carrier where it is established that he accepted the
A: CARRIAGE OF PASSENGERS terms thereof and is trying to enforce it. (Everett Steamship vs. CA,
1. Common Carrier: GR no. 122494, October 8, 1998)
- Persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers Instances when a Consignee is bound by the Contract
or goods or both, by land, water, or air, for even if the Consignee is not the contracting party:
compensation, offering their services to the public. 1. By reason of the relationship between the
(Art. 1732, NCC) consignee and the shipper consignor;
- One that holds itself out as ready to engage in the 2. By the inequivocal acceptance of the bill of lading
transportation of goods for hire as a public delivered to the consignee, with full knowledge of
employment and not as a casual occupation. (Aquino its contents; or
& Hernando (2016), p. 10) 3. By the availment of the stipulation pour autrui (ie.
when the consignee, a third person, demands
2. Passenger: before the carrier the fulfillment of the stipulation
- One who travels in a public conveyance by virtue of a made by the consignor/shipper in the consignee’s
contract, express or implied, with the carrier as as to favor, specifically the delivery of the goods/cargoes
the payment of fare or that which is accepted as an shipped). (MOF Company vs. Shin Yang Brokerage
equivalent thereof. (Vda. De Nueca vs. Manila Corp., GR no. 172822, December 18, 2009)
Railroad Co., CA No. 31731-R, January 30, 1968)
The following are NOT considered as PASSENGERS, PERFECTION OF CONTRACT OF TRANSPORTATION

and are entitled to ordinary diligence only:
a. One who has not yet boarded any part of a vehicle A: CARRIAGE OF PASSENGERS
regardless of whether or not he has purchased a 1. Contract to Carry:
ticket; - It is an agreement to carry the passenger at some
b. One who remains on a carrier for an unreasonable future date.
length of time after he has been afforded every safe - It is consensual and, therefore, perfected by mere
opportunity to alight; consent. (Aquino & Hernando (2016), p. 5)
c. One who has boarded by fraud, stealth, or deceit; - An action for damages may be sustained for breach
d. One who attempts to board a moving vehicle, of contract to carry. (British Airways, Inc. vs. CA, GR
although he has a ticket, unless th attempt be with no. 92288, February 9, 1993)
the knowledge and consent of the carrier;
e. One who has boarded a wrong vehicle, has been 2. Contract of Carriage or of Common Carriage:
properly informed of such fact, and on alighting, is - It is considered a real contract not until the facilities
injured by the carrier; or of the common carrier are actually used can the
f. One who rides any part of the vehicle which is carrier be said to have already assumed the
unsuitable or dangerous or which he knows is not obligation of the carrier. (Aquino & Hernando (2016),
designed or intended for passengers. (Vda. De Nueca p. 5)
vs. Manila Railroad Co., CA No. 31731-R, January 30,
1968)
B: CARRIAGE OF GOODS
1. Contract to Carry Goods:
B: CARRIAGE OF GOODS - A consensual contract to carry goods whereby the
1. Shipper: carrier agrees to accept and transport at some
- The person who delivers the goods to the carrier or future date. (Aquino & Hernando (2016), p. 6)
transportation and pays the consideration, or on
whose behalf payment is made. (Aquino & Hernando 2. Contract of Carriage of Goods:
(2016), p. 4)
- By the act of delivery of the goods, when the goods
are unconditionally placed in the possession and
control of the carrier, and upon their receipt by the

TRANSPORTATION LAW
Morillo Notes
carrier for the transportation. (Aquino & Hernando
both, and one who does such carrying only as an ancillary
(2016), p. 6) activity (in local Idiom as "a sideline"). Article 1732 also carefully
avoids making any distinction between a person or enterprise
C: AIRCRAFT offering transportation service on a regular or scheduled basis
1. Contract to Carry Passengers: and one offering such service on an occasional, episodic or
- It is perfected even if no tickets are issued so long unscheduled basis. Neither does Article 1732 distinguish
as there was already meeting of the minds with between a carrier offering its services to the "general public," i.e.,
respect to the subject matter and the consideration. the general community or population, and one who offers
services or solicits business only from a narrow segment of the
(Compañia Maritime vs. Insurance Company, GR no.
general population. We think that Article 1733 deliberation
L-18965, October 30, 1964) making such distinctions.
2. Contract of Carriage between Passenger and Airline: The Court of Appeals referred to the fact that private respondent
- It is perfected when the passenger had checked in held no certificate of public convenience, and concluded he was
at the departure counter, passed through customs not a common carrier. This is palpable error. A certificate of
and immigration, boarded the shuttle bus and public convenience is not a requisite for the incurring of liability
proceeded to the ramp of the aircraft and his under the Civil Code provisions governing common carriers.
baggage loaded to the aircraft. (Korean Airlines vs.
CA, GR no. 114061, August 3, 1994) True Test of a Common Carrier:
- The true test for a common carrier is not the
D: BUSES, JEEPNEYS, and STREET CARS quantity or extent of the business actually
- The act of the driver in stopping their conveyances is a transacted, or the number and character of the
continuous offer to rides. The passenger is deemed to be conveyances used in the activity, but whether the
accepting the offer if he is already attempting to board the undertaking is a part of the activity engaged in by
conveyances and the contract of carriage is perfected the carrier that he has held out to the general
from that point. (Dangwa Transportation Co., Inc vs. CA, public as his business or occupation. (Sps. Perena
GR no. 95582, October 7, 1991) vs. Sps. Nicolas, GR no. 157917, August 29, 2012)
- If the undertaking is a single transaction, not a part
E: TRAINS of the general business or occupation engaged in,
- The person must have the bona fide intention to use the as advertised and held out to the general public,
facilities of the carrier, possess sufficient fare and present the individual or the entity rendering such services
himself to the carrier for transportation at the proper place is a private, not a common, carrier. (Sps. Perena
and manner provided. (Vda. De Nueca vs. Manila vs. Sps. Nicolas, Supra)
Railroad, supra)
CHARACTERISTICS OF A COMMON CARRIER:
TESTS AND CHARACTERISTICS 1. Art. 1732, NCC, makes no distinction between one
whose principal business activity is the carrying of
OF A COMMON CARRIER
persons o goods or both, and one who does such
carrying only as an ancillary activity (or “sideline”);
TESTS IN DETERMINING A COMMON CARRIER OF 2. Art. 1732, NCC, also carefully avoids making any
GOODS: distinction between a person or enterprise offering
1. He must be engaged in the business of carrying transportation service on a regular or scheduled
goods for others as a public employment, and basis and one offering such service on an
must hold himself out as ready to engage in the occasional, episodic or unscheduled basis.
transportation of goods for person generally as a 3. Art. 1732 does not distinguish between a carrier
business and not as a casual occupation: offering its services to the general public (ie., the
2. He must undertake to carry goods of the kind to general community or population) and one who
which his business is confined; offers services or solicits business only from a
3. He must undertake to carry by the method his narrow segment of the general population.
business is conducted and over his established 4. A person or entity is a common carrier and has the
roads; and obligations of common carrier under the Civil
4. The transportation must be for hire. (First philippine Code even if he did not secure a Certificate of
Industrial Corp vs. CA, GR no.125948, December Public Convenience.
29, 1998) 5. The Civil Code makes no distinction as to the
means of transporting, as long as it is by land,
water or air.
PEDRO DE GUZMAN vs. CA
6. The Civil Code does not provide that the
GR no. L-47822, december 22, 1988
transportation should be by motor vehicle.
The Civil Code defines "common carriers" in the following terms: 7. A person or entity may be a common carrier even if
he has no fixed and publicly known route,
Article 1732. Common carriers are persons, maintains no terminals, and issues no tickets.
corporations, firms or associations engaged in the 8. A person or entity need not be engaged in the
business of carrying or transporting passengers or business of public transportation for the provisions
goods or both, by land, water, or air for compensation, of the Civil Code on common carriers to apply to
offering their services to the public.
them.
The above article makes no distinction between one whose 9. The carrier can also be a common carrier even if
principal business activity is the carrying of persons or goods or the operator does not own the vehicle or vessel
that he or she operates. (De Guzman vs. CA, GR


TRANSPORTATION LAW
Morillo Notes
no. L-4782, December 22, 1988; First Philippine
Despite catering to a limited clientele, Petitioners Sps.
Industrial Corp. vs. CA, GR no. 125948, December Perenas operated as a common carrier because they
29, 1998; Fabre, Jr. vs. CA, GR no. 111127, July held themselves out as a ready transportation
26, 1996; Cebu Salvage vs. Phil. Home Assurance, indiscriminately to the students of a particular school
GR no. 150403, January 25, 2007) living within or near where they operated the service
for a fee.
Ancillary Business:
- Art. 1732, NCC, makes no distinction between one
whose principal business activity is the carrying of PHIL. AMERICAN GENERAL INSURANCE
persons o goods or both, and one who does such vs. PKS SHIPPING CO,
carrying only as an ancillary activity (or “sideline”) GR no. 149038, April 9, 2003
PEDRO DE GUZMAN vs. CA Respondent PKS Shipping transported 75,000 bags of

GR no. L-4782, December 22, 1988 cement of DUMC in a barge. The bags of cement sank
together with the barge when a tugboat was towing the
Respondent Cendana was considered a common latter.
carrier although his principal business was as a junk
dealer. Cendana is engaged in buying used bottles and The SC declared that PKS SHipping was a common
scrap metal in Pangasinan. Upon gathering sufficient carrier because it was engaged in the business of
quantities of such scrap material, Cendana would bring carrying goods for others for a fee. The regularity of its
such material to Manila for resale. He utilized two 6- activities in the area indicates more than just a casual
wheeler trucks that he owned for hauling the material activity on its part. Neither can the concept of a
to Manila. On the return trip to Pangasinan, Cendana common carrier change merely because individual
would load his vehicles with cargo which various contracts are executed or entered into which with the
merchants wanted delivered to establishments in patrons of the carriers. PKS was declared a common
Pangasinan. for that service, Cendana charged freight carrier although it had a limited clientele.
rates that were commonly lower than regular
commercial rates. Therefore, even if the transportation
of goods was ancillary to the main business of buying ASIA LIGHTERAGE AND SHIPPING, INC. vs. COURT
and selling used bottles and scrap metals, the SC
OF APPEALS
considered Cendana a common carrier.
GR no. 147246, August 19, 2003
Asia Lighterage and Shipping was involved in the

Limited Clientele:
business of carrying goods through its barges. It has
- Although the clientele is limited, the regularity of no fixed and publicly known route, maintains no
the activities of a carrier may indicate that the same terminals, and issues no tickets.
carrier is a common carrier. (Aquino & Hernando, p.
16) The SC ruled that it is a common carrier pointing out
- A public utility may not evade control and that the principal business Asia lighterage is that of
supervision of its operation by the government by lighterage and dravage and it offers its barges to the
selecting its customers under the guise of private public for carrying or transporting by water for
compensation.
transactions. (Luzon Stevedoring Co., vs. Public
Service Commission, GR no. L-5458, September Asia Lighterage is also considered as a common
16, 1953) carrier whether its business of carrying goods is done
LUZON BROKERAGE COMPANY vs. PUBLIC on an irregular basis rather than scheduled manner
SERVICE COMMISSION and with limited clientele. A common carrier need not
GR no. L-5458, September 16, 1953 have a fixed and publicly known route nor does it have
to maintain terminals or issue tickets.
SC declared that Act 454 is clear in including in the
definition of a public service that which is rendered for
NOT A COMMON CARRIER BY LAW:
compensation, although limited exclusively to the
customers of petitioner Luzon Stevedoring. In this - Foreign vessels engaging in carriage conducted in
case, Luzon Brokerage Company, a customs broker, accordance with RA no. 10668 shall not be
had been receiving, depositing, and delivering goods considered common carriers under the New Civil
discharged from ships at the pier to its customers. Code. (Sec. 7, RA no. 1066)
Luzon Brokerage was then rendering transportation
service for compensation to a limited clientele, not to EFFECT OF A CHARTER PARTY:
the public at large. - A charter party may transform a common carrier
into a private carrier. However, it must be a
bareboat or demise charter where the charterer
SPS. PERENA vs. SPS. NICOLAS mans the vessel with his own people and becomes,
GR no. 157917, August 29, 2012
in effect, the owner for the voyage or service
SC Concluded that Sps. Perenas as the operators of a stipulated. (Caltex (Phils.) vs. Sulpicio Lines, 315
school bus service were; (a) engaged in transporting SCRA 709)
passengers generally as business, not just as a casual
occupation; (b) undertaking to carry passengers over What is a Charter Party?
established roads by the method by which the - It is a contract by which an entire ship, or some
business was conducted; and (c) transporting students principal part thereof, is let by the owner to another
for a fee. person for a specified time or use. (Planters

TRANSPORTATION LAW
Morillo Notes
Products, Inc. vs. CA, GR no. 101503, September expediting her voyage without reference to any
15, 1993) circumstances of danger. (Supra)
Types of Charter Parties: Diligence Required:

1. Contract of affreightment which involves the use of - Common carriers are required to undertake
shipping space on vessels leased by the owner in extraordinary diligence, however, in a contract of
part or as a whole, to carry goods for others; and towage, the party is required to observe the due
2. Charter by demise pr “Bareboat Charter”, by the diligence of a good father of the family. (Cargolift
terms of which the whole vessel is let to the Shipping vs. L. Actuario Marketing and Skyland
charterer with a transfer to him of its entire Brokerage, GR no. 146426, June 27, 2006)
command and possession and consequent control
over its navigations, including the mater and the 2. ARRASTRE:
crew, who are his servants. (Planters Products, Inc. What is Arrastre?
vs. CA, Supra) - Refers to hauling of cargom comprehends the
handling of cargo on the wharf or between the
establishment of the consignee or shipper and the
DISTINCTION BETWEEN COMMON CARRIERS,
ship’s tackle. (Mindanao Terminal and Brokerage
PRIVATE CARRIERS AND OTHER CONTRACTS
Services vs. Phoenix Assurance Company, GR no.
162467, May 8, 2009)
A. COMMON CARRIERS vs. PRIVATE CARRIERS: - The responsibility of the arrastre operator lasts until
the delivery of the cargo to the consignee.
COMMON PRIVATE (Mindanao Terminal and Brokerage Services vs.
CARRIER CARRIER Phoenix Assurance Company, Supra)
Law on common Law on obligations
Governing Law Functions of Arrastre:
carriers and contracts
State Subject to State Not subject to State 1. To receive, handle, care for, and deliver all
Regulations regulations regulations merchandise imported and exported, upon or
Holds himself out for Contracts with passing over government-owned wharves and
Availability all people particular individuals piers in the port;
indiscriminately or groups only 2. To record or check all merchandise which may be
Extraordinary Diligence of a good delivered to said port at shipside, and in general
Diligence
diligence father of a family
and;
Presumption of There is presumption No presumption of
negligence of fault or negligence fault or negligence 3. To furnish light, and water services and other
Prove extraordinary Fortuitous Event or incidental services in order to undertake its arrastre
Exempting service. (Delgado Brothers, Inc. vs. Home
diligence and Art. Force Majure under
Circumstances Insurance, Inc., GR no. L-16567, March 27, 1961)
1734, NCC Art. 1174, NCC
Parties may not agree Parties may limit the
on limiting the carrier’s liability, Diligence Required:
carrier’s liability provided it is not - An arrastre operator should observe the same
except when contrary to law, degree of diligence as that required of a common
provided by law. It morals or good
carrier and a warehouseman under Art. 1733, NCC
Stipulation cannot stipulate that customs. It can
limiting liability it is exempt from stipulate that it is and Sec. 3(b) of the Warehouse Receipts Law,
liability for the exempt from liability respectively. being the custodian of the goods
negligence of its for the negligence of discharged from a vessel, an arrastre operator’s
employees or agents, its employees or duty is to take good care of the goods and to turn
being contrary to agents. them over to the party entitled to their possession.
public policy. (Summa Insurance Corp. vs. CA, 323 Phil. 214)
Source: Aquino & Hernando (2016)
Solidary Liability:
B. COMMON CARRIERS vs. OTHER CONTRACTS: - Common carrier may be held solidarily liable with
the arrastre operator depending on the
Note: Common carriers that carry or transport goods by
circumstances. They may not be held solidarily
seas should be distinguished from those who are liable at all times. It should be noted that both the
engaged in towage and from arrastre operators. (Aquino arrastre operator and the carrier may be charged
& Hernando, pp. 30-31) with and obligated to deliver the goods in good
condition to the consignee. (Phil. First Insurance
Co., Inc. vs. Wallem Philippines Shipping, GR no.
1. TOWAGE:
165647, March 26, 2009)
What is a Contract of Towage? - However, the liability of the carrier usually remains
- A vessel is hired to bring another vessel to another until delivery of the goods to the consignee,
place. Thus, a Tugboat may be hired by a common therefore, the custody of the carrier remains while
carrier to bring a barge to a port. In this case, the the goods are being unloader. (Westwind Shipping
operator of a tugboat cannot be considered a Corp. vs. UCPB General Insurance Co., GR no.
common carrier. (Aquino & Hernando, p. 31) 200289, November 25, 2013)
- In Maritime law, it refers to a service rendered to a
vessel by towing for the mere purpose of
3. STEVEDORING:
What is stevedoring?


TRANSPORTATION LAW
Morillo Notes
- Refers to the handling of the cargo in the holds of Nevertheless those engaged in “Tramp Service '' may also
the vessel or between the ship’s tackle and the be considered common carries depending on the
holds of the vessel. The responsibility of the circumstances. (Aquino & Hernando, p. 37)
stevedore ends upon the loading and stowing of
the cargo in the vessel. (Mindanao Terminal and
GOVERNING LAWS
Brokerage Service vs. Phoenix Assurance
Company, Supra)
- A stevedore is not a common carrier for it does not GOVERNING LAWS:
transport goods or passengers, it is not akin to a - In all matters not regulated by the Civil Code, the
warehousemen for it does not store goods for rights and obligations of common carriers shall be
profit. (Mindanao Terminal and Brokerage Service governed by the Code of Commerce and by
vs. Phoenix Assurance Company, Supra) special laws. (Art. 1766, NCC)
- However, Art. 1753, NCC is explicit that with
Function of Stevedore: respect to cases involving loss, destruction or
- Loading and unloading of coastwise vessels calling deterioration of goods, the law of the country of
at port. (Cebu Arrastre vs. CIR, GR no. L-7444, destination shall apply. Therefore, Philippine Laws
May 30, 1956) shall apply if the goods are to be transported from
japan to the Philippines. (Eastern Shipping Lines
Diligence Required: vs. IAC, GR no. L-69044, may 29, 1987)
- The diligence required of a stevedore is the - The laws of the Philippines would apply in case of
diligence of a good father of a family. (Mindanao loss of goods due to collision. It is immaterial that
Terminal and Brokerage Service vs. Phoenix the collision occurred in foreign waters. However, it
Assurance Company, Supra) was explained that collision falls among the
matters not specifically regulated by the Civil Code,
4. TRAVEL AGENCY: so Arts. 826 to 839, Book III, Code of Commerce
Nature of a Travel Agency: shall apply exclusively. (National Development
- A travel agency is not a common carrier. Company vs. CA, GR nos. L-49407 and L-49469,
- The object of contractual relations of a person who August 19, 1988)
purchases a ticket through a travel agency is only - Treaties are also part of the law of the land. Thus,
the agency’s service of arranging and facilitating the Warsaw Convention or the Convention for the
the booking, ticketing and accommodation in a Unification of Certain Rules Relating to the
package tour. (Crisostomo vs. CA, GR no. 138334, International Carriage by Air with its amendments
August 25, 2003) should be applied in this jurisdiction. (Alitalia vs.
- In contrast, the object of the contract with a IAC, 192 SCRA 9)
common carrier is transportation. The contract
between the travel agency and a passenger is a
SAMAR MINING CO. vs.
contract of service and not a contract of carriage.
NORDEUTSCHER LLOYD
(Crisostomo vs. CA, Supra) GR no. L-28673, october 23, 1984
Diligence Required: The law of the country to which the goods are to be transported
- The diligence required of a travel agency is governs the liability of the common carriers in case their loss,
ordinary diligence of a good father of a family destruction or deterioration. As the cargoes in question were
under Art. 1173, NCC. (Crisostomo vs. CA, Supra) transported from Japan to the Philippines, the liability of
- However, the travel agency and the carrier may be Petitioner Carrier is governed primarily by the Civil Code.
However, in all matters not regulated by the said Code, the rights
made jointly and severally liable. (Cathay Pacity
and obligations of common carrier shall be governed by the
Airways vs. Juanita Reyes, GR no. 185891, June Code of Commerce and by special laws. Therefore, the Carriage
26, 2013) of Goods by Sea Act, a special law, is suppletory to the
provisions of the Civil Code.
5. TRAMP SERVICE AND LINE SERVICE:
LINE SERVICE TRAMP SERVICE
GOVERNMENT REGULATION
The operation of a common The operation of a contract
carrier which publicly offers carrier which has no regular
services without discrimination and fixed routes and NATURE OF BUSINESS
to any user, has regular ports schedules but accepts cargo
of call/destination, fiixed wherever and whenever the
sailing schedules and shipper desires, is hired on a Nature of Business:
frequences and published contractual basis, or chartered - Common carriers exercise a sort of public office,
freight rates and attendant by any one or few shippers and have duties to perform in which the public is
charges and usually carries under mutually agreed terms interested. Consequently, common carriers are
multiple consignments. and usually carries bulk or
subject to regulation by the State. (Fisher vs.
break bulk cargoes.
Yangco Steamship Company, GR no. 8095,
Source: Sec. 1, RA 9515 November 5, 1914)
- Common carriers are public utilities, they are
NOTE: While RA 9515 refers to an entity engage in “Line enterprise that specially cater to the needs of the
Service '' as a common carrier, an entity that provides public and conduce to their comfort and
“Tramp Service” is only referred to as a “Contract carrier”. convenience. As such, common carriers are

TRANSPORTATION LAW
Morillo Notes
impressed with public interest and concern. (KMU
of the registered owner. It appears that, earlier, in the first week
Labor Center vs. Garcia, Jr., GR no. 115381, of May 1980, private respondent Greenhills had contracted
December 23, 1994) Licuden who was then driving the same cargo truck to transport
and carry a load of sawn lumber from the Maddela sawmill to
Dagupan City. No one came forward to question that contract or
REGISTERED OWNER RULE the authority of Licuden to represent the owner of the carrier
truck.
Concept of the Registered Owner Rule:
Moreover, assuming the truth of her story, petitioner Benedicto
- The person who is the registered owner of a vehicle retained registered ownership of the freight truck for her own
is liable for any damage caused by the negligent benefit and convenience, that is, to secure the payment of the
operation of the vehicle although the same was balance of the selling price of the truck. She may have been
already sold or conveyed to another person at the unaware of the legal security device of chattel mortgage; or she,
time of the accident. This rule is a matter of public or her buyer, may have been unwilling to absorb the expenses of
interest. (Filcar Transport Services vs. Espias, GR registering a chattel mortgage over the truck. In either case,
no. 174156, June 20, 2012) considerations both of public policy and of equity require that
she bear the consequences flowing from registered ownership of
- The registered owner of a public service vehicle is
the subject vehicle.
responsible for damages that may arise from
consequences incident to its operation or that may
be caused to any of the passengers therein. When the Registered Owner Rule does not apply:
(Gelisan vs. Alday, GR no. L-30212, September 30, - The registered owner is not liable if the vehicle was
1987) taken from his garage without his knowledge and
consent. To hold the registered owner liable would
Application of the Registered Owner Rule: be absurd as it would be like holding liable the
- The registered owner rule applies even if the owner of a stolen vehicle for an accident caused by
registered owner leased the vehicle to another who the person who stole such vehicle. (Duavit vs. CA,
is the actual operator, in which the registered GR no. 82318, May 18, 1989)
owner is directly liable. (BA FInance Corporation vs. - Unauthorized use and/or theft of the vehicle may
CA, 215 SCRA 715). However, in order to be free be invoked in proper cases. However, absent the
from liability, the lessor-owner should register the circumstance of unauthorized use or that the
lease contract with the LTO. (PCI Leasing and subject vehicle was stolen which are valid defense
Finance vs. UCPB General Insurance, GR no. available to a registered owner, the registered
162267, July 4, 2008) owner cannot escape liability resulting from the use
- The registered owner rule applies also in a financial of the registered owner’s vehicle. (Del Carmen vs.
lease. (Sec. 3(d), RA 5980 as amended by RA 8556) Bacoy, GR no. 173870, April 25, 2012)
- If the registered owner is made liable despite the
transfer of the vehicle, the transferee is liable to the
KABIT SYSTEM
registered owner for the damages caused to the
passenger. He has the right to be reimbursed by
the transferee. (Perez vs. Gutierrez, 63 scra 149) Kabit System:
- An arrangement whereby a person who has been
BENEDICTO vs. CA granted a certificate of public convenience allows other
GR no. 70876, July 19, 1990 persons who own motor vehicles to operate them under
his license, sometimes for a fee or percentage of the
The prevailing doctrine on common carriers makes the registered earnings. (Abelardo Lim vs. CA, GR no. 125817,
owner liable for consequences flowing from the operations of the January 16, 2002)
carrier, even though the specific vehicle involved may already
have been transferred to another person. This doctrine rests Prohibition on the Kabit System:
upon the principle that in dealing with vehicles registered under
- Although the parties to a Kabit System are not
the Public Service Law, the public has the right to assume that
the registered owner is the actual or lawful owner thereof It outrightly penalized by law, the Kabit System is
would be very difficult and often impossible as a practical matter, invariably recognized as being contrary to public policy
for members of the general public to enforce the rights of action and, therefore, void and inexistent under Art. 1409, Civil
that they may have for injuries inflicted by the vehicles being Code (Lim vs. CA, GR no. 125817, January 16, 2002)
negligently operated if they should be required to prove who the - The Kabit system renders illusory such purpose and
actual owner is. The registered owner is not allowed to deny worse, may still be availed of by the grantee to escape
liability by proving the identity of the alleged transferee. Thus, civil liability caused by a negligent use of a vehicle
contrary to petitioner's claim, private respondent is not required
owned by another and operated under his license. (Lim
to go beyond the vehicle's certificate of registration to ascertain
the owner of the carrier. In this regard, the letter presented by vs. CA, supra)
petitioner allegedly written by Benjamin Tee admitting that
Licuden was his driver, had no evidentiary value not only Pari Delicto Rule:
because Benjamin Tee was not presented in court to testify on - “He who goes to court must come with clean
this matter but also because of the aforementioned doctrine. To hands”
permit the ostensible or registered owner to prove who the actual - Persons who are parties to the “Kabit System”
owner is, would be to set at naught the purpose or public policy cannot invoke the same as against each other
which infuses that doctrine.
either to enforce their illegal agreement or to invoke
In fact, private respondent had no reason at all to doubt the the same to escape liability. “Having entered into
authority of Licuden to enter into a contract of carriage on behalf an illegal contract, neither can seek relief from the
courts, and each must bear the consequences of


TRANSPORTATION LAW
Morillo Notes
his acts. (Lita Enterprises vs. IAC, GR no. 64693, operated under the certificate of public
April 27, 1984) convenience granted;
2. the PUV operator shall not allow any illegal transfer
TEJA MARKETING vs. IAC
GR no. 65510, March 9, 1987
of motor vehicle plate/s or illegally reproduce the
same (known as “Kambal Plaka”) for the use by
Petitioner Teja Marketing filed a case against Pedro unauthorized motor vehicle units; and
Nale alleging that the latter purchased a motorcycle 3. The PUV operator shall not allow the illegal use or
with sidecar from them. Teja Marketing was transfer of chassis or engine motor (known as
constrained to file an action for damages because “pukpok chassis”) for the use of unauthorized
Pedro Nale allegedly failed to pay the balance of the PUVs. (LTFRB Memorandum Circular 2011-004)
purchase price. However, the SC sustained the
dismissal of the case because the parties were in “Pari
Delicto”.
Kabit System on Aircrafts and Vessels:
- The policy which prohibits the “kabit system” may
Although the motorcycle was allegedly purchased from also be applied to vessels and aircrafts that are
Teja Marketing, the same remained to be registered in covered by certificates of public convenience and
their name and was operated under Pedro Nale’s necessity. It is a basic rule that no person can
franchise pursuant to a “Kabit System” without prior operate a common carrier without securing a
approval of the appropriate government agency. The certificate of public convenience and necessity.
SC ruled that it would not aid either party to enforce an
Hence, persons who do not have such certificate
illegal contract.
cannot circumvent the law by using the certificate
of another. No permits or certificates can be
transferred without the permission of the
Lita Enterprises vs. IAC
government agency concerned. *Sec. 23, RA 776
GR no. 64693, April 27, 1984
as amended.)
Ocampo and Garcia purchased 5 cars on installment. - With respect to Aircraft, the certificate of
Since they have no franchise, they contracted with Lita registration of an aircraft is conclusive evidence of
Enterprise for the use of the latter’s franchise so that ownership except when ownership itself is at issue.
they can use the cars as tax units. Ocamp and Garcia (Sec. 44, RA 9497). Therefore, in an action for
retained possessions. Later, onee of the cars collided damages, the name of the carrier appearing in the
with a motorcycle resulting in death. A case was filed certificate of registration is conclusive. No proof to
against lita Enterprise and in due course, judgment
the contrary can be established.
was rendered against ir. Later, the decision was
executed and one of the cars of Ocampo and Garcia,
and another belonging to Lita Enterprise were levied
BOUNDARY SYSTEM
upon.
Ocampo and Garcia decided to register their

ownership and demanded that Lita Enterprise must MAGBOO vs. BERNARDO
turn over the certificates of registration. The SC ruled GR no. L-16790, April 30, 1963
that the same demand cannot prosper. The in pari
delicto rule was applied because the parties were Conrado Roque and Delfin Bernardo executed contract whereby
definitely engaged in a “kabit system” Conrado shall pay Delfin P8.00 for the privilege of driving the
jeepney and that whatever earnings that Conrado make out of
the use of the jeepney in transporting passengers from one point
Land Transportation Rule on the prohibition of the Kabit to another in the City of Manila would belong entirely to Conrado.
System: When an accident occurred which resulted in the death of the
- “Transfer of a certificate of public convenience to child of Petitioner Sps. Magboo, the said spouses filed
operate a transportation service is not effective and subsidiary damages against Delfin for being the employer of
Conrad. Delfin denied liability because his relationship with
binding insofar as the responsibility of the grantee
Conrado is not of employer-employee but of lessor-lessee.
under the franchise in its relation to the public is
concerned, without the approval of the transfer by The SC rejected Delfin’s defense of lessor-lessee relation and
the Public Service Commission required by the explained that characteric of the “boundary system” wherein the
Public Service Act, and that in contemplation of fact that the driver does not receive a fixed wage but gets only
law, the transferor of such certificate continues to the excess of the recept of fares collected by him over the
be the operator of the service as long as the amount he pays to the jeep-owner and that the gasoline
transfer is not yet approved, and as such operator, consumed by the jeep is for the account of the driver. The SC
ruled that Boundary System are not sufficient to withdraw the
he is the one responsible jointly and severally with
relationship between them from that of employer and employee.
his driver for damages incurred by passengers or
third persons in consequence of injuries or deaths
resulting from the operation of such service. (Sec. Cannot escape liability:
20(g), PublicService Act; Zamboanga Transport vs. - In land transportation where the boundary system
CA, GR no. L-25292, November 29, 1969) may be implemented by the common carrier, the
carrier cannot escape liability by claiming that the
Conditions for the issuance of a Certificate of Public driver is a lessee. (Hernandez vs. Dolor, GR no.
Convenience in favor of carriers that are operating 160286, July 30, 2004)
public utility vehicles:
1. The PUV operator shall not allow any motor vehicle
belonging to others to be registered and/or

TRANSPORTATION LAW
Morillo Notes
2. the goods are unfit for Transportation;
OBLIGATIONS OF 3. Acceptance would result in overloading;
THE PARTIES 4. The goods are considered contrabands or illegal
goods;
5. Goods are injurious to health;
6. Goods will be exposed to untoward danger like
A. OBLIGATION OF THE CARRIER flood, capture by enemies and the like;
7. Goods like livestock will be exposed to diseases;
Basic Obligation of the Carrier: 8. Strike; and
- To transport the goods or passengers to the 9. Failure to tender goods on time. (Fisher vs.
agreed destination. (Aquino & Hernando, p. 56) Yangco, Supra; Francis, Law on Transportation,
pp. 40-41)
Duties of the Common Carrier:
1. To accept passengers and goods without Hazardous and Dangerous Substances:
discrimination; - The certificate of public convenience granted to a
2. To seasonably deliver the goods or bring the carrier may include the authority to transport
passenger to the destination; explosives or dangerous chemicals. For example, a
3. To deliver the goods or bring the passenger to the carrier may be specially designed to carry
proper place or destination; dangerous chemicals that are necessary for certain
4. To deliver the goods to the proper person; and manufacturing businesses and may secure the
5. To exercise extraordinary diligence in the appropriate authorization for such purpose. (Fisher
performance of its duties. (Aquino & Hernando, p. vs. Yangco, Supra)
56) - MARINA Memorandum Circular No. 101 disallows
the carriage of hazardous goods if there is no
Special Permit to Carry from the MARINA.
NOTE: Every obligation of the carrier is coupled with the - MARINA Memorandum Circular No. 147 provides
corresponding right of the shipper or the passenger. A passenger for rules on compliance with clearance
or shipper has a right against discrimination, the right to have his requirements for the carriage of vehicles, animals,
goods or be transported without delay, and the personal right to
forest products and toxic and hazardous materials
enforce all the obligations of the carrier.
to be loaded on board inter-island vessels. The
shipowners and master are mandated to accept
the saood cargoes only if they are covered by the
DUTY TO ACCEPT
necessary clearance from appropriate government
agencies. For Example, Toxic and Hazardous
DUTY TO ACCEPT GOODS FOR TRANSPORTATION: materials cannot be transported on board domestic
- A common carrier that is granted a certificate of vessels if there is no clearance from the DENR-
public convenience is duty bound to accept Environmental Management Bureau.
passengers or cargo.
- It is illegal for domestic ship operators to refuse to Unfit for Transportation:
accept or carry passengers or cargo without just - Carriers may refuse to accept goods that are unfit
cause (Sec. 16, RA 9295) for transportation. (Art. 356, Code of Commerce)
- it shall be unlawful for any air freight forwarder to - These goods may by nature be unfit for
give undue preference or make unjust transportation or unfit due to improper packaging
discrimination in his servvice. (Sec. 6, Economic or defect in their containers.
Regulation no. 4, CAB) - However, the carrier may choose to transport such
goods and limit its liability by stipulation. (Art. 356,
FC FISHER vs. YANGCO STEAMSHIP COMPANY
Code of Commerce)
GR no. 8095, November 5, 1914
The legislators having enacted a regulation prohibiting common Lessening Loss:

carriers from giving unnecessary or unreasonable preferences or - If the loss, destruction, or deterioration of the
advantages to any particular kind of traffic or subjecting any goods should be cause by the character of the
particular kind of traffic to any undue or unreasonable prejudice goods, or the faulty nature of the packing or of the
or discrimination ehatsoever, it is clear that common carriers in containers, the common carrier must exercise due
this jurisdiction cannot lawfully decline to accept a particular diligence to forestall or lessen the loss. (Art. 1742,
class of goods for carriage, to the prejudice of the traffic in those
NCC)
goods, unless it appears that for some sufficient reason the
discrimination against the traffic in such goods is reasonable and
necessary. Mere whim or prejudice will not suffice. The grounds Inspection:
for discrimination must be substantial ones, such as will justify - A common carrier is entitled to fair representation
the courts in holding the discrmination to have been reasonable of the nature and value of the goods to be carried,
and necessary under all circumstances of the case. with the concomitant right to rely thereon, and
further noting at this juncture that a carrier has no
obligation to inquire into the correctness or
Valid Grounds for Refusal to Accept Good for
sufficiency of such information. The consequent
Transportation:
duty to conduct an inspection thereof arises in the
1. When the goods sought to be transported are
event that there should be reason to doubt the
dangerous objects, or substances including
veracity of such representation. (Saludo vs. CA, GR
dynamites and other explosives;
no. 95536, March 23, 1992)


TRANSPORTATION LAW
Morillo Notes
- See also Art. 357, Code of Commerce fulfill the contract and is liable for any
delay, no matter from what cause it may
Transportation of Animals: have arisen.
- It shall be the duty of any owner or operator of any - If there is no period fixed for the delivery
land, air or water public utility transporting pet, of goods that carrier shall be bound to
wildlife and all other animals to provide in all cases forward them in the first shipment of the
adequate, clean and sanitary facilities for the safe same or similar goods which he may make
conveyance and delivery thereof to their consignee to the point of delivery; and should he not
at the place of consignment. They shall provide do so, the damages caused by the delay
sufficient food and water for such animals while in should be for his account. (Art. 358, Code
transit for more than 12 hours or whenever of Commerce)
necessary. (Sec. 4, RA 10631)
- No public utility shall transport any such animal Reasonable Time:
without a written permit from the Director of the - In the absence of a special contract, a carrier is not
Bureau of Animal Industry or his/her representative. an insurer against delay in the transportation of
No cruel confinement or restraint shall be made on goods. When a common carrier undertakes to
such animals while being transported. (Sec. 4, RA convey goods, the law implies a contract that they
10631) shall be delivered at destination within a
reasonable time in the absence of any agreement
DUTY TO ACCEPT PASSENGERS FOR as to the time of delivery. (Saludo vs. CA, GR no.
TRANSPORTATION: 95536, March 23, 1992)
- A vessel generally engaged as a common carrier of - In determining if the delivery is made within a
passengers is bound to receive for carriage, reasonable time, the expected date of arrival
without discrimination all proper persons who reflected in the bill of lading may be considered.
desire it and properly offer to become passengers Therefore, if the estimated date of arrival is April 3
unless some sufficient excuse exists for refusing of a given year, delay in the delivery of goods
them. (Aquino & Hernando, p. 58) spanning a period of more than 2 months is
- For the issuance of a franchise in favor of a considered unreasonable. (Maersk Line vs. CA, 222
common carrier, “it shall be unlawful for any PUV SCRA 108)
operator to give undue preferences or make unjust
discrimination in his/her/its services. (Par. 5, LTFRB Delays in transporting good::
Memorandum Circular No. 2011-004) - If the common carrier negligently incurs in delay in
transporting the goods, a natural disaster shall not
Duties to Special classes of passengers: free such carrier from responsibility. (Art. 1740,
a. Persons with Disability (PWD): NCC)
- Disabled persons shall be allowed to drive motor - If the common carrier, without just cause, delays
vehicles, subject to the rules and regulations the transportation of the goods or changes the
issued by the LTO pertinent to the nature of their stipulated or usual route, the contract limiting the
disability and the appropriate adaptations or common carrier’s liability cannot be availed of in
modifications made on such vehicles. (Sec. 26, RA case of the loss, destruction, or deterioration of the
7277) goods. (Art. 1747, NCC)
- It shall be considered discrimination for the - See Arts. 370-373, Code of Commerce
franchisees or operators and persinnel of sea, land, - Excusable delays in carriage suspens, but do not
and air transportation facilities to charge higher fare generally terminate, the contract of carriage, and
or to refuse to convey a passenger, his orthopedic when the cause is removed, the master must
devices, personal effects, and merchandise by proceed with the voyage and make delivery. During
reason of his disability. (Sec. 34, RA 7277) the detention or delay, the vessel continues to be
liable as a common carrier, not a warehouseman,
b. Senior Citizens: and remains duty bound to exercise extraordinary
- Senior Citizens are also given a 20% discount diligence. (Aquino & Hernando, p. 66)
relative to utilization of transportation services.
(Sec. 3, RA 7432 as amended by RA 9257) Right to Abandon:
- In cases of delay on account of the fault of the
carrier, the consignee may leave the goods
DUTY TO DELIVER transported in the hands of the carrier, informing
him thereof in writing before the arrival of the same
Duty to make timely delivery of the goods: at the point of destination. (Art. 371, par. 1, Code of
- The carrier is duty bound to deliver the goods Commerce)
within the time agreed upon to the designated - The carrier shall be liable for the total
cogniee. (Aquino & Hernando, p. 64) value of such goods. The aforesaid
provision confers upon the consignee an
Agreement as to time of delivery of goods: exceptional but limited right to abandon
- The goods must be delivered within the stipulated the goods transported during the period
time. intervening between the moment when the
- Where a carrier has made an express fault of the carrier produces a delay which
contract to transport and deliver property is the generative causes of action, until
within a specified time, he is bound to the moment just before the arrival of the

TRANSPORTATION LAW
Morillo Notes
goods at the place of delivery, by
MARINA Memorandum Circular no. 112
communicating such abandonment to the
carrier in writing; and when these 3.1 In case the vessel can not continue or complete her voyage
conditions do not concur, the refusal to for any cause, the carrier is under obligation to transport the
accept cannot be effective. (Francisco, passenger to his/her destination at the expense of the carrier
Law on Transportation, p. 119) including free meals and lodging before the said passenger is
- SC explained that Art. 371, par. 1, Code of transported to his/her destination. A passenger may opt to have
Commerce, wherein the shipper can his/her ticket refunded in full if the cause of the unfinished
voyage is due to the negligence of the carrier, or, to an amount
abandon the goods in case of
that will suffice to defray transportation cost at the shortest
unreasonable delay in the deliver in possible route towards his/her destination if the cause of the
overland transportation, can also be made unfinished voyage is a fortuitous event.
to apply to marine transportation even if
the provision is in the Chapter of the Code 3.2 The carrier shall provide meals, free of charge, during meal
of Commerce dealing with overland time in case the vessel is delayed in the arrival at the port of
transportation. (Magellan Marketing Mfg. destination.
Corp. vs. CA, GR no. 95529, August 22,
3.3 In case of delay in the departure at the port of origin due to
1991)
the carrier’s negligence, the carrier is also under obligation to
provide meals, free of charge, during meal time to ticketed
Delay to transport passengers: passengers for the particular voyage. If the cause of the delay is
- The carrier must commence its trip within a a fortuitous event, the carrier is under no obligation to serve free
reasonable time. A carrier is duty bound to meals to the passengers.
transport the passenger with reasonable dispatch.
The carrier shall be made liable when the vessel or 3.4 The carrier is under obligation to duly inform the passengers
vehicle is unreasonably delayed. (70 Am Jur 2d of the change in sailing schedule of the vessel(s)
874)
- “In case a voyage already begun should be
interrupted, the passengers shall be obliged to pay WHEN AND TO WHOM DELIVERED
the fare in proportion to the distance covered
without right to recover for losses and damages if PLACED OF DELIVERY:
the interruption is due to fortuitous event or force - The goods should be delivered to the consignee in
majeure, but with a right to indemnity if the the place agreed upon by the parties. If the specific
interruption should have been caused by the place or warehouse is designated in the bill of
captain exclusively. If the interruption should be lading, the goods must be delivered in such a place
caused by the disability of the vessel and even if it is not the usual place of delivery in the
passenger should agree to await the repairs, he place of destination. Francisco, Law on
may not be required to pay any increased price of Transportation, p. 119)
passage, but his living expenses during the stay
shall be for his own account.” (Art. 698, Code of TO WHOM DELIVERED:
Commerce) - The goods should be delivered to the consignee or
- Art. 698 of the Code of Commerce applies
any other person to whom the bill of lading was
suppletorily pursuant to Art. 1766, Civil
validly transferred or negotiated.
Code) - Delivery must generally be made to the owner or
consignee or to someone lawfully authorized by
Effect of Decision of Passenger: (The passenger was not him to receive the goods for his account. By
able to recover lost profits that resulted because of his own issuing a Bill of Lading, by stipulating delivery to
decision to disembark.) order, the ship becomes bound to deliver only to
TRANS-ASIA SHIPPING LINES vs. CA one who has the order of the shipper; and it is no
GR no. 118126, March 4, 1996 excuse for delivery to the wrong person that the
endorsee of the bill is unknown or that he delayed
Plaintiff Public Attorney boarded a vessel for its voyage from presenting the bill when such delivery is not
Cebu City to Cagayan De Oro City. The vessel departed at instrumental in causing the wrong delivery or
around 11pm with only 1 engine running. After an hour of slow
misleading the ship. (Aquino & Hernando, p. 71)
voyage, the vessel stopped near Kawit Island and dropped its
anchor thereat. After half an hour of stillness, some passengers - See Arts. 368-369, Code of Commerce
demanded that they should be allowed to return to Cebu City for
they were no longer willing to continue their voyage to Cagayan Conflict between Consignee and Shipper:
De Oro City. the captain acceded to their request and thus the - If conflict exist between the Shipper and the
vessel headed back to Cebu City. On the next day, Plaintiff Consignee as when the shippers orders the
boarded M/V Asia Japan for its voyage to Cagayan De Oro, shipping company to return or retain the goods
which is also owned by the Defendant. shipped while the consignee demands their
delivery, → the right of the shipper to countermand
SC explained that the carrier would have been liable for loss of
income if the Plaintiff were unable to report to his office on the the shipment terminates when the consignee or
day he was supposed to arrive were it not for the delay. legitimate holder of the bill of lading appears with
However, this assumes that he stayed on the vessel and was such bill of lading before the carrier and makes
with it when it thereafter resumed its voyage; but did not. himself a party to the contract. (Mendoza vs.
Philippine Airlines, GR no. L-3678, february 29,
1952)
MARINA Regulation:


TRANSPORTATION LAW
Morillo Notes
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE A. PRESUMPTION OF NEGLIGENCE:
Preliminary Note: A. PRESUMPTION OF NEGLIGENCE OVER CARRIAGE

- A common carrier is required to faithfully comply OF GOODS:
with his obligation to deliver the goods and to ferry
Article 1734. Common carriers are responsible for the loss,
the passenger to the point of destination. destruction, or deterioration of the goods, unless the same is due
to any of the following causes only:
Article 1733. Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe 1. Flood, storm, earthquake, lightning, or other natural
extraordinary diligence in the vigilance over the goods and for disaster or calamity;
the safety of the passengers transported by them, according to 2. Act of the public enemy in war, whether international or
all the circumstances of each case. civil;
3. Act or omission of the shipper or owner of the goods;
Such extraordinary diligence in the vigilance over the goods is 4. The character of the goods or defects in the packing or
further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, in the containers;
and 7, while the extraordinary diligence for the safety of the 5. Order or act of competent public authority. (Art. 1734,
passengers is further set forth in articles 1755 and 1756. (Art. NCC)
1733, Civil Code)
Article 1735. In all cases other than those mentioned in Nos. 1,

Article 1755. A common carrier is bound to carry the passengers 2, 3, 4, and 5 of the preceding article, if the goods are lost,
safely as far as human care and foresight can provide, using the destroyed or deteriorated, common carriers are presumed to
utmost diligence of very cautious persons, with a due regard for have been at fault or to have acted negligently, unless they prove
all the circumstances. (Art. 1755, Civil Code) that they observed extraordinary diligence as required in article
1733. (Art. 1735, NCC)
Rationale behind the “Duty to Exercise Extraordinary

Notes:
Diligence”:
- The presumption of fault or negligence will not
- The common carrier is bound to carry the
arise if the loss is due to any of the following
passenger safely as far as human care and
causes: (1) flood, storm, earthquake, lightning, or
foresight can provide, using the utmost diligence of
other natural disaster or calamity; (2) an act of the
very cautious persons, with due regard for all
public enemy in war, whether international or civil;
circumstances. This extraordinary diligence
(3) an act or omission of the shipper or owner of
required of common carriers is calculated to
the goods; (4) the character of the goods or defects
protect the passengers from the tragic mishaps
in the packing or the container; or (5) an order or
that frequently occur in connection with rapid
act of competent public authority. This is a closed
modern transportation. This high standard of care
list. If the cause of destruction, loss or deterioration
is imperatively demanded by the preciousness of
is other than the enumerated circumstances, then
human life and by the consideration that every
the carrier is liable therefor. Corollary to the
person must in every way be safeguarded against
foregoing, mere proof of delivery of the goods in
all injury. (Report of the Code Commission, pp. 35-
good order to a common carrier and of their arrival
36)
in bad order at their destination constitutes a prima
facie case of fault or negligence against the carrier.
Meaning of Extraordinary Diligence:
If no adequate explanation is given as to how the
- Extraordinary diligence in the vigilance over the
deterioration, the loss or the destruction of the
goods tendered for shipment requires the common
goods happened, the transporter shall be held
carrier to know and to follow the required
responsible (Belgian Overseas Chartering vs. Phil.
precaution for avoiding damage to, or destruction
First Insurance, GR no. 143133, June 5, 2002)
of the goods entrusted to it for safe carriage and
delivery. (Compania Maritima vs. CA, GR no. L-
31379, August 29, 1958) TABACALERA INSURANCE CO. vs. NORTH FRONT
- It requires common carriers to render service with SHIPPING, INC.
the greatest skill and foresight and to use all the GR no. 119197, May 16, 1997
reasonable means to ascertain the nature and
Mere proof of delivery of the goods in good order to a common
characteristics of goods tendered for shipment,
carrier, and of their arrival at the place of destination in bad
and to exercise due care in the handling and order, makes out prima facie case against the common carrier,
stowage, including such methods as their nature so that if no explanation is given as to how the loss, deterioration
requires. (Compania Maritima vs. CA, Supra) or destruction of the goods occurred, the common carrier must
be held responsible. Otherwise stated, it is incumbent upon the
Non-Delegable Duty: common carrier to prove that the loss, deterioration or
- The duty of seaworthiness, the duty of care, the destruction was due to accident or some other circumstances
cargo is non-delegable, and the carrier is inconsistent with its liability . . .
accordingly responsible for the acts of the master,
The extraordinary diligence in the vigilance over the goods
the crew, the stevedore, and his other agents. tendered for shipment requires the common carrier to know and
(West Shipping Corp vs. UCPB General Insurance to follow the required precaution for avoiding damage to, or
Co., GR no. 200289, November 25, 2013)

TRANSPORTATION LAW
Morillo Notes
destruction of the goods entrusted to it for safe carriage and passenger. By the contract of carriage, the carrier BLTB
delivery. It requires common carriers to render service with the assumed the express obligation to transport the passengers to
greatest skill and foresight and "to use all reasonable means to their destination safely and to observe extraordinary diligence
ascertain the nature and characteristics of goods tendered for with a due regard for all the circumstances, and any injury that
shipment, and to exercise due care in the handling and stowage, might be suffered by its passengers is right away attributable to
including such methods as their nature requires". the fault or negligence of the carrier (Art. 1756, New Civil Code).
In fine, we find that the carrier failed to observe the required Petitioners also contend that "a common carrier is not an
extraordinary diligence in the vigilance over the goods placed in absolute insurer against all risks of travel and are not liable for
its care. The proofs presented by North Front Shipping Services, acts or accidents which cannot be foreseen or inevitable and that
Inc., were insufficient to rebut the prima facie presumption of responsibility of a common carrier for the safety of its passenger
private respondent's negligence, more so if we consider the prescribed in Articles 1733 and 1755 of the New Civil Code is not
evidence adduced by petitioners. susceptible of a precise and definite formulation." (p. 13, Rollo)
Petitioners' contention holds no water because they had totally
failed to point out any factual basis for their defense of force
B. PRESUMPTION OF NEGLIGENCE OVER CARRIAGE majeure in the light of the undisputed fact that the cause of the
OF PASSENGERS: collision was the sole negligence and recklessness of petitioner
Armando Pon. For the defense of force majeure or act of God to
prosper the accident must be due to natural causes and
Article 1756. In case of death of or injuries to passengers, exclusively without human intervention.
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 articles 1733 and 1755.
(Art. 1756, NCC) B. DURATION OF DUTY
A. DURATION OF DUTY IN
ABETO vs. PHILIPPINE AIRLINES CARRIAGE OF GOODS:
GR no. L-28692, July 30, 1982
Article 1736. The extraordinary responsibility of the common
The provisions of the Civil Code on this question of liability are carrier lasts from the time the goods are unconditionally placed
clear and explicit. Article 1733 binds common carriers, "from the in the possession of, and received by the carrier for
nature of their business and by reasons of public policy, ... to transportation until the same are delivered, actually or
observe extraordinary diligence in the vigilance ... for the safety constructively, by the carrier to the consignee, or to the person
of the passengers transported by them according to all the who has a right to receive them, without prejudice to the
circumstances of each case." Article 1755 establishes the provisions of article 1738. (Art. 1736, NCC)
standard of care required of a common carrier, which is, "to carry
the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, Article 1737. The common carrier's duty to observe
with due regard for all the circumstances." Article 1756 fixes the extraordinary diligence over the goods remains in full force and
burden of proof by providing that "in case of death of or injuries effect even when they are temporarily unloaded or stored in
to passengers, common carriers are presumed to have been at transit, unless the shipper or owner has made use of the right of
fault or to have acted negligently, unless they prove that they stoppage in transitu. (Art. 1737, NCC)
observed extra-ordinary diligence as prescribed in Articles 1733
and 1755." Lastly, Article 1757 states that "the responsibility of a
common carrier for the safety of passengers ... cannot be
dispensed with or lessened by stipulation, by the posting of Article 1738. The extraordinary liability of the common carrier
notices, by statements on tickets, or otherwise." continues to be operative even during the time the goods are
stored in a warehouse of the carrier at the place of destination,
In an action based on a contract of carriage, the court need not until the consignee has been advised of the arrival of the goods
make an express finding of fault or negligence on the part of the and has had reasonable opportunity thereafter to remove them
carrier in order to hold it responsible to pay the damages sought or otherwise dispose of them. (Art. 1738, NCC)
for by the passenger. By the contract of carriage, the carrier
assumes the express obligation to transport the passenger to his
destination safely and to observe extraordinary diligence with a When the goods are deemed delivered to the carrier:
due regard for all the circumstances, and any injury that might be - The goods are deemed delivered to the carrier
suffered by the passenger is right away attributable to the fault or when the goods are ready and have been placed in
negligence of the carrier (Art. 1756, New Civil Code). This is an the exclusive possession, custody and control of
exception to the general rule that negligence must be proved. the carrier for the purpose of their immediate
transportation and the carrier has accepted them.
When the carrier has thus accepted such delivery,
BLTB vs. IAC the liability of the carrier commences “eo instanti.”
GR nos. 74387-90, November 14, 1988 (Saludo vs. CA, GR no. 95536, March 23, 1992)
It is settled that the proximate cause of the collision resulting in REPUBLIC vs. LORENZO SHIPPING CORP.
the death of three and injuries to two of the passengers of BLTB GR no. L-48757, May 30, 1988
was the sole negligence of the driver of the BLTB Bus, who
recklessly operated and drove said bus in a lane where The representative of the consignee signed the delivery receipt
overtaking is not allowed by Traffic Rules and Regulations. Such but did not surrender the bill of lading covering the goods. It was
negligence and recklessness is binding against petitioner BLTB, ruled that the obligation of the carrier could also be considered
more so when We consider the fact that in an action based on a terminated despite the non-surrender of the bill of lading. The
contract of carriage, the court need not make an express finding surrender of the bill of lading is not necessary for the discharge
of fault or negligence on the part of the carrier in order to hold it of the obligations of the carrier. Art. 353, Code of Commerce,
responsible for the payment of the damages sought by the provides that after the contract has been complied with, the bill


TRANSPORTATION LAW
Morillo Notes
custody of the Bureau of Customs. (Lu Do & Lu Ym
of lading, which the carrier has issued, shall be returned to him
but the bill of lading cannot be returned, the consignee must give Corp. vs. IV Binamira, GR no. L9840, April 22,
a receipt for the goods delivered. 1957)
B. DURATION OF DUTY IN
Temporary Unloading or Storage: CARRIAGE OF PASSENGERS:
- Common carrier has a duty to observe
extraordinary diligence over the goods remains in
full force and effect even when they are LA MALLORCA vs. CA
GR no. L-20761, july 27, 1966
temporarily unloaded or stored in transit. (Art.
1737, NCC).
It has been recognized as a rule that the relation of carrier and
- This means that the goods have not yet been passenger does not cease at the moment the passenger alights
delivered to the consignee and that the voyage of from the carrier's vehicle at a place selected by the carrier at the
the carrier will resume. point of destination, but continues until the passenger has had a
reasonable time or a reasonable opportunity to leave the carrier's
Stoppage in Transitu: premises. And, what is a reasonable time or a reasonable delay
- By way of exception under Art. 1737 (NCC), within this rule is to be determined from all the circumstances.
Thus, a person who, after alighting from a train, walks along the
Extraordinary diligence need not be exercised over
station platform is considered still a passenger. So also, where a
the goods that are unloaded temporarily if the passenger has alighted at his destination and is proceeding by
shipper or owner has made use of the right of the usual way to leave the company's premises, but before
stoppage in transitu. actually doing so is halted by the report that his brother, a fellow
- The right of stoppage in transitu is the right of an passenger, has been shot, and he in good faith and without
unpaid seller to resume possession of the goods at intent of engaging in the difficulty, returns to relieve his brother,
any time while the goods are in transit, and he will he is deemed reasonably and necessarily delayed and thus
then become entitled to the same rights in regard continues to be a passenger entitled as such to the protection of
the railroad and company and its agents.
to the goods as he would have had if he had never
parted with the possession. (Art. 1530, NCC) In the present case, the father returned to the bus to get one of
his baggages which was not unloaded when they alighted from
When the Right of Stoppage in Transitu is Available: the bus. Raquel, the child that she was, must have followed the
1. When the buyer of goods is or becomes insolvent; father. However, although the father was still on the running
2. When the unpaid seller has parted with the board of the bus awaiting for the conductor to hand him the bag
possession of th goods; and or bayong, the bus started to run, so that even he (the father) had
3. When the goods are still in transit. (Arts. 1530- to jump down from the moving vehicle. It was at this instance
that the child, who must be near the bus, was run over and killed.
1531, NCC)
In the circumstances, it cannot be claimed that the carrier's
agent had exercised the "utmost diligence" of a "very cautious
Diligence up to Delivery: person" required by Article 1755 of the Civil Code to be
- The extraordinary responsibility of the common observed by a common carrier in the discharge of its obligation
carrier lasts until the time the goods are actually or to transport safely its passengers. In the first place, the driver,
constructively delivered by the carrier to the although stopping the bus, nevertheless did not put off the
consignee or the person who has the right to engine. Secondly, he started to run the bus even before the bus
receive them. There is actual delivery in contracts conductor gave him the signal to go and while the latter was still
unloading part of the baggages of the passengers Mariano
of transport when possession has been turned over
Beltran and family. The presence of said passengers near the
to the consignee or to his duly authorized agent bus was not unreasonable and they are, therefore, to be
and a reasonable time is given to remove the considered still as passengers of the carrier, entitled to the
goods. (Samar Mining Company vs. Nordeutscher protection under their contract of carriage.
Lloyed, 217 Phil. 497)
Delivery to Customs Authorities: ABOITIZ SHIPPING CORP. vs. CA

- Generally, the goods remain to be the responsibility GR no. 84458, November 6, 1989
of the carrier if they are still in the hands of
customs officials. there is no delivery of the cargo The rule is that the relation of carrier and passenger continues
to the consignee, or to the person who has a right until the passenger has been landed at the port of destination
and has left the vessel owner's dock or premises. Once created,
to receive them, contemplated in Art. 1736, Civil
the relationship will not ordinarily terminate until the passenger
Code, because in such case, the goods are still in has, after reaching his destination, safely alighted from the
the hands of the Government and the owner carrier's conveyance or had a reasonable opportunity to leave
cannot exercise dominion over them. However, the the carrier's premises. All persons who remain on the premises a
SC believes that the parties may agree to limit the reasonable time after leaving the conveyance are to be deemed
liability of the carrier considering that the goods passengers, and what is a reasonable time or a reasonable delay
have still to go through the inspection of the within this rule is to be determined from all the circumstances,
customs authorities before they are actually and includes a reasonable time to see after his baggage and
prepare for his departure. The carrier-passenger relationship is
turnover to the consignee. This is a situation where
not terminated merely by the fact that the person transported
the carrier loses control of the goods because of a has been carried to his destination if, for example, such person
custom regulation and it is unfair that it be made remains in the carrier's premises to claim his baggage.
responsible for what may happen during the
interregnum. The solution for the carrier is to It is not definitely shown that one (1) hour prior to the incident,
stipulate in the bill of lading that the carrier shall not the victim had already disembarked from the vessel. Petitioner
be liable for any loss while the goods are in the failed to prove this. What is clear to us is that at the time the

TRANSPORTATION LAW
Morillo Notes
victim was taking his cargoes, the vessel had already docked an liable for injuries suffered by boarding passengers resulting from
hour earlier. In consonance with common shipping procedure as the sudden starting up or jerking of their conveyances while they
to the minimum time of one (1) hour allowed for the passengers are doing so.
to disembark, it may be presumed that the victim had just gotten
off the vessel when he went to retrieve his baggage. Yet, even if Further, even assuming that the bus was moving, the act of the
he had already disembarked an hour earlier, his presence in victim in boarding the same cannot be considered negligent
petitioner's premises was not without cause. The victim had to under the circumstances. As clearly explained in the testimony of
claim his baggage which was possible only one (1) hour after the the aforestated witness for petitioners, Virginia Abalos, the bus
vessel arrived since it was admittedly standard procedure in the had "just started" and "was still in slow motion" at the point
case of petitioner's vessels that the unloading operations shall where the victim had boarded and was on its platform.
start only after that time. Consequently, under the foregoing
circumstances, the victim Anacleto Viana is still deemed a It is not negligence per se, or as a matter of law, for one to
passenger of said carrier at the time of his tragic death. attempt to board a train or streetcar which is moving slowly. An
ordinarily prudent person would have made the attempt to board
the moving conveyance under the same or similar
LRTA vs. NATIVIDAD circumstances. The fact that passengers board and alight from a
slowly moving vehicle is a matter of common experience and
GR no. 145804, February 6, 2003
both the driver and conductor in this case could not have been
unaware of such an ordinary practice.
The law requires common carriers to carry passengers safely
using the utmost diligence of very cautious persons with due
The victim herein, by stepping and standing on the platform of
regard for all circumstances. Such duty of a common carrier to
the bus, is already considered a passenger and is entitled to all
provide safety to its passengers so obligates it not only during
the course of the trip but for so long as the passengers are within the rights and protection pertaining to such a contractual
relation. Hence, it has been held that the duty which the carrier of
its premises and where they ought to be in pursuance to the
passengers owes to its patrons extends to persons boarding the
contract of carriage. The statutory provisions render a common
cars as well as to those alighting therefrom.
carrier liable for death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on account of
Common carriers, from the nature of their business and for
wilful acts or negligence of other passengers or of strangers if
reasons of public policy, are bound to observe extraordinary
the common carrier’s employees through the exercise of due
diligence for the safety of the passengers transported by them,
diligence could have prevented or stopped the act or omission.
according to all the circumstances of each case. A common
In case of such death or injury, a carrier is presumed to have
carrier is bound to carry the passengers safely as far as human
been at fault or been negligent, and by simple proof of injury, the
care and foresight can provide, using the utmost diligence of
passenger is relieved of the duty to still establish the fault or
very cautious persons, with a due regard for all the
negligence of the carrier or of its employees and the burden
circumstances.
shifts upon the carrier to prove that the injury is due to an
unforeseen event or to force majeure. In the absence of
satisfactory explanation by the carrier on how the accident
occurred, which petitioners, according to the appellate court, B. DEFENSES OF COMMON CARRIER
have failed to show, the presumption would be that it has been
at fault, an exception from the general rule that negligence must
be proved. DOCTRINE OF PROXIMATE CAUSE IS NOT
APPLICABLE:
The foundation of LRTA’s liability is the contract of carriage and - The common carrier is presumed negligent the
its obligation to indemnify the victim arises from the breach of moment he fails to deliver the goods to its
that contract by reason of its failure to exercise the high diligence
destination or the moment the passenger did not
required of the common carrier. In the discharge of its
commitment to ensure the safety of passengers, a carrier may reach his destination while riding the carrier.
choose to hire its own employees or avail itself of the services of Hence, the Doctrine of Proximate Cause will not
an outsider or an independent firm to undertake the task. In apply to a contract of carriage. The injured
either case, the common carrier is not relieved of its passenger or owner of goods need not prove
responsibilities under the contract of carriage. causation to establish his case. The presumption
arises upon the happening of the accident.
(Calalas vs. CA, GR no. 122039, May 31, 2000)
DANGWA TRANSPORTATION vs. CA
GR no. 95582, October 7, 1991 DEFENSES IN THE CARRIAGE OF GOODS: Defenses that
can be raised by common carriers for the loss, destruction,
The contention of petitioners that the driver and the conductor
or deterioration of the goods are the following:
had no knowledge that the victim would ride on the bus, since
the latter had supposedly not manifested his intention to board 1. Flood, storm, earthquake, lightning and other
the same, does not merit consideration. When the bus is not in natural disaster and calamity;
motion there is no necessity for a person who wants to ride the 2. Acts of the public enemy at war, whether
same to signal his intention to board. A public utility bus, once it international or civil;
stops, is in effect making a continuous offer to bus riders. Hence, 3. Act or omission of the shipper or owner of the
it becomes the duty of the driver and the conductor, every time goods;
the bus stops, to do no act that would have the effect of 4. The character of the packing of the goods in the
increasing the peril to a passenger while he was attempting to
packing or in the containers;
board the same. The premature acceleration of the bus in this
case was a breach of such duty. 5. Order or act of the competent authority; and
6. Exercise of extraordinary diligence. (Arts. 1734,
It is the duty of common carriers of passengers, including 1742, 1743, NCC)
common carriers by railroad train, streetcar, or motorbus, to stop
their conveyances a reasonable length of time in order to afford
passengers an opportunity to board and enter, and they are NOTE: No other defense may be raised by the common carrier in


TRANSPORTATION LAW
Morillo Notes
Monsoon wind is not an unusual occurrence and is
the carriage of goods. The above enumeration is exclusive or a
closed lits. (Phil. Charter Insurance vs. Unknown Owner of M/V a normal and foreseeable condition while
Honor, GR no. 161833, July 8, 2005) navigating in the sea. (Central Shipping vs.
Insurance Co., Supra)
- However, there may be cases when strong winds
DEFENSES IN CARRIAGE OF PASSENGERS: Defenses may be unforeseeable. Hence, in one case, the
that can be raised by common carriers in case of death of or carrier was not made liable because the proximate
injuries to passengers; and only cause of the loss was unforeseeable
1. Flood, storm, earthquake, lightning and other strong winds and enormous waves. (Phil. American
natural disaster and calamity; General Insurance vs. MCG Marine Services, GR
2. Acts of the public enemy at war, whether no. 135645, March 8 2005)
international or civil;
3. Act or omission of the shipper or owner of the Hijacking:
goods; - Hijacking of the carrier does not fall among the 5
4. Order or act of the competent authority; and categories of exempting causes. The carrier’s
5. Exercise of extraordinary diligence. (Arts. 1756, vehicle must be dealt with under Art/ 1735, NCC. In
NCC) other words, the common carrier is presumed to be
at fault or to have acted negligently unless there is
FORTUITOUS EVENT proof of extraordinary diligence on its part of the
common carrier.
GACAL vs. PHILIPPINE AIRLINES
REQUISITES BEFORE THE CARRIER CAN INVOKE
GR no. L-55300, March 15, 19900
FORTUITOUS EVENT:
1. The cause of the unforeseen and unexpected In order to constitute a caso fortuito or force majeure that
occurrence, or of the failure of the debtor to would exempt a person from liability under Article 1174 of the
comply with his obligation, must be independent of Civil Code, it is necessary that the following elements must
the human will. concur: (a) the cause of the breach of the obligation must be
2. It must be impossible to foresee the event that independent of the human will (the will of the debtor or the
constitutes the caso fortuito, or if it can be foreseen obligor); (b) the event must be either unforeseeable or
unavoidable; (c) the event must be such as to render it
it must be impossible to avoid.
impossible for the debtor to fulfill his obligation in a normal
3. The occurrence must be such as to render it manner; and (d) the debtor must be free from any
impossible for the debtor to fulfill his obligation in a participation in, or aggravation of the injury to the creditor
normal manner. (Lasam v. Smith, 45 Phil. 657 [1924]; Austria v. Court of
4. The obligor/debtor must be free from any Appeals, 39 SCRA 527 [1971]; Estrada v. Consolacion, supra;
participation in or the aggravation of the injury Vasquez v. Court of Appeals, 138 SCRA 553 [1985]; Juan F.
resulting to the creditor. (See; Art. 1174, NCC; Nakpil & Sons v. Court of Appeals, 144 SCRA 596 [1986]).
Gacal vs. PAL, GR no. L-55300, March 15, 1990; Caso fortuito or force majeure, by definition, are extraordinary
events not foreseeable or avoidable, events that could not be
Aquino & Hernando, p. 186)
foreseen, or which, though foreseen, are inevitable. It is,
therefore, not enough that the event should not have been
EFFECT OF CARRIER’S PARTICIPATION: foreseen or anticipated, as is commonly believed, but it must
be one impossible to foresee or to avoid. The mere difficulty
Article 1739. In order that the common carrier may be exempted
to foresee the happening is not impossibility to foresee the
from responsibility, the natural disaster must have been the
same (Republic v. Luzon Stevedoring Corporation, 21 SCRA
proximate and only cause of the loss. However, the common
279 [1967]).
carrier must exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood, storm or other
Applying the above guidelines to the case at bar, the failure to
natural disaster in order that the common carrier may be
transport petitioners safely from Davao to Manila was due to
exempted from liability for the loss, destruction, or deterioration
the skyjacking incident staged by six (6) passengers of the
of the goods. The same duty is incumbent upon the common
same plane, all members of the Moro National Liberation
carrier in case of an act of the public enemy referred to in article
Front (MNLF), without any connection with private
1734, No. 2. (Art. 1739, NCC)
respondent, hence, independent of the will of either the PAL
or of its passengers.
Fire:
Under normal circumstances, PAL might have foreseen the
- Force majeure generally applies to a natural
skyjacking incident which could have been avoided had there
accident, such as that caused by lightning, an been a more thorough frisking of passengers and inspection
earthquake, a tempest or a public enemy. Hence, of baggages as authorized by R.A. No. 6235. But the incident
fire is not considered a natural disaster or calamity. in question occurred during Martial Law where there was a
(Eastern Shipping Lines vs. IAC, 150 SCRA 469) military take-over of airport security including the frisking of
passengers and the inspection of their luggage preparatory to
Storm: boarding domestic and international flights. In fact military
- PAGASA described a storm as having a wind force take-over was specifically announced on October 20, 1973 by
General Jose L. Rancudo, Commanding General of the
of 48 to 55 knots or 55 to 63 miles per hour.
Philippine Air Force in a letter to Brig. Gen. Jesus Singson,
(Central Shipping vs. Insurance Co., 438 SCRA then Director of the Civil Aeronautics Administration (Rollo,
511) pp. 71-72) later confirmed shortly before the hijacking incident
- the presence of a strong wind does not by itself of May 21, 1976 by Letter of Instruction No. 399 issued on
justify the conclusion that there is a storm. For April 28, 1976 (Rollo, p. 72).
instance, strong monsoon winds are not a storm
within the contemplation of Art. 1734(1), NCC. Otherwise stated, these events rendered it impossible for PAL

TRANSPORTATION LAW
Morillo Notes
to perform its obligations in a nominal manner and obviously it responsible for a fortuitous event which could not be
cannot be faulted with negligence in the performance of duty foreseen, or which, though foreseen, was inevitable. In other
taken over by the Armed Forces of the Philippines to the words, there must be an entire exclusion of human agency
exclusion of the former. from the cause of injury or loss.
Under the circumstances of this case, the explosion of the

Mechanical Defect: new tire may not be considered a fortuitous event. There are
- Damage or injury that can be traced to mechanical human factors involved in the situation. The fact that the tire
defects is not a damage or injury that is caused by was new did not imply that it was entirely free from
a fortuitous event. (Necesito vs. Paras, GR no. L- manufacturing defects or that it was properly mounted on
10605, June 30, 1958) the vehicle. Neither may the fact that the tire bought and
used in the vehicle is of a brand name noted for quality,
NECESITO vs. PARAS resulting in the conclusion that it could not explode within
GR no. L-10605, June 30, 1958 five days' use. Be that as it may, it is settled that an accident
caused either by defects in the automobile or through the
The rationale of the carrier's liability is the fact that the negligence of its driver is not a caso fortuito that would
passenger has neither choice nor control over the carrier in exempt the carrier from liability for damages.
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
PUBLIC ENEMY
passenger has no remedy against him, while the carrier
usually has. It is but logical, therefore, that the carrier, while
not in insurer of the safety of his passengers, should MEANING OF “PUBLIC ENEMY”:
nevertheless be held to answer for the flaws of his equipment
- It presupposes the existence of an actual state of
if such flaws were at all discoverable.
war, and refers to the government of a foreign
In the case now before us, the record is to the effect that the nation at war with the country to which the carrier
only test applied to the steering knuckle in question was a belongs, though not necessarily with that to which
purely visual inspection every thirty days, to see if any cracks the owner of the goods owes allegiance.
developed. It nowhere appears that either the manufacturer (Francisco, Law on Transportation, p. 75)
or the carrier at any time tested the steering knuckle to
ascertain whether its strength was up to standard, or that it Additional Notes:
had no hidden flaws would impair that strength. And yet the
- The act of a rebel against the government is not an
carrier must have been aware of the critical importance of the
knuckle's resistance; that its failure or breakage would result act of a public enemy. However, Art. 1734, Civil
in loss of balance and steering control of the bus, with Code, makes an act of a public enemy in war as a
disastrous effects upon the passengers. No argument is public enemy even if the war is civil in nature.
required to establish that a visual inspection could not Therefore, there is also public enemy “when the
directly determine whether the resistance of this critically parties in rebellion occupy and hold in a hostile
important part was not impaired. Nor has it been shown that manner a certain portion of territory, when they
the weakening of the knuckle was impossible to detect by have declared their independence, cast off their
any known test; on the contrary, there is testimony that it
allegiance, and have in the field a regularly
could be detected. We are satisfied that the periodical visual
inspection of the steering knuckle as practiced by the organized force in armed hostility to the
carrier's agents did not measure up to the required legal government, and the authority of the latter is for the
standard of "utmost diligence of very cautious persons" — time overthrown, such an uprising may take on the
"as far as human care and foresight can provide", and dignity of the civil war, and when so magnified and
therefore that the knuckle's failure can not be considered a matured, the parties are belligerents and
fortuitous event that exempts the carrier from responsibility respectively entitled to belligerent rights. War,
(Lasam vs. Smith, 45 Phil. 657; Son vs. Cebu Autobus Co., therefore, may be either international or civil,
94 Phil., 892.)
foreign or domestic, and when ever an armed
contest assumes such proportions, the combatants
Tire Blowouts: therein come within the legal comprehension of the
- The rule on mechanical defects applies to “tire term “public enemy”/ (Francisco, Supra)
blow-outs.” (Necesito vs. Paras, Supra)
YOBIDO vs. CA IMPROPER PACKING
GR no. 113003, October 17, 1997
In view of the foregoing, petitioners' contention that they Article 1742. Even if the loss, destruction, or deterioration of the
should be exempt from liability because the tire blowout goods should be caused by the character of the goods, or the
was no more than a fortuitous event that could not have faulty nature of the packing or of the containers, the common
been foreseen, must fail. A fortuitous event is possessed of carrier must exercise due diligence to forestall or lessen the loss.
the following characteristics: (a) the cause of the unforeseen (Art. 1742, NCC)
and unexpected occurrence, or the failure of the debtor to
comply with his obligations, must be independent of human
will; (b) it must be impossible to foresee the event which - Art. 1734(4), cannot apply where the carrier
constitutes the caso fortuito, or if it can be foreseen, it must accepted the goods despite such defects. The SC
be impossible to avoid; (c) the occurrence must be such as
explained: “For this provision to apply, the rule is
to render it impossible for the debtor to fulfill his obligation
in a normal manner; and (d) the obliger must be free from
that if the improper packing or, in this case, the
any participation in the aggravation of the injury resulting to defect/s in the container, is/are known to the
the creditor. As Article 1174 provides, no person shall be carrier or his employees or apparent upon ordinary
observation, but he nevertheless accepts the same


TRANSPORTATION LAW
Morillo Notes
without protest or exception notwithstanding such When this Defense is not available:
condition, he is not relieved of liability for damage 1. If the public authority has no authority to issue the
resulting therefrom. In this case, petitioner subject order; or
accepted the cargo without exception despite the 2. If the public authority exceeded his authority.
apparent defects in some of the container vans.
Hence, for failure of petitioner to prove that she
GANZON vs. CA
exercised extraordinary diligence in the carriage of
GR no. L-48757, May 30, 1988
goods in this case or that she is exempt from
liability, the presumption of negligence as provided FACTS: Tumambing contracted the services of Ganzon to haul
under. Art. 1735, NCC, holds.” (Virgines Calvo vs. 305 tons of scrap iron from Mariveles, Bataan, to the port of
UCPB General Insurance, Co., GR no. 148496, Manila on board the lighter LCT "Batman". Ganzon sent his
Mach 19, 2002) lighter "Batman" to Mariveles where it docked in three feet of
water Thereafter, Tumambing delivered the scrap iron to Niza,
Defense under Carriage of Goods by Sea Act (COGSA): captain of the lighter, for loading which was actually begun on
the same date by the crew of the lighter under the captain's
Similarly, COGSA provides that the carrier shall not be liable
supervision. When about half of the scrap iron was already
for the following: loaded Mayor Jose Advincula of Mariveles, Bataan, arrived and
1. Wastage in bulk or weight or any other loss or demanded P5,000.00 from Gelacio Tumambing. The latter
damage arising from inherent defect, quality or vice resisted the shakedown and after a heated argument between
of goods; them, Mayor Advincula drew his gun and fired at
2. Insufficiency of packing; Tumambing.e||anº•1àw>The gunshot was not fatal but
3. Insufficiency or inadequacy of the marks; or Tumambing had to be taken to a hospital in Balanga, Bataan, for
4. Latent defects not discoverable by due diligence. treatment.
(Sec. 4(2), m , n, o, and, p, COGSA)
After sometime, the loading of the scrap iron was resumed. But
on December 4, 1956, Acting Mayor Basilio Rub, accompanied
When this Defense is not available: by three policemen, ordered captain Filomeno Niza and his crew
- The carrier is not responsible if the loss occurs to dump the scrap iron where the lighter was docked. The rest
because of the inherent nature of shipment. This was brought to the compound of NASSCO. Later on Acting
applies even to hand-carried baggage. (Art. 2002, Mayor Rub issued a receipt stating that the Municipality of
NCC) Mariveles had taken custody of the scrap iron.
- In one case, the soybean meals were transported
RULING: The SC cannot sustain the theory of caso fortuito. In
from the US to Manila. The carrier was not made the courts below, the petitioner's defense was that the loss of
responsible for the shortage because soybean the scraps was due to an "order or act of competent public
meals are hygroscopic materials that either lose authority," and this contention was correctly passed upon by the
(desorb) or gain (absorb) moisture from the Court of Appeals which ruled that: “In the second place, before
surrounding air. The SC noted that taking into the appellee Ganzon could be absolved from responsibility on
consideration the phenomena of desorption, the the ground that he was ordered by competent public authority to
change in temperature surrounding the soybean unload the scrap iron, it must be shown that Acting Mayor Basilio
meal from the time it left wintertime in the USA and Rub had the power to issue the disputed order, or that it was
lawful, or that it was issued under legal process of authority. The
the time it arrived in Manila and the fact that appellee failed to establish this. Indeed, no authority or power of
voyage up to the point of unloading was 36 days. the acting mayor to issue such an order was given in evidence.
the shipment could have definitely lost weight, Neither has it been shown that the cargo of scrap iron belonged
corresponding to the amount of moisture lost to the Municipality of Mariveles. What we have in the record is
during transit. (Asian Terminal vs. Simon the stipulation of the parties that the cargo of scrap iron was
Enterprise, GR no. 177116, February 27, 2013) accilmillated by the appellant through separate purchases here
- If the carrier accepts the goods knowing the fact of and there from private individuals. The fact remains that the
improper packing of goods upon ordinary order given by the acting mayor to dump the scrap iron into the
sea was part of the pressure applied by Mayor Jose Advincula to
observation or notwithstanding such condition, it is shakedown the appellant for P5,000.00. The order of the acting
not relieved of liability for loss or injury resulting mayor did not constitute valid authority for appellee Mauro
therefrom. (Southern lines vs. CA, GR no. L-16629, Ganzon and his representatives to carry out.”
January 31, 1962)
Now the petitioner is changing his theory to caso fortuito. Such a
change of theory on appeal we cannot, however, allow. In any
ORDER OF PUBLIC AUTHORITY case, the intervention of the municipal officials was not In any
case, of a character that would render impossible the fulfillment
by the carrier of its obligation. The petitioner was not duty bound
Article 1743. If through the order of public authority the goods to obey the illegal order to dump into the sea the scrap iron.
are seized or destroyed, the common carrier is not responsible, Moreover, there is absence of sufficient proof that the issuance
provided said public authority had power to issue the order. (Art. of the same order was attended with such force or intimidation
1743, NCC) as to completely overpower the will of the petitioner's
employees. The mere difficulty in the fulfillment of the obligation
is not considered force majeure. We agree with the private
- An order of a public authority may be used to respondent that the scraps could have been properly unloaded
excuse liability only if the public authority who at the shore or at the NASSCO compound, so that after the
issued the order is duly authorized to issue the dispute with the local officials concerned was settled, the scraps
could then be delivered in accordance with the contract of
order as provided for in Art. 1743, NCC.
carriage.

TRANSPORTATION LAW
Morillo Notes
DEFENSES IN CARRIAGE OF PASSENGERS carrier's employees through the exercise of the diligence of a
good father of a family could have prevented or stopped the act
or omission. (Art. 1763, NCC)
Preliminary Note:
- The primary defense of the carrier in transporting
passengers is exercise of extraordinary diligence. FORTUNE EXPRESS vs. CA
Thus, even if there is a fortuitous event, the carrier GR no. 119756, March 18, 1999
must also present proof of exercise of
extraordinary diligence. Art. 1763 of the Civil Code provides that a common carrier is
responsible for injuries suffered by a passenger on account of
wilfull acts of other passengers, if the employees of the common
ACTS OF EMPLOYEES carrier could have prevented the act through the exercise of the
diligence of a good father of a family. In the present case, it is
clear that because of the negligence of petitioner's employees,
the seizure of the bus by Mananggolo and his men was made
Article 1759. Common carriers are liable for the death of or
possible.
injuries to passengers through the negligence or wilful acts of the
former's employees, although such employees may have acted
Despite warning by the Philippine Constabulary at Cagayan de
beyond the scope of their authority or in violation of the orders of
Oro that the Maranaos were planning to take revenge on the
the common carriers.
petitioner by burning some of its buses and the assurance of
petitioner's operation manager, Diosdado Bravo, that the
This liability of the common carriers does not cease upon proof
necessary precautions would be taken, petitioner did nothing to
that they exercised all the diligence of a good father of a family in
protect the safety of its passengers.
the selection and supervision of their employees. (Art. 1759,
NCC)
Had petitioner and its employees been vigilant they would not
have failed to see that the malefactors had a large quantity of
gasoline with them. Under the circumstances, simple
Rationales of Art. 1759, NCC:
precautionary measures to protect the safety of passengers,
1. The special undertaking of the carrier requires that such as frisking passengers and inspecting their baggages,
it furnish its passenger that full measure of preferably with non-intrusive gadgets such as metal detectors,
protection afforded by the exercise of the high before allowing them on board could have been employed
degree of care prescribed by the law, inter alia from without violating the passenger's constitutional rights. As this
violence and insults at the hands of strangers and Court amended in Gacal v. Philippine Air Lines, Inc., a common
other passengers, but above all, from the acts of carrier can be held liable for failing to prevent a hijacking by
the carrier's own servants charged with the frisking passengers and inspecting their baggages.
passenger's safety;
From the foregoing, it is evident that petitioner's employees
2. Said liability of the carrier for the servant's violation failed to prevent the attack on one of petitioner's buses because
of duty to passengers, is the result of the formers they did not exercise the diligence of a good father of a family.
confiding in the servant's hands the performance of Hence, petitioner should be held liable for the death of Atty.
his contract to safely transport the passenger, Caorong.
delegating therewith the duty of protecting the
passenger with the utmost care prescribed by law;
and PILAPIL vs. CA
3. As between the carrier and the passenger, the GR no. 52159, December 22, 1989
former must bear the risk of wrongful acts or
negligence of the carrier's employees against While as a general rule, common carriers are bound to exercise
passengers, since it, and not the passengers, has extraordinary diligence in the safe transport of their passengers,
it would seem that this is not the standard by which its liability is
power to select and remove them. (Maranan vs.
to be determined when intervening acts of strangers is to be
Perez, GR no. L-22272, June 26, 1967) determined directly cause the injury, while the contract of
carriage Article 1763 governs: “Article 1763. A common carrier is
Passengers has no duty to inquire: responsible for injuries suffered by a passenger on account of
- It is no defense that the employee acted beyond the wilful acts or negligence of other passengers or of strangers,
the scope of his authority because the riding public if the common carrier's employees through the exercise of the
is not expected to inquire from time to time before diligence of a good father of a family could have prevented or
they board the carrier whether or not the driver or stopped the act or omission.”
any other employee is authorized to drive the Clearly under the above provision, a tort committed by a stranger
vehicle or that said driver is acting within the scope which causes injury to a passenger does not accord the latter a
of his authority and observing the existing rules and cause of action against the carrier. The negligence for which a
regulations required of him by management. common carrier is held responsible is the negligent omission by
(Silverio Marchan vs. Mendoza, GR no. 24471, the carrier's employees to prevent the tort from being committed
August 30, 1968) when the same could have been foreseen and prevented by
them. Further, under the same provision, it is to be noted that
when the violation of the contract is due to the willful acts of
ACTS FOR OTHER PASSENGERS strangers, as in the instant case, the degree of care essential to
AND THIRD PERSONS be exercised by the common carrier for the protection of its
passenger is only that of a good father of a family.
Article 1763. A common carrier is responsible for injuries

suffered by a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the common


TRANSPORTATION LAW
Morillo Notes
PASSENGER’S BAGGAGES latter, they take the precautions which said hotel-keepers or their
substitutes advised relative to the care and vigilance of their
effects.
Article 1754. The provisions of articles 1733 to 1753 shall apply
Article 2001. The act of a thief or robber, who has entered the
to the passenger's baggage which is not in his personal custody
hotel is not deemed force majeure, unless it is done with the use
or in that of his employee. As to other baggage, the rules in
of arms or through an irresistible force.
articles 1998 and 2000 to 2003 concerning the responsibility of
hotel-keepers shall be applicable. (Art. 1754,NCC)
Article 2002. The hotel-keeper is not liable for compensation if
the loss is due to the acts of the guest, his family, servants or
Definition of Baggage: visitors, or if the loss arises from the character of the things
brought into the hotel.
- It is defined to include whatever articles a
passenger usually takes with him for his own Article 2003. The hotel-keeper cannot free himself from
personal use, comfort, and convenience according responsibility by posting notices to the effect that he is not liable
to the habits or wants of the particular class to for the articles brought by the guest. Any stipulation between the
which he belongs, either with reference to his hotel-keeper and the guest whereby the responsibility of the
immediate necessities or to the ultimate purpose of former as set forth in articles 1998 to 2001 is suppressed or
his journey. (Francisco, Law on Transportation, p. diminished shall be void.
242)
LTFRB Rules: OBLIGATION OF THE SHIPPER, CONSIGNEE AND

1. Every passenger is entitled to a free carriage of 10 PASSENGER
kilograms of baggage and shall pay the
corresponding freightage for excess weight;
2. When the PUV operator’s unit/s carry both DUTY TO DISCLOSE
passengers and freight, the freight shall be placed
in a separate compartment, except packages or
bundles the size of which will allow placement DUTY TO DISCLOSE:
under the seats without causing inconvenience to, - Proper information will help the carrier exercise
and compromising the safety of, the other proper care and caution in relation not only to the
passengers; subject cargo but also to the cargo of other
3. In case freight is carried on top of Public Utility shippers and the passengers. Therefore, the
Buses, it shall not exceed 20 Kilos per square shipper must give proper information if there is a
meter of roof area, distributed so that it will not need to store the cargoes in a separate place.
endanger the lives of passengers or stability of the - A common carrier is entitled to fair representation
bus unit; of the nature and value of the goods to be carried,
4. The PUV operator shall not load any animals of any with the concomitant right to rely thereon, and a
kind, except fowls. (Pars. 21 to 24, LTFRB carrier has no obligation to inquire into the
Memorandum Circular 2011-04) correctness or sufficiency of such information.
(Saludo vs. CA, GR no. 95536, March 23, 1992)
Checked-In Baggage:
- Baggage that are “checked-in” or delivered to the Damage caused by Cargoes:
carrier are governed by the rules above. In other - The duty to disclose the nature of the cargo is
words, the rules that are applicable to goods that important in order that the carrier can exercise due
are being shipped are applicable to baggage diligence in preventing damage to the cargoes to
delivered to the custody of the carrier as an be transported.
incident of a contract of carriage of passenger. - In addition, the information that the carrier will
- In the case of Sarkies Tours Phils. vs. CA (GR no. receive will be used to prevent damage to the
108897, October 2, 1997), the three pieces of vessel. Therefore, the shipper may be held liable
luggage of a passenger who was on her way to for any damage that may have been caused solely
Legaspi City were kept in the baggage by the dangerous nature of the cargoes or the
compartment of the bus. During the stopover at defect in the packaging of the cargoes.
Daet, it was discovered that only one bag remained
in the compartment that was already open. The DUTY TO EXERCISE DUE DILIGENCE
cause of the loss was the negligence of the carrier
in not ensuring that the doors of the baggage
compartment of the bus were securely fastened, DUTY TO EXERCISE DUE DILIGENCE
Arts. 1733, 1734, and 1746, NCC, were applied to - The shipper or carrier is bound to pay the
hold the carrier liable. consideration in the form of freight or fare. Also the
shippey and the passenger are bound to exercise
Rules on Hand Carried Luggage: The following Civil Code due diligence in avoiding damage or injury.
provisions applies:
NEGLIGENCE OF SHIPPER OR PASSENGER:
Article 1998. The deposit of effects made by travellers in hotels - The obligation to exercise due diligence is not
or inns shall also be regarded as necessary. The keepers of
limited to the carrier. The shipper is obliged to
hotels or inns shall be responsible for them as depositaries,
provided that notice was given to them, or to their employees, of exercise due diligence in avoiding damage to the
the effects brought by the guests and that, on the part of the goods that are being shipped or injury to his

TRANSPORTATION LAW
Morillo Notes
person. This obligation to exercise due care is that the other driver was likewise guilty of
likewise basic in all forms of obligations. (Aquino & negligence.”
Hernando, p. 172)
ASSUMPTION OF RISK
ACTS OF THE SHIPPER OR THE PASSENGER:
- If the act or omission of the shipper or owner of the
goods or the passenger is the proximate and only Assumption of Risk:
cause of the damage, then the common carrier is - Passengers must take risks incident to the mode of
not liable. (Art. 1734, NCC) travel. Carriers are not insurers of the lives of their
passengers. Therefore, in air travel, adverse
Contributory Negligence of the Shipper: weather conditions or extreme climatic changes
- Contributory negligence is conduct on the part of are some of the perils involved in air travel, the
the injured party, contributing as a legal cause to consequences of which the passenger must
the harm he has suffered, which falls below the assume or expect. (Japan Airlines vs. CA, GR no.
standard to which he is required to conform for his 118664, August 7, 1998)
own protection. (Sealoader Shipping Corp vs. - However, there is no assumption of risk in case the
Grand Cement Mfg. Corp, GR nos. 167363 and passenger voluntarily boarded a carrier that was
177466, December 15, 2010) filled to capacity.
- If the shipper or oner merely contributed to the
CALALAS vs. CA
loss, destruction or deterioration of the goods, the
GR no. 122039, May 31, 2000
proximate cause thereof being the negligence of
the common carrier, the latter shall be liable in A student took a passenger jeepney operated by the
damages, which however, shall be equitably Petitioner Calalas. As the jeepney was filled to the
reduced. (Art. 1741, NCC) capacity of about 24 passengers, the conductor gave
the student an “extension seat”, a wooden stool at the
Contributory Negligence of Passenger: back of the door of the rear end of the vehicle. They
- The passenger must observe the diligence of a jeepney stopped on its way to let a passenger off and
the student gave way to the outgoing passenger. Just
good father of a family to avoid injury to himself.
as she was doing so, a truck bumped the rear end
(Art. 1761, NCC) portion of the jeepney. The student was injured as a
- The contributory negligence of the passenger does result.
not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the The SC rejected the argument of the carrier that the
negligence of the common carrier, but the amount student’s taking an “extension seat” amounted to an
of damages shall be equitably reduced. (Art. 1762, implied assumption of risk. It is true that her being
NCC) seated therein placed her in a peril greater than that to
which the other passengers were exposed. However,
the same cannot be construed as assumption of risk
DOCTRINE OF LAST CLEAR CHANCE and such position is “akin to arguing that the injuries to
the many victims of the tragedies in our seas should
not be compensated merely because those
Doctrine of Last Clear Chance: passengers assumed a greater risk of drowning by
- When both parties involved in the accident were boarding an overloaded ferry.” Additionally, the SC
both negligent, the negligence of the party will not pointed out that the carrier failed to exercise
extraordinary diligence. The Court pointed out that the
be considered the proximate cause if the other
jeepney was improperly parked because its rear
party has the last clear chance of avoiding the portion was exposed about 2 meters from the broad
injury. (Phil. National Railways Corp vs. Vizcara, GR shoulders if the highway and faced the middle of the
no. 190022, february 15, 2012) highways in a diagonal angle.
- A negligent defendant defendant is held liable even
to a negligent plaintiff, or even to a plaintiff who has
been grossly negligent in placing himself in peril, if - There is also no assumption of risk by mere fact
he, aware of plaintiff’s peril, or according to some that the carrier posted notices against such liability.
authorities, should have been aware of it in the (Art. 1757, NCC)
reasonable exercise of due care, had in fact an
opportunity later than that of the plaintiff to avoid PAYMENT OF FREIGHT
an accident. (Bustamante vs. CA, GR no. 89880,
February 6, 1991)
PAYMENT OF FREIGHT:
When Doctrine of Last Clear Chance does not apply: - Common carriers are subject to heavy regulation
- In the case of Phil. Rabbit Bus Lines vs. IAC (GR with respect to rates that they are charging the
nos. 66102-04, August 30, 30, 1990), where it was public. The regulation of rates of public utilities is
the SC ruled that the principle of “last clear founded upon the police power of the State and
chance” applies in a suit between the owners and statutes prescribing rules for the control and
drivers of colliding vehicles. “It does not arise regulation of public utilities are a valid exercise
where a passenger demands responsibility from thereof.
the carrier to enforce its contractual obligations. - When private property is used for a public purpose
For it would be inequitable to exempt the negligent and is affected with public interest, it ceases to be
driver of the jeepney and its owners on the ground juris privati only and becomes subject to regulation.
The regulation is to promote the common good.


TRANSPORTATION LAW
Morillo Notes
The owner may withdraw submission to regulation vessel beyond the time agreed on for loading and
by discontinuing use; but as long as use of the unloading.
property is continued, the sme is subject to public - Essentially, It is the claim for damages for failure to
regulation. (Republic vs. Manila Electric Company, accept delivery. (Magellan Manufacturing
GR no. 141314, November 15, 2002) Marketing Corp. vs. CA, GR no. 95529, August 22,
- In regulating rates charged by public utilities, the 1991)
States protects the public against arbitrary and
excessive rates while maintaining the efficiency
and quality of services rendered. However, the DUTY TO EXERCISE EXTRAORDINARY DILIGENCE
power to regulate rates does not give the State the
right to prescribe rates that are so low as to DUTY TO EXERCISE EXTRAORDINARY DILIGENCE:
deprive the public utility of a reasonable return on
investment. (Republic vs. Manila Electric Company, Article 1733. Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe
Supra)
extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to
Who will pay the Freight? all the circumstances of each case.
- The shipper may pay the necessary freight before
or at the time he delivers the goods to the carrier Such extraordinary diligence in the vigilance over the goods is
for shipment. However, the parties may also further expressed in articles 1734, 1735, and 1745, Nos. 5, 6,
stipulate that the consignee will pay the freight at and 7, while the extraordinary diligence for the safety of the
the point of destination. The consignee is bound by passengers is further set forth in articles 1755 and 1756. (Art.
1733, NCC)
such stipulation the moment he accepts the goods.
(Aquino & Hernando, p. 174)
- With respect to passengers, the said passengers
Article 1755. A common carrier is bound to carry the passengers
are contractually bound to pay the fare within such
safely as far as human care and foresight can provide, using the
time as prescribed by regulations or by the carrier. utmost diligence of very cautious persons, with a due regard for
There are some carrier that require payment of all the circumstances. (Art. 1755, NCC)
consideration before the passenger is already on
board. (Aquino & Hernando, p. 175)
RATIONALE:
Time to pay the Freight: - A common carrier is bound to carry the passengers
- The consignees to who, the shipment was made safely as far as human and foresight can provide,
may not defer the payment of the expenses and using the utmost diligence of very cautious
transportation charges of the goods they receive persons, with due regard for all circumstances.
after the lapse of 24 hours following their delivery; This extraordinary diligence required of common
and in case of delay in this payment, the carrier carriers is calculated to protect the passengers
may demand the judicial sale of the goods from the tragic mishaps that frequently occur in
transported in an amount necessary to cover the connection with rapid modern transportation. This
cost transportation and the expenses incurred. (Art. high standard of care is imperatively demanded by
374, Code of Commerce) the preciousness of human life and by the
- With respect to carriage of passengers by sea, the consideration that every person must in every way
tickets are purchased in advance from ticket be safeguarded against all injury. (Report of Code
outlets or booking offices that are required to be Commission, pp. 35-26)
set up in every ports of call of the vessel. (MARINA
Memorandum Circular No. 112) HOW DUTY IS COMPLIED WITH:
- The law does not prescribe a formula that must be
Carrier’s Lien: used to determine of due diligence is complied
- The goods transported shall be especially bound to with.
answer for the cost of transportation and for the - SC explained in the case of Juntilla vs. Fontanar
expenses and fees incurred for them during their (GR no. L-45637, May 31, 1985), that “the source
conveyance and until the moment of their delivery. of a common carrier’s legal liability is the contract
(Art. 375, par. 1, Code of Commerce) of carriage, and by entering into the said contract,
- This special right shall prescribe eight days after it binds itself to carry the passengers safely as far
the delivery has been made, and once prescribed, as human care and foresight can provide, using the
the carrier shall have no other action than that utmost diligence of a very cautious person, with
corresponding to him as an ordinary creditor. (Art. due regard for all the circumstances.”
375, par. 2, Code of Commerce)
EFFECT OF STIPULATION
DEMURRAGE ON EXTRAORDINARY DILIGENCE
Demurrage: A. As to the Goods:

- The parties may stipulate the period within which to Article 1744. A stipulation between the common carrier and the
load and unload cargoes. shipper or owner limiting the liability of the former for the loss,
- Demurrage is the compensation provided for in the destruction, or deterioration of the goods to a degree less than
contract of affreightment for the detention of the extraordinary diligence shall be valid, provided it be:

TRANSPORTATION LAW
Morillo Notes
clear breach of its duty prescribed in Art. 1755 of
1. In writing, signed by the shipper or owner;
2. Supported by a valuable consideration other than the the Civil Code. (Caltex (Phils), Inc. vs. Sulpicio
service rendered by the common carrier; and Lines, Inc., GR no. 131166, September 30, 1999)
3. Reasonable, just and not contrary to public policy.
Warranty of Seaworthiness of Ship:
- A passenger or a shipper of goods is under no
Notes: obligation to conduct an inspection of the ship and
- The parties cannot stipulate that the carrier will not its crew, the carrier is obliged by law to impliedly
exercise any diligence in the custody of goods. warrant its seaworthiness. (Vector Shipping vs.
(Art. 1748(3), NCC) Adelfo Macasa, GR no. 160219, July 21, 2008)
- Neither can it be stipulated that the goods are the - Although there is no express provision under the
shipper’s risk. (Art. 1748 (1), NCC) New Civil Code that provides for warranty of
- however, the law allows a stipulations whereby the seaworthiness of the ship, the warranty is implied
carrier will exercise a degree of diligence that is because the failure of a common carrier to maintain
less than extraordinary with respect to goods. in seaworthy condition the vessel involved in its
contract of carriage is a clear breach of its duty
B. As to the Passengers: prescribed in Art. 1755, NCC. (Caltex (Phils), Inc.
Article 1757. The responsibility of a common carrier for the vs. Sulpicio Lines, Supra)
safety of passengers as required in articles 1733 and 1755
cannot be dispensed with or lessened by stipulation, by the Warranty under Special Law:
posting of notices, by statements on tickets, or otherwise. (Art.
1757, NCC) Section 3. (1) The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence to -
C. As to Gratuitous Passenger: (a) Make the ship seaworthy;” (Sec. 3 (1), Insurance Code)
Article 1758. When a passenger is carried gratuitously, a

stipulation limiting the common carrier's liability for negligence is Domestic Shipping:
valid, but not for wilful acts or gross negligence.
SEC. 9. Safety Standards. - All vessels operate by domestic
The reduction of fare does not justify any limitation of the ship operators shall at all times be in seaworthy condition
common carrier's liability. (Art. 1758, NCC) properly equipped with adequate life-saving, communication,
safety and other equipment operated and maintained in
accordance with the standards set by MARINA, and manned by
duly licensed and competent vessel crew.
LARA vs. VALENCIA
GR no. L-9907, June 30, 1958 The MARINA shall have the power to inspect vessels and all
equipment on board to ensure compliance with safety standards.
SC explained therein that as to accommodation passengers or (Sec. 9, RA 9295)
invited guests, the carrier owes to them merely the duty to
exercise reasonable care so that they may be transported safely
to their destination. “The rule is established by the weight of
authority that the owner or operator of an automobile owes the Section 9. Safety Standards – All vessels operated by domestic
duty to an invited guest to exercise reasonable care in its ship operators shall at all times be in seaworthy condition,
operation, and not unreasonably to expose him to danger and properly equipped with adequate life-saving, communication,
injury by increasing the hazard of travel. This rule is that an safety and other equipment, operated and maintained in
owner of an automobile owes a guest the duty to exercise accordance with the standards set by MARINA.
ordinary or reasonable care to avoid injury. Since one riding in
an automobile is no less a guest because he asked for the 9.1. All ships must be manned by duly licensed and
privilege of doing so, the same obligation of care is imposed competent vessel crew and shall comply with
upon the driver as in the case of one expressly invited to ride. qualification standards set by MARINA for seafarers
Therefore, defendant is only required to observe ordinary care, onboard its registered ships;
and is not duty bound to exercise extraordinary diligence as
required of a common carrier by Arts. 1755-1756, NCC. 9.2. In the exercise of its power to inspect all ships and
all equipment on board vessels, the MARINA shall
undertake inspections in conformity with the Ship
Safety Inspection System (SSIS), and ensure that all
EXTRAORDINARY DILIGENCE BY CARRIAGE shipowners or operators shall maintain their ships in
BY SEA accordance with operational and safety standards
required by existing laws and/or applicable
international conventions, codes, rules and regulations
SEAWORTHINESS: for the duration of the ship’s operational life; and
- Extraordinary diligence requires that the ship that
will transport the passengers and goods is 9.3. All ships are required to carry on board the
seaworthy. (Trans-Asia Shipping Lines vs. CA, 254 relevant or applicable ship safety certificates issued by
SCRA 260) MARINA. (2014 Amendments to RA 9295)
- The carriers are deemed to warrant impliedly the
seaworthiness of the ship. For a vessel to be No duty to inquire:
seaworthy, it must be adequately equipped for the - There is implied warranty of seaworthiness,
voyage and manned with a sufficient number of shippers of goods, when transacting with common
competent officers and crew. The failure of a carriers, are not expected to inquire into the
common carrier to maintain in seaworthy condition vessel’s seaworthiness, genuineness of its licenses
the vessel involved in its contract of carriage is a and compliance with all maritime laws. To demand


TRANSPORTATION LAW
Morillo Notes
more from shippers and hold them liable in case of the particular kind of cargo that she has contracted
failure exhibits nothing but futility of our maritime to carry and her cargo must be so loaded that it is
laws insofar as the protection of the public in safe for her to proceed on her voyage. (Aquino &
generalis concerned. (Caltex (Phils.), Inc vs. Hernando, p. 114)
Sulpicio Lines, Supra)
When a vessel is not cargoworthy:
Burden of Proof: - A vessel is not cargoworthy if frozen perishable
- It is the carrier, and not the passenger nor shipper, goods like meat are carried even if it has defective
that carries such a burden of proving that the ship refrigeration equipment. (Maori King vs. Hughes, 2
is seaworthy. Sufficient evidence must be QB 550)
submitted and the presentation of certificates of - the vessel is not cargoworthy if iron plates which
seaworthiness is not sufficient to overcome the have been loaded broke loose in righ weather and
presumption of negligence. (Delsan transport Lines went through the ship’s side. (Kopitoff vs. Wilson, 1
vs. CA, GR no. 127897, November 15, 2001) QBD. 377)
- A ship may be unfit to carry the contemplated
MEANING OF SEAWORTHINESS: cargo because she has no sufficient means of
- Seaworthiness is that strength, durability and ventilation and yet be quite fit to make the
engineering skill made a part of a ship’s contemplated voyage as a ship. (AE Reed vs.
construction and continued maintenance, together Page, Son and East Ltd., 1 KB. 743)
with a competent and sufficient crew, which would
withstand the vicissitudes and dangers of the PROPER MANNING AND ADEQUATE EQUIPMENT:
elements which might reasonably be expected or
Article 609. Captains, masters or patrons of vessels must be
encountered during during her voyage without loss Filipinos, have legal capacity to contract in accordance with this
or damage to her particular cargo. (Standard code, and prove the skill, capacity, and qualifications necessary
Vacuum Oil vs. Luzon Stevedoring, GR no. L-5203, to command and direct the vessel, as established by marinine or
aPRIL 18, 1956) navigation laws, ordinances, or regulations, and must not be
disqualified according to the same for the discharge of the duties
Meaning of Seaworthiness under the Insurance Code: of the position.
Section 116. A ship is seaworthy when reasonably fit to perform If the owner of the vessel desires to be the captain thereof,
the service and to encounter the ordinary perils of the voyage without having the legal qualifications therefor, he shall limit
contemplated by the parties to the policy. himself to the financial administration of the vessel, and shall in
trust the navigation to a person possessing the qualifications
Section 118. A warranty of seaworthiness extends not only to required by said ordinances and regulations. (Art. 609, Code of
the condition of the structure of the ship itself, but requires that it Commerce)
be properly laden, and provided with a competent master, a
sufficient number of competent officers and seamen, and the
requisite appurtenances and equipment, such as ballasts, cables Notes:
and anchors, cordage and sails, food, water, fuel and lights, and - For a vessel to be seaworthy, it must be adequately
other necessary or proper stores and implements for the voyage. equipped for the voyage and manned with a
sufficient number of competent officers and crew.
Section 121. A ship which is seaworthy for the purpose of an
(Caltex (Phils), Inc. vs. Sulpicio Lines, GR no.
insurance upon the ship may, nevertheless, by reason of being
unfitted to receive the cargo, be unseaworthy for the purpose of
131166, September 30, 1999)
insurance upon the cargo. - The carrier cannot claim to have exercised
extraordinary diligence by placing a person whose
navigational skills are questionable, at the helm of
Meaning of Seaworthiness under COGSA: the vessel. (Coastwise Lighterage Corp vs. CA, GR
Section 3. (1) The carrier shall be bound, before and at the no. 114167, July 12, 1995)
beginning of the voyage, to exercise due diligence to —
a. Make the ship seaworthy; OVERLOADING:
b. Properly man, equip, and supply the ship; - Duty to exercise due diligence likewise includes the
c. Make the holds, refrigerating and cooling chambers, duty to take passengers or cargoes that are within
and all other parts of the ship in which goods are the carrying capacity of the vessel. Hence, the
carried, fit and safe for their reception carriage and carrier failed to exercise due diligence in one case
preservation.
because it was established that the total number
(2) The carrier shall properly and carefully load, handle, stow, allowed by the Philippine Coast guard on the ship
carry, keep, care for, and discharge the goods carried. was 864, of whom 810 are passengers, but there
were actually 1,004 on board the vessel when it
sank, 140 persons more than the maximum
CARGOWORTHINESS: number that could be safely carried by it. (Negros
- The ship itself must not only be seaworthy to Navigation Co., Inc. vs. CA, GR no. 110398,
undertake the voyage but it must also be November 7, 1997)
“Cargoworthy”. Even if the vessel was properly
maintained and is free from defect, the carrier must PROPER STORAGE:
not accept goods that cannot properly be - The vessel itself may be suitable for the cargo but
transported in the ship. this is not enough because the cargo must also be
- The ship must be an efficient storehouse for her properly stored.
cargo. Cargoworthiness means that the vessel
must be sufficiently strong and equipped to carry

TRANSPORTATION LAW
Morillo Notes
- Due diligence was not exercised when the carrier the carrier. (Sulpicio Lines vs. First Lepanto-Taisho
exposed a cargo of potatoes for 2 days to the heat Insurance, 462 SCRA 125)
of the sun, in tightly closed compartments and
without ventilation that caused the goods to be DEVIATION (DUTY TO TAKE PROPER ROUTE):
rotted beyond use or value. (Hashim and Co. vs. - The carrier is obligated to follow the usual
Rocha and Co., GR no. L-6195, January 17, 111) reasonable commercial or customary route. If there
is no evidence of the usual route, the route is
BELGIAN OVERSEAS CHARTERING & SHIPPING vs.
PHILIPPINE FIRST INSURANCE COMPANY
presumed to be the direct geographical route.
GR no. 143133, June 5, 2002 However, this may be modified in many cases for
navigational or other reasons. (Reardon Smith Line
Steel sheets were shipped through Petitioner Belgian Overseas. vs. black Sea, AC 562 (HL) (1939).
There was proof that they were received in good condition
except that there was a notation in the Bill of Lading “metal Improper Deviation:
envelopes rust stained and slightly dented.” When the metal
sheets were delivered, it was discovered that the steel bands Article 359. If there is an agreement between the shipper and
were broken, and the metal envelopes rust-stained and heavily the carrier as to the road over which the conveyance is to be
uckled and the contents thereof exposed and rusty. made, the carrier may not change the route, unless it be by
reason of force majeure; and should he do so without this cause,
The SC still concluded that the Petitioner failed to prove that due he shall be liable for all the losses which the goods he transports
diligence was observed. The SC explained: “Further, petitioners may suffer from any other cause, beside paying the sum which
failed to prove that they observed the extraordinary diligence and may have been stipulated for such case.
precaution which the law requires a common carrier to know and
to follow to avoid damage to or destruction of the goods When on account of said cause of force majeure, the carrier had
entrusted to it for safe carriage and delivery. to take another route which produced an increase in
transportation charges, he shall be reimbursed for such increase
True, the words "metal envelopes rust stained and slightly upon formal proof thereof. (Art. 359, Code of Commerce)
dented" were noted on the Bill of Lading; however, there is no
showing that petitioners exercised due diligence to forestall or
lessen the loss. Having been in the service for several years, the - There was negligence on the part of the carrier
master of the vessel should have known at the outset that metal when the vessel took a shortcut route instead of
envelopes in the said state would eventually deteriorate when not the usual route that exposed the voyage to
properly stored while in transit. Equipped with the proper unexpected hazard. This constrained the captain to
knowledge of the nature of steel sheets in coils and of the proper force the vessel to run aground. (Loadstar Shipping
way of transporting them, the master of the vessel and his crew vs. Pioneer Asia Insurance, GR no. 157481,
should have undertaken precautionary measures to avoid
January 24, 2006)
possible deterioration of the cargo. But none of these measures
was taken. Having failed to discharge the burden of proving that - There will be no improper deviation if the voyage is
they have exercised the extraordinary diligence required by law, customarily in stages to replenish the ship’s fuel. It
petitioners cannot escape liability for the damage to the four may be reasonable that a voyage may be instages
coils.” to enable a shipowner to start with fuel sufficient
for a stage and necessarily involves calling at a
port for refueling to keep the ship seaworthy.
NEGLIGENCE OF CAPTAIN AND CREW:
(Reardon Smith Line vs. Black Sea, Supra)
- The common carrier must exercise due diligence
must exercise due diligence in the supervision of
TRANSSHIPMENT:
the functions of its captain and crew are
- Defined as “the act of taking cargo out of one ship
performing their functions. However, failure on the
and loading it in another,” or “the transfer of goods
part of the carrier in maritime commerce to provide
from the vessel stipulated in the contract of
competent captain and crew should be
affreightment to another vessel before the place of
distinguished from the negligence of the said
destination named in the contract has been
captain and crew. It is important to make such
reached.”. (Magellan Mfg. Marketing Corp. vs. CA,
distinction because the Limited Liability Rule may
GR no. 95529, August 22, 1991)
in proper cases, cover a situation involving only the
- There is transshipment whether or not the same
negligence of the captain or crew.
person, firm or entity owns the vessel. In other
- Under the said rule, the said liability of the
words, the fact of transshipment is not dependent
shipowner may be limited to the value of the
upon the ownership of the transporting ships or
vessel. On the other hand, if the negligence of the
conveyances or in the change of carriers, as the
captain or crew can be traced to the fact that they
petitioner seems to suggest, but rather on the fact
are really incompetent, the Limited Liability Rule
of actual physical transfer of cargo from one vessel
cannot be invoked because the shipowner may be
to another. (Magellan Mfg. Marketing Corp. vs. CA,
deemed negligent.
Supra)
- There was no dispute that the proximate cause of
the sinking of the vessel resulting in the loss of its
crgo was the “snapping of the iron chains and the EXTRAORDINARY DILIGENCE IN CARRIAGE
subsequent rolling of the logs to the portside due BY LAND
to the negligence of the captain in stowing and
securing the logs on board the vessel,”(Valenzuela
Hardwood vs. CA, GR no. 102316, June 30, 1997) ROADWORTHINESS:
- There is negligence if the crate containing the - Common carriers that offer transportation by land
goods will be dropped while being unloaded from are similarly required to make sure that the vehicles
that they are using are in good order and condition.


TRANSPORTATION LAW
Morillo Notes
- The carrier will not be excused from liability on the 7. A motorcycle driver was not wearing a protective
ground that the tire blowout was due to a fortuitous headgear at the time of the accident;
event when it was shown that the passengers were 8. Overtaking in a “no-overtaking zone” particularly
injured because the floor of the bus gave way. (M. the place where there are two continuous yellow
Ruiz Highway Transit vs. CA, GR no. 16086, May lines at the center of the highway which is part of
29, 1964) internationally recognized pavement regulation
known as the “double yellow center lines”
regulation;
BAYASEN vs. CA
GR no. L-25785, February 26, 1981
9. Overtaking in an intersection; and
10. Violating the MMDA ordinance prohibiting a vehicle
It is obvious that the proximate cause of the tragedy was the coming from a particular street from crossing
skidding of the rear wheels of the jeep and not the "unreasonable another specified street or avenue. (Makati Auro
speed" of the petitioner because there is no evidence on record Line vs. People, GR no. 152040, March 31, 2006;
to prove or support the finding that the petitioner was driving a at Heirs of Redentor Completo vs. Albayda, GR no.
"an unreasonable speed". 172200, July 6, 2010; Guillang vs. Bedania, GR no.
162987, May 21, 2009; Cang vs. Cullen, GR no.
It is a well known physical tact that cars may skid on greasy or
slippery roads, as in the instant case, without fault on account of
163078, November 25, 2009; Ramos vs. COL
the manner of handling the car. Skidding means partial or Realty, GR no. 184905, August 28, 2009)
complete loss of control of the car under circumstances not
necessarily implying negligence. It may occur without fault.
MALLARI vs. CA
GR no. 128607, January 31, 2000
No negligence as a matter of law can, therefore, be charged to
the petitioner. In fact, the moment he felt that the rear wheels of
The rule is settled that a driver abandoning his proper lane for the
the jeep skidded, he promptly drove it to the left hand side of the
purpose of overtaking another vehicle in an ordinary situation has
road, parallel to the slope of the mountain, because as he said,
the duty to see to it that the road is clear and not to proceed if he
he wanted to play safe and avoid the embankment.
cannot do so in safety. When a motor vehicle is approaching or
rounding a curve, there is special necessity for keeping to the
Under the particular circumstances of the instant case, the
right side of the road and the driver does not have the right to
petitioner- driver who skidded could not be regarded as
drive on the left hand side relying upon having time to turn to the
negligent, the skidding being an unforeseen event, so that the
right if a car approaching from the opposite direction comes into
petitioner had a valid excuse for his departure from his regular
view.
course. The negligence of the petitioner not having been
sufficiently established, his guilt of the crime charged has not
In the instant case, by his own admission, petitioner Mallari Jr.
been proven beyond reasonable doubt. He is, therefore, entitled
already saw that the BULLETIN delivery van was coming from
to acquittal.
the opposite direction and failing to consider the speed thereof
since it was still dark at 5:00 o'clock in the morning mindlessly
TRAFFIC RULES: occupied the left lane and overtook two (2) vehicles in front of it
at a curve in the highway. Clearly, the proximate cause of the
- The carrier fails to exercise extraordinary diligence
collision resulting in the death of Israel Reyes, a passenger of the
if it will not comply with basic traffic rules. Art. jeepney, was the sole negligence of the driver of the passenger
2185, NCC, even provides for a presumption of jeepney, petitioner Alfredo Mallari Jr., who recklessly operated
negligence in case the accident occurs while the and drove his jeepney in a lane where overtaking was not
operator of the motor vehicle is violating traffic allowed by traffic rules. Under Art. 2185 of the Civil Code, unless
rules. (Marikina Auto Line vs. People, GR no. there is proof to the contrary, it is presumed that a person driving
152040, March 31, 2006) a motor vehicle has been negligent if at the time of the mishap he
- In cases involving breach of contract of carriage, was violating a traffic regulation. As found by the appellate court,
petitioners failed to present satisfactory evidence to overcome
proof of violation of traffic rules confirms that the
this legal presumption.
carrier failed to exercise extraordinary diligence.
The carrier will be usually made liable and will not
overcome the presumption of negligence if there is
PESTANO vs. SPS. SUMAYANG
violation of traffic rules because extraordinary GR no. 139875, December 4, 2000
diligence on the part of the common carrier
requires compliance with traffic rules and Under Articles 2180 and 2176 of the Civil Code, owners and
regulations (Aquino Hernando, p. 133) managers are responsible for damages caused by their
employees. When an injury is caused by the negligence of a
Instances when the Court found that traffic rules and servant or an employee, the master or employer is presumed to
regulations were violated: be negligent either in the selection or in the supervision of that
employee. This presumption may be overcome only by
1. Violation of Sec. 37 thereof requiring motorist to
satisfactorily showing that the employer exercised the care and
drive on the right side of the road and providing the diligence of a good father of a family in the selection and the
rules on overtaking; supervision of its employee.
2. Speeding in violation of law providing for restriction
on speed; The CA said that allowing Pestaño to ply his route with a
3. Speeding in an intersection; defective speedometer showed laxity on the part of Metro Cebu
4. A vehicle’s failure to signal while making the U- in the operation of its business and in the supervision of its
turn; employees. The negligence alluded to here is in its supervision
over its driver, not in that which directly caused the accident. The
5. The driver escaped and abandoned the victims and
fact that Pestaño was able to use a bus with a faulty
his truck; speedometer shows that Metro Cebu was remiss in the
6. Driving without the license or driving alone with supervision of its employees and in the proper care of its
only a student’s license;

TRANSPORTATION LAW
Morillo Notes
vehicles. It had thus failed to conduct its business with the (Decision p. 16, Record on Appeal.) According to His Honor, "if
diligence required by law. proper and rigid inspection were observed by the defendant, the
contents of the box could have been discovered and the
accident avoided. Refusal by the passenger to have the package
opened was no excuse because, as stated by Dispatcher
DILIGENCE IN THE SELECTION AND SUPERVISION: Cornista, employees should call the police if there were
packages containing articles against company regulations." That
Article 1759. Common carriers are liable for the death of or may be true, but it is Our considered opinion that the law does
injuries to passengers through the negligence or wilful acts of the not require as much. Article 1733 is not as unbending as His
former's employees, although such employees may have acted Honor has held, for it reasonably qualifies the extraordinary
beyond the scope of their authority or in violation of the orders of diligence required of common carriers for the safety of the
the common carriers. passengers transported by them to be "according to all the
circumstances of each case." In fact, Article 1755 repeats this
This liability of the common carriers does not cease upon proof same qualification: "A common carrier is bound to carry the
that they exercised all the diligence of a good father of a family in passengers safely as far as human care and foresight can
the selection and supervision of their employees. (Art. 1759, provide, using the utmost diligence of very cautious persons,
NCC) with due regard for all the circumstances."
In this particular case before Us, it must be considered that while

- The duty of the common carrier to exercise it is true the passengers of appellant's bus should not be made
extraordinary diligence includes due diligence in to suffer for something over which they had no control, as
the selection and supervision of the employee. enunciated in the decision of this Court cited by His Honor,
- In the discharge of the common carrier’s fairness demands that in measuring a common carrier's duty
commitment to ensure safety of passengers, a towards its passengers, allowance must be given to the reliance
carrier may choose to hire its own employees or to that should be reposed on the sense of responsibility of all the
avail itself of the services of an outsider or an passengers in regard to their common safety. It is to be
independent firm to undertake the task. In either presumed that a passenger will not take with him anything
dangerous to the lives and limbs of his co-passengers, not to
case, the common carrier is not relieved of its speak of his own. Not to be lightly considered must be the right
responsibility under the contract of carriage. (LRTA to privacy to which each passenger is entitled. He cannot be
vs. Natividad, GR no. 145804, February 6, 2003) subjected to any unusual search, when he protests the
- Common carriers are now required to make sure innocuousness of his baggage and nothing appears to indicate
that their drivers will not drive under the influence the contrary, as in the case at bar. In other words, inquiry may be
of alcohol or of dangerous drugs and other similar verbally made as to the nature of a passenger's baggage when
substances. (RA 10586 or Anti-Drunk and Drugged such is not outwardly perceptible, but beyond this, constitutional
Driving Act of 2013) boundaries are already in danger of being transgressed. Calling a
policeman to his aid, as suggested by the service manual
invoked by the trial judge, in compelling the passenger to submit
DUTY TO INSPECT: to more rigid inspection, after the passenger had already
- There is no unbending duty to inspect each and declared that the box contained mere clothes and other
every package or baggage that is being brought miscellaneous, could not have justified invasion of a
inside the bus or jeepney. The duty of a carrier to constitutionally protected domain. Police officers acting without
inspect depends on the circumstances. judicial authority secured in the manner provided by law are not
beyond the pale of constitutional inhibitions designed to protect
individual human rights and liberties. Withal, what must be
NOCUM vs. LAGUNA TAYABAS BUS COMPANY importantly considered here is not so much the infringement of
GR no. L-23733, October 31, 1969 the fundamental sacred rights of the particular passenger herein
involved, but the constant threat any contrary ruling would pose
Petitioner Nocum was injured as a consequence of the explosion on the right of privacy of all passengers of all common carriers,
of firecrackers contained in a box, loaded in said bus and considering how easily the duty to inspect can be made an
declared to its conductor as containing clothes and excuse for mischief and abuse. Of course, when there are
miscellaneous items by a co-passenger. It was argued that the sufficient indications that the representations of the passenger
employees of the carrier should have inspected the box regarding the nature of his baggage may not be true, in the
containing the firecrackers. interest of the common safety of all, the assistance of the police
authorities may be solicited, not necessarily to force the
The SC rejected that argument explaining that: “We cannot passenger to open his baggage, but to conduct the needed
agree. No doubt, the views of His Honor do seem to be in line investigation consistent with the rules of propriety and, above all,
with the reasons that the Code Commission had for the constitutional rights of the passenger. It is in this sense that
incorporating the above-quoted provisions in its draft of the Civil the mentioned service manual issued by appellant to its
Code. Indeed, in approving the said draft, Congress must have conductors must be understood.
concurred with the Commission that by requiring the highest
degree of diligence from common carriers in the safe transport of Decisions in other jurisdictions cited by appellant in its brief,
their passengers and by creating a presumption of negligence evidently because of the paucity of local precedents squarely in
against them, the recklessness of their drivers which is a point, emphasize that there is need, as We hold here, for
common sight even in crowded areas and, particularly, on the evidence of circumstances indicating cause or causes for
highways throughout the country may, somehow, if not in a large apprehension that the passenger's baggage is dangerous and
measure, be curbed. We are not convinced, however, that the that it is failure of the common carrier's employee to act in the
exacting criterion of said provisions has not been met by face of such evidence that constitutes the cornerstone of the
appellant in the circumstances of this particular case.” common carrier's liability in cases similar to the present one.
It is undisputed that before the box containing the firecrackers Explosive or Dangerous Contents. — A carrier is ordinarily not
were allowed to be loaded in the bus by the conductor, inquiry liable for injuries to passengers from fires or explosions caused
was made with the passenger carrying the same as to what was by articles brought into its conveyances by other passengers, in
in it, since its "opening ... was folded and tied with abaca." the absence of any evidence that the carrier, through its


TRANSPORTATION LAW
Morillo Notes
employees, was aware of the nature of the article or had any the flight or that there is a hierarchy of boarding priorities in
reason to anticipate danger therefrom. booking passengers. It is evident that petitioners had the right to
rely upon the assurance of respondent TWA, thru its agent in
Manila, then in New York, that their tickets represented
confirmed seats without any qualification. The failure of
respondent TWA to so inform them when it could easily have
EXTRAORDINARY DILIGENCE IN CARRIAGE done so thereby enabling respondent to hold on to them as
BY AIR passengers up to the last minute amounts to bad faith. Evidently,
respondent TWA placed its self-interest over the rights of
petitioners under their contracts of carriage. Such conscious
EXTRAORDINARY DILIGENCE IN AIR disregard of petitioners' rights makes respondent TWA liable for
TRANSPORTATION: moral damages. To deter breach of contracts by respondent
- It includes the obligation to make sure that the TWA in similar fashion in the future, we adjudge respondent TWA
aircraft is airworthy, that the vessel has a liable for exemplary damages, as well.
competent captain and crew, and that the captain
and his crew exercised extraordinary diligence in
operating the aircraft. (PAL vs. CA, GR no. L-
46558, July 31, 1981)
AIRWORTHINESS: BILL OF LADING AND

- Aircrafts that are used by common carriers must be OTHER FORMALITIES
fit to transport goods and passengers. It must be in
such a condition that it must be able to withstand
the rigors of the flight. (Abeto vs. PAL, 115 SCRA
489) DEFINITION AND KINDS
KOREAN AIRLINES vs. CA DEFINITION OF A BILL OF LADING:

GR no. 114061, August 3, 1994
- It is an instrument in writing, signed by a carrier or
his agent, describing the freight so as to identify it,
A contract to transport passengers is different in kind and degree
from any other contractual relation. The business of the carrier is stating the name in the consignor, the terms of the
mainly with the traveling public. It invites people to avail contract of carriage, and agreeing or directing that
themselves of the comforts and advantages it offers. The the freight to be delivered to the order or assigns of
contract of air carriage generates a relation attended with a a specified person at a specified place. (Ace
public duty. Passengers have the right to be treated by the Navigation Co, Inc. vs. FGU INSURANCE Corp.,
carrier's employees with kindness, respect, courtesy and due GR no. 171591, June 25, 2012)
consideration. They are entitled to be protected against personal
misconduct, injurious language, indignities and abuses from
such employees. So it is that any discourteous conduct on the
KINDS OF BILLS OF LADING:
part of these employees toward a passenger gives the latter an 1. Clean Bill of Lading - one that does not contain
action for damages against the carrier. any notation indicating any defect in the goods.
(Magellan Mfg. Marketing Corp. vs. CA, GR no.
The breach of contract was aggravated in this case when, 95529, August 22, 1991)
instead of courteously informing Lapuz of his being a "wait- 2. Foul Bill of Lading - one that contains such
listed" passenger, a KAL officer rudely shouted "Down! Down!" notation.
while pointing at him, thus causing him embarrassment and
3. Spent Bill of Lading - where the carrier already
public humiliation.
delivers the goods, the carrier is supposed to have
retrieved the covering bill of lading that he issued
for the goods. If the goods were already delivered
ZALAMEA vs. CA
GR no. 104235, November 18, 1993
but the bill of lading was not returned, the bill of
lading is called a “spent bill of lading.”
Even on the assumption that overbooking is allowed, respondent 4. Through Bill of Lading - one issued by a carrier
TWA is still guilty of bad faith in not informing its passengers who is obliged to use the facilities of other carriers
beforehand that it could breach the contract of carriage even if as well as his own facilities for the purpose of
they have confirmed tickets if there was overbooking. transporting the goods from the city of the seller to
Respondent TWA should have incorporated stipulations on the city of the buyer, which bill of lading is honored
overbooking on the tickets issued or to properly inform its
by the second and other interested carriers who do
passengers about these policies so that the latter would be
prepared for such eventuality or would have the choice to ride not issue their own lading.
with another airline. 5. On Board Bill of Lading - one in which it is stated
that the goods have been received on board the
It is respondent TWA's position that the practice of overbooking vessel which is to carry the goods. This is issued
and the airline system of boarding priorities are reasonable when the goods have been actually placed aboard
policies, which when implemented do not amount to bad faith. the ship with every reasonable expectation that the
But the issue raised in this case is not the reasonableness of said shipment is as good as on its way. (Magellan Mfg.
policies but whether or not said policies were incorporated or
Marketing Corp. vs. CA, Supra)
deemed written on petitioners' contracts of carriage. Respondent
TWA failed to show that there are provisions to that effect. 6. Received for Shipment Bill - one in which it is
Neither did it present any argument of substance to show that stated that the goods have been received for
petitioners were duly apprised of the overbooked condition of shipment with or without specifying the vessel by
which the goods are to be shipped. These are

TRANSPORTATION LAW
Morillo Notes
issued whenever conditions are not normal and
there is insufficiency of shipping space. (Magellan PARTIES TO A BILL OF LADING:
Mfg. Marketing Corp. vs. CA, Supra) a. The Shipper; and
7. Custody Bill of Lading - the goods are already b. The Carrier
received by the carrier but the vessel indicated c. The Consignee by reasons of either:
therein has not yet arrived in the port. i. the relationship of agency between the
8. Port Bill of Lading - the vessel indicated in the bill consignee and the shipper/consignor;
of lading that will transport the goods is already in ii. the unequivocal acceptance of the bill of
the port. lading delivered to the consignee, with full
knowledge of its contents; or
iii. Availment of the stipulation pour autrui, ie.
NATURE OF BILL OF LADING when the consignee (a third person)
demands before the carrier the fulfillment of
NATURE OF BILL OF LADING: A bill of lading operates the stipulation made by the
both: consignor/shipper in the consignee’s favor,
1. As a Receipt; and specifically the delivery of the
2. As a Contract. goods/cargoes shipped. (MOF Company,
3. A Document of Title that makes it a symbol of Inc. vs. Shin Yang brokerage, GR no.
goods. (Lorenzo Shipping Corp vs. Chubb and 172822, December 18, 2009)
Sons, Inc., GR no. 147724, June 8, 2004)
CONTRACT OF ADHESION:
It is a receipt for the goods shipped and a contract to - Defined a contract where the only participation of
transport and deliver the same as therein stipulated. As a the party is the signing of his signature or his
contract, it stipulates the rights and obligations assumed by “adhesion” thereto. (SweetLines, Inc. vs. Teves, GR
the parties. Being a contract, it is the law between the no. L-37750, May 19, 1978)
parties who are bound by its terms and conditions provided - Bills of lading constitute a class of contracts of
that these are not contrary to law, morals, good customs, adhesion. (Ace Navigation Co vs. FGU Insurance
public order and public policy. (Magellan Mfg. Marketing Corp, Supra)
Corp. vs. CA, Supra) - Therefore, Bill of lading is normally construed
liberally in favor of the passenger or shipper who
As a receipt, the bill of lading “recites the date and place of adhered to such bill of lading or ticket.
shipment, describes the goods as to quantity, weight, - In all contractual property or other relations, when
dimensions, identification marks and condition, quality, and one of the parties is at a disadvantage on account
value. As a contract, it names the contracting parties, which of his moral dependence, ignorance indigence,
include the consignee, fixes the route, destination, and mental weakness, tender age and other handicap,
freight rates or charges, and stipulates the rights and the courts must be vigilant for his protection. (Art.
obligations assumed by the parties. (Ace Navigation vs. 24, NCC)
FGU Insurance, GR no. 171591, June 25, 2012)
PAROL EVIDENCE RULE:
WHEN A BILL OF LADING BECOMES EFFECTIVE: - Under this rule, the terms of a contract are
- A Bill of Lading becomes effective upon delivery rendered conclusive upon the parties, and
and acceptance of the shipper. evidence aliunde is not admissible to vary or
- The acceptance of the bill without dissent raises contradict a complete and enforceable agreement
the presumption that all the terms therein were embodied in a document, subject to well-defined
brought to the knowledge of the shipper and exceptions.
agreed to by him and, in the absence of fraud or - In orde that parol evidence may be admitted, said
mistake, he is estopped from thereafter denying mistake must be put in issue by the pleadings,
that he assented to such terms. This rule applies such that if not raised inceptively in the complaint
with particular force where a shipper accepts a bill or in the answer, as the case may be, a party
of lading with full knowledge of its contents and cannot later on be permitted to introduce parol
acceptance under such circumstances makes it a evidence thereon. (Magellan Mfg. Marketing Corp
binding contract. (Magellan Mfg. Marketing corp. vs. CA, GR no. 95529, August 22, 1991)
vs. CA, Supra) - A bill of lading is covered by the parol evidence
rule. (Aquino & Hernando, p. 268)
BILL OF LADING AS CONTRACT BILL OF LADING AS EVIDENCE:

- The legal evidence of the contract between the
BILL OF LADING AS CONTRACT: shipper and the carrier shall be the bills of lading,
- The nature of a bill of lading as contract applies to by the contents of which the disputes which may
tickets issued to passengers. arise regarding their execution and performance
- A bill of lading may be defined as a written shall be decided, no exceptions being admissible
acknowledgement of the receipt of goods and an other than those of falsity and material error in the
agreement to transport and to deliver them at a drafting. (Art. 353, Code of Commerce)
specified place to a person named or on his order. - A bill of lading drawn up in accordance with the
(Interprovincial Autobus Co., Inc. vs. Collector, GR provisions of this title shall be proof as between all
no. L-6741, January 31, 1956) those interested in the cargo and between the
latter and the insurers, proof to the contrary being


TRANSPORTATION LAW
Morillo Notes
reserved for the latter. (Art. 709, Code of REQUISITES FOR A PARTIES TO STIPULATE THE
Commerce) REDUCTION OF DILIGENCE:
1. That the stipulation be in writing signed by both
parties;
PROHIBITED AND LIMITING STIPULATIONS
2. That the stipulation be supported by a valuable
consideration other than the service rendered by
PROHIBITED STIPULATIONS: the common carrier; and
3. That the stipulation be reasonable, just and not
Article 1745. Any of the following or similar stipulations shall be
contrary to law. (Art. 1744, NCC)
considered unreasonable, unjust and contrary to public policy:
1. That the goods are transported at the risk of the owner
or shipper; Reduction of Diligence is Not Allowed for Passenger:
2. That the common carrier will not be liable for any loss, - The responsibility of a common carrier for the
destruction, or deterioration of the goods; safety of passengers as required in Article 1733
3. That the common carrier need not observe any and 1755 cannot be dispensed with or lessened
diligence in the custody of the goods; by stipulation, by the posting of notices, by
4. That the common carrier shall exercise a degree of statements on tickets, or otherwise. (Art. 1757,
diligence less than that of a good father of a family, or
NCC)
of a man of ordinary prudence in the vigilance over the
movables transported;
5. That the common carrier shall not be responsible for REQUIREMENTS FOR STIPULATIONS FIXING THE LIMIT
the acts or omission of his or its employees; OF RECOVERY:
6. That the common carrier's liability for acts committed 1. The stipulation must be reasonable and just under
by thieves, or of robbers who do not act with grave or the circumstances; and
irresistible threat, violence or force, is dispensed with 2. It is fairly and freely agreed upon. (Art. 1750, NCC)
or diminished;
7. That the common carrier is not responsible for the
loss, destruction, or deterioration of goods on account CORPUS JURIS ON
of the defective condition of the car, vehicle, ship, LIMITATION OF LIABILITY
airplane or other equipment used in the contract of
carriage. "Par. 194, 6. Reasonableness of Limitations. — The validity of
stipulations limiting the carrier's liability is to be determined by
their reasonableness and their conformity to the sound public
LIMITING STIPULATIONS: policy, in accordance with which the obligations of the carrier to
the public are settled. It cannot lawfully stipulate for exemption
Article 1746. An agreement limiting the common carrier's liability
from liability, unless such exemption is just and reasonable, and
may be annulled by the shipper or owner if the common carrier
unless the contract is freely and fairly made. No contractual
refused to carry the goods unless the former agreed to such
limitation is reasonable which is subversive of public policy.
stipulation.
"Par. 195. 7. What Limitations of Liability Permissible. — a.
Article 1747. If the common carrier, without just cause, delays
Negligence — (1) Rule in America — (a) In Absence of Organic or
the transportation of the goods or changes the stipulated or
Statutory Provisions Regulating Subject — aa. Majority Rule. —
usual route, the contract limiting the common carrier's liability
In the absence of statute, it is settled by the weight of authority in
cannot be availed of in case of the loss, destruction, or
the United States, that whatever limitations against its common-
deterioration of the goods.
law liability are permissible to a carrier, it cannot limit its liability
for injury to or loss of goods shipped, where such injury or loss is
Article 1748. An agreement limiting the common carrier's liability
caused by its own negligence. This is the common law doctrine
for delay on account of strikes or riots is valid.
and it makes no difference that there is no statutory prohibition
against contracts of this character.
Article 1749. A stipulation that the common carrier's liability is
limited to the value of the goods appearing in the bill of lading,
"Par. 196. bb. Considerations on which Rule Based. — The rule,
unless the shipper or owner declares a greater value, is binding.
it is said, rests on considerations of public policy. The
undertaking is to carry the goods, and to relieve the shipper from
Article 1750. A contract fixing the sum that may be recovered.
all liability for loss or damage arising from negligence in
by the owner or shipper for the loss, destruction, or deterioration
performing its contract is to ignore the contract itself. The natural
of the goods is valid, if it is reasonable and just under the
effect of a limitation of liability against negligence is to induce
circumstances, and has been fairly and freely agreed upon.
want of care on the part of the carrier in the performance of its
duty. The shipper and the common carrier are not on equal
terms; the shipper must send his freight by the common carrier,
PURPOSE OF LIMITING STIPULATIONS:
or not at all; he is therefore entirely at the mercy of the carrier
- To protect the common carrier. Such stipulation unless protected by the higher power of the law against being
obliges the shipper/consignee to notify the forced into contracts limiting the carrier's liability. Such contracts
common carrier of the amount that the latter may are wanting in the element of voluntary assent.
be liable for in case of loss of the goods.
"Par. 197. cc. Application and Extent of Rule — (aa) Negligence
PRESUMPTION OF NEGLIGENCE: of Servants. — The rule prohibiting limitation of liability for
- Even when there is an agreement limiting the negligence is often stated as a prohibition of any contract
relieving the carrier from loss or damage caused by its own
liability of the common carrier in the vigilance over
negligence or misfeasance, or that of its servants; and it has
the goods, the common carrier is disputably been specifically decided in many cases that no contract
presumed to have been negligent in case of their limitation will relieve the carrier from responsibility for the
loss, destruction or deterioration. (Article 1752, negligence, unskillfulness, or carelessness of its employer."
NCC) (Ysmael and Co. vs. Barreto, 51 Phil. 90; Shewaram vs.
Philippine Airlines, GR no. L-20099, July 7, 1966)

TRANSPORTATION LAW
Morillo Notes
BILL OF LADING AS RECEIPT
Factors to Consider in determining whether the
stipulation is just and reasonable:
- The fact that the common carrier has no BILL OF LADING AS RECEIPT:
competitor along the line or route, or a part thereof,
SALUDO vs. CA
to which the contract refers shall be taken into
GR no. 95536, March 23, 1992
consideration on the question of whether or not a
stipulation limiting the common carrier's liability is A bill of lading is a written acknowledgment of the receipt of the
reasonable, just and in consonance with public goods and an agreement to transport and deliver them at a
policy. (Art. 1751, NCC) specified place to a person named or on his order. Such
- A stipulation that the common carrier's liability is instrument may be called a shipping receipt, forwarder's receipt
limited to the value of the goods appearing in the and receipt for transportation. The designation, however, is
bill of lading, unless the shipper or owner declares immaterial. It has been hold that freight tickets for bus
a greater value, is binding. (Art. 1749, NCC) companies as well as receipts for cargo transported by all forms
of transportation, whether by sea or land, fall within the
definition. Under the Tariff and Customs Code, a bill of lading
RIOTS AND STRIKES: includes airway bills of lading. The two-fold character of a bill of
- Article 1748, NCC, provides that an agreement lading is all too familiar; it is a receipt as to the quantity and
limiting the common carrier’s liability for delay on description of the goods shipped and a contract to transport the
account of strikes or riots is valid. goods to the consignee or other person therein designated, on
- Implicit from this provision is the rue that the carrier the terms specified in such instrument.
is still liable even if the delay is caused by strikes
Logically, since a bill of lading acknowledges receipt of goods to
and riots. The provision does not provide an
be transported, delivery of the goods to the carrier normally
escape from liability; it merely allows limitation of precedes the issuance of the bill; or, to some extent, delivery of
liability. However, it is a usual provision in contracts the goods and issuance of the bill are regarded in commercial
that relieves the obligor/debtor of liability if there is practice as simultaneous acts. However, except as may be
delay by reason of strikes or riots. It is believed prohibited by law, there is nothing to prevent an inverse order of
that this provision relieving liability of the carrier is events, that is, the execution of the bill of lading even prior to
valid provided that extraordinary diligence is actual possession and control by the carrier of the cargo to be
exercised in preventing or th aggravation of transported. There is no law which requires that the delivery of
the goods for carriage and the issuance of the covering bill of
damage or injury.
lading must coincide in point of time or, for that matter, that the
former should precede the latter.
CARRIAGE OF GOODS BY SEA ACT (COGSA):
Neither the carrier nor the ship shall in any event be or become Ordinarily, a receipt is not essential to a complete delivery of
liable for any loss or damage to or in connection with the goods to the carrier for transportation but, when issued, is
transportation of goods in an amount exceeding $600 per competent and prima facie, but not conclusive, evidence of
package lawful money of the United States, or in case of goods delivery to the carrier. A bill of lading, when properly executed
not shipped in packages, per customary freight unit, or the and delivered to a shipper, is evidence that the carrier has
equivalent of that sum in other currency, unless the nature and received the goods described therein for shipment. Except as
value of such goods have been declared by the shipper before modified by statute, it is a general rule as to the parties to a
shipment and inserted in the bill of lading. This declaration, if contract of carriage of goods in connection with which a bill of
embodied in the bill of lading, shall be prima facie evidence, but lading is issued reciting that goods have been received for
shall not be conclusive on the carrier. transportation, that the recital being in essence a receipt alone, is
not conclusive, but may be explained, varied or contradicted by
By agreement between the carrier, master, or agent of the parol or other evidence.
carrier, and the shipper another maximum amount than that
mentioned in this paragraph may be fixed: Provided, That such While we agree with petitioners' statement that "an airway bill
maximum shall not be less than the figure above named. In no estops the carrier from denying receipt of goods of the quantity
event shall the carrier be liable for more than the amount of and quality described in the bill," a further reading and a more
damage actually sustained. faithful quotation of the authority cited would reveal that "(a) bill
of lading may contain constituent elements of estoppel and thus
Neither the carrier nor the ship shall be responsible in any event become something more than a contract between the shipper
for loss or damage to or in connection with the transportation of and the carrier. . . . (However), as between the shipper and the
the goods if the nature or value thereof has been knowingly and carrier, when no goods have been delivered for shipment no
fraudulently misstated by the shipper in the bill of lading. (Sec. recitals in the bill can estop the carrier from showing the true
4(5), COGSA) facts . . . Between the consignor of goods and receiving carrier,
recitals in a bill of lading as to the goods shipped raise only a
rebuttable presumption that such goods were delivered for
WHEN THE LIMITING STIPULATION CANNOT BE shipment. As between the consignor and a receiving carrier, the
INVOKED: fact must outweigh the recital.”
1. When the agreement limiting the common carrier’s
liability is annulled by the shipper or owner if the Said Weight Clause
common carrier refused to carry the goods unless - It means nobody knows the actual weight of the
the former agreed to such stipulation; cargo; the weight written on the bill and on the
2. If the carrier delays in the transportation of the manifest is based only on the declaration of the
goods; and shipper. (Wallem Philippines Shipping vs.
3. If the carrier changes the stipulated or usual route. Prudential Guarantee & Assurance, GR no. 152158,
(Arts. 1746 and 1747, NCC) February 7, 2003)
- Said Weight clause is material when the
presumption of negligence is invoked because


TRANSPORTATION LAW
Morillo Notes
before the presumption can operate, the shipper
1. Where by the terms of the document the carrier,
must prove the alleged loss. Thus, if the shipper warehouseman or other bailee issuing the same
claims that there was shortage in the goods that undertakes to deliver the goods to the bearer; or
were delivered, the shipper must prove such 2. Where by the terms of the document the carrier,
shortgage. “This can only be done if the weight of warehouseman or other bailee issuing the same
the shipment at the port of origin and its undertakes to deliver the goods to the order of a
subsequent weight at the port of arrival have been specified person, and such person or a subsequent
proven by a preponderance of evidence, and it can indorsee of the document has indorsed it in blank or to
the bearer.
be seen that the former weight is considerably
greater than the latter weight, taking into Where by the terms of a negotiable document of title the goods
consideration the exceptions provided in Art. 1734, are deliverable to bearer or where a negotiable document of title
NCC. (Asian Terminals, Inc. vs. Simon Enterprise, has been indorsed in blank or to bearer, any holder may indorse
Inc., GR no. 177116, February 27, 2013) the same to himself or to any specified person, and in such case
the document shall thereafter be negotiated only by the
indorsement of such indorsee. (Art. 1508, NCC)
BILL OF LADING AS DOCUMENT OF TITLE
Preliminary Note: Article 1511. A document of title which is not in such form that it
can be negotiated by delivery may be transferred by the holder
- A bill of lading is a document of title as
by delivery to a purchaser or donee. x x x (Art. 1511, NCC)
contemplated under the Civil Code. Such bills of
lading can be negotiable documents of title.
- The goods are locked up in the bill in the same way Order Document:
that the debt is merged in the instrument. A seller
Article 1509. A negotiable document of title may be negotiated
who ships on an order bull can, by insisting on by the indorsement of the person to whose order the goods are
payment before the bill is delivered to his buyer, by the terms of the document deliverable. Such indorsement
protect himself against an insolvent’s obtaining may be in blank, to bearer or to a specified person. If indorsed to
possession of the goods much more effectively a specified person, it may be again negotiated by the
than by his” remedy of stoppage in transit. (Gilmore indorsement of such person in blank, to bearer or to another
and Black, jr., p. 96) specified person. Subsequent negotiations may be made in like
manner. (Art. 1509, NCC)
NEGOTIABILITY:
Article 1507. A document of title in which it is stated that the Section 38. Negotiation of negotiable receipt by indorsement
goods referred to therein will be delivered to the bearer, or to the - A negotiable receipt may be negotiated by the indorsement of
order of any person named in such document is a negotiable the person to whose order the goods are, by the terms of the
document of title. (Art. 1507, NCC) receipt, deliverable. Such indorsement may be in blank, to bearer
or to a specified person. If indorsed to a specified person, it may
be again negotiated by the indorsement of such person in blank,
Effect of Stamp or Notation “Non-Negotiable.” to bearer or to another specified person. Subsequent negotiation
Article 1510. If a document of title which contains an may be made in like manner. (Sec. 38, NIL)
undertaking by a carrier, warehouseman or other bailee to deliver
the goods to bearer, to a specified person or order of a specified
person or which contains words of like import, has placed upon
Incomplete Negotiation:
it the words "not negotiable," "non-negotiable" or the like, such Article 1515. Where a negotiable document of title is transferred
document may nevertheless be negotiated by the holder and is a for value by delivery, and the indorsement of the transferor is
negotiable document of title within the meaning of this Title. But essential for negotiation, the transferee acquires a right against
nothing in this Title contained shall be construed as limiting or the transferor to compel him to indorse the document unless a
defining the effect upon the obligations of the carrier, contrary intention appears. The negotiation shall take effect as of
warehouseman, or other bailee issuing a document of title or the time when the indorsement is actually made. (Art. 1515,
placing thereon the words "not negotiable," "non-negotiable," or NCC)
the like. (Art. 1510, NCC)
EFFECT OF NEGOTIATION: Negotiation of the document

HOW NEGOTIATED: has the effect of manual delivery so as to constitute the
ARTICLE 708. Bills of lading issued to bearer and sent to the transferee the oner of the goods.
consignee shall be transferable by actual delivery of the
PHILIPPINE TRUST CO vs. NATIONAL BANK
instrument; and those issued to order, by virtue of an
GR no. L-16483, December 7, 1921
indorsement.
The execution of the notes, the physical possession of the
In either case, the person to whom the bill of lading is transferred
negotiable quedan, or warehouse receipt, and the recognition of
shall acquire all the rights and actions of the transferor or
ownership by the warehouseman, legally carried with it both the
indorser with regard to the merchandise mentioned in the same.
titled to, and the possession of, the property. In such a case, a
(Art. 708, Code of Commerce)
title is not founded on a public instrument which should be
authenticated by a notary or by competent public official. Legally
Bearer Document: speaking, the execution of the promissory notes and the
pledging of the quedans, or warehouse receipts, as collateral,
Article 1508. A negotiable document of title may be negotiated and the describing of them in the notes, and the manual delivery
by delivery: of the quedan, or warehouse receipt itself carries with it not only
the title, but the legal possession of the property. In other words,

TRANSPORTATION LAW
Morillo Notes
Thouse source of obligation is culpa Contractual.
as to the property described in the quedans, or warehouse
receipts, which were pledged, as collateral, in January, 1919, to This is different from Quasi-Delict under Art. 2176,
secure the eight respective promissory notes, both the title and NCC.
the possession of that property were delivered to and vested in
the defendant bank in January, 1919. Three of those quedans, or
warehouse receipts, were returned to the firm by the bank on CONCURRENT CAUSES OF ACTION
February 10, 1919, but the bank still owned and held the notes,
which were secured by those warehouse receipts, and no part of
CONCURRENT CAUSES OF ACTION:
the debt itself was paid by or through the surrender of the
receipts. For such reason, as to the first cause of action, the - A negligent act that breaches the contract may give
plaintiff cannot recover, and, as to it, the judgment of the lower rise to a liability based on contract as well as
court should be affirmed. quasi-delict under Art. 2176, NCC. In fact, with
respect to the employee of the carrier, civil liability
may be based on Quasi-Delict as well as on
Article 1513. A person to whom a negotiable document of title criminal liability under Art. 100, RPC.
has been duly negotiated acquires thereby: - Hence, the cause of action of a passenger or
1. Such title to the goods as the person negotiating the shipper against the common carrier can be culpa
document to him had or had ability to convey to a contractual or culpa aquiliana, while the basis of
purchaser in good faith for value and also such title to liability on the part of the driver is either based on
the goods as the person to whose order the goods
Delicts or Quasi-Delicts. The driver of the carrier is
were to be delivered by the terms of the document had
or had ability to convey to a purchaser in good faith for not liable based on contract because there is no
value; and privity of contract between him and the passenger
2. The direct obligation of the bailee issuing the or shipper.
document to hold possession of the goods for him
according to the terms of the document as fully as if CONCURRENCE WITH THIRD PERSON:
such bailee had contracted directly with him. (Art. - If the negligence of third persons concurs with the
1513, NCC) breach, the liability of the third person who was
driving another vehicle and/or his employer may be
based on quasi-delict. The driver alone may be
held criminally liable and civil liability may be
imposed on him based on delict. In the latter case,
the employer is subsidiarily liable.
ACTIONS AND DAMAGES - However, in case of injury to a passenger due to
IN CASE OF BREACH the negligence of the driver of the vehicle on which
he was riding and the driver of another vehicle, the
drivers and the owners of the two vehicles are
DISTINCTIONS BETWEEN CULPA CONTRACTUAL AND jointly and severally liable for damages. It does not
CULPA AQUILIANA: make any difference that the liability of one springs
from contract while that of other arises from quasi-
CULPA CULPA delict. (Francisco Viluan vs. CA, GR no. 21477-81,
CONTRACTUAL AQUILIANA April 29, 1966)
As to Source of Obligation SOLIDARY LIABILITY:

- In case the negligence of the carrier’s driver and a
Contract Quasi-Delict third person concurs with the liability of the parties
→ carrier and his driver, third person → is joint and
As to the Liability of Employee several. (Viluan vs CA, Supra)
No Liability there being no Solidarily liable with the Alternative Causes of Action:
privity of contract Employee - The SC clarified that it was permissible for the
plaintiff to allege in the Complaint alternative
As to the Availability of Defense causes of action and join as many parties as may
be liable on such causes of action so long as the
Due diligence in the selection Due diligence in the selection plaintiff does not recover twice for the same injury.
and supervision of the and supervision of the Thus, the carrier may be sued on the alternative
employee is not a defense employee is a defense under causes of action of breach and quasi-delict. (Fabre
Art. 2180, NCC vs. CA, GR no. 111127, July 26, 1996)
In What Capacity Liable ELEMENTS OF CAUSE OF ACTION AGAINST THE

CARRIER:
Liable as a contracting party. Liable as an Employer. 1. A right in favor of the plaintiff by whatever means
Source: Aquino & Hernando, p. 306 and whatever law it arises;
2. The correlative obligation of the defendant to
Additional Notes: respect such right; and
- Passengers and shippers who suffered damages 3. The act or omission of the defendant violates the
because of the breach of the contractual obligation right of the plaintiff.
of the carrier may sue the latter for damages.


TRANSPORTATION LAW
Morillo Notes
complete. All valid conditions precedent to the
NOTE: Violation of the right in contracts generally involves
allegation of a breach of such contract through negligence,
institution of the particular action, whether
fraud, delay, or any other acts or omissions that contravenes the prescribed by statute, fixed by agreement of the
tenor of the obligation. However, if the cause of action invoked is parties or implied by law must be performed or
culpa contractual, it is not necessary for the plaintiff passenger complied with before commencing the action,
or shipper to allege and prove the negligent act of the carrier. All unless the conduct of the adverse party has been
that is necessary is to allege the presence of the contract and the such as to prevent or waive performance or excuse
damage or injury to the plaintiff because breach through non-performance of the condition.” (Phil. American
negligence is already presumed in such cases. (Arts. 1735, and
General Insurance vs. Sweetlines, Inc., GR no.
1756, NCC)
87434, August 5, 1992)
NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD NOTICE OF CLAIM IN INTERNATIONAL CARRIAGE OF

GOODS BY SEA
NOTICE OF CLAIM:
- In Civil Law, those who, in the performance of their
Unless notice of loss or damage and the general nature of such
obligation, are guilty of fraud, negligence, or delay loss or damage be given in writing to the carrier or his agent at
and those who in any manner contravene the tenor the port of discharge before or at the time of the removal of the
of the obligation, are liable for damages. (Art. 1170, goods into the custody of the person entitled to delivery thereof
NCC) under the contract of carriage, such removal shall be prima facie
evidence of the delivery by the carrier of the goods as described
Essential Requirement of the Claimant in an Action for in the bill of lading. If the loss or damage is not apparent, the
notice must be given within three days of the delivery.
Damages:
1. The existence of a perfected contract; Said notice of loss or damage maybe endorsed upon the receipt
2. The breach thereof by the other contracting party; for the goods given by the person taking delivery thereof.
and
3. The damages which he/she sustained due to the The notice in writing need not be given if the state of the goods
breach. (MCC Industrial Sales Corporation vs. has at the time of their receipt been the subject of joint survey or
Ssyangyong Corp., 536 SCRA 408) inspection.
In any event the carrier and the ship shall be discharged from all
CLAIM IN OVERLAND TRANSPORTATION liability in respect of loss or damage unless suit is brought within
AND COASTWISE SHIPPING one year after delivery of the goods or the date when the goods
should have been delivered: Provided, That if a notice of loss or
damage, either apparent or concealed, is not given as provided
CLAIM IN OVERLAND TRANSPORTATION AND for in this section, that fact shall not affect or prejudice the right
COASTWISE SHIPPING: of the shipper to bring suit within one year after the delivery of
- A condition precedent for an action against the the goods or the date when the goods should have been
delivered
carrier in overland transportation is the filing of a
claim with the carrier within the period prescribed In the case of any actual or apprehended loss or damage the
under Art. 366, Code of Commerce. carrier and the receiver shall give all reasonable facilities to each
other for inspecting and tallying the goods. (Sec.3 (6), COGSA)
Periods to file a claim with the carrier under Art. 366,
Code of Commerce:
1. The claim for damage must be filed immediately if Period to File Claim for Damages:
the damage is apparent; or 1. If the damage is apparent, the claim should be
filed immediately upon discharge of the goods.
2. The claim for damage must be made within 24
2. The claim must be made within 3 days from
hours from receipt of the merchandise if the
damage is not apparent, that is, the damage delivery if the damage is not apparent.
cannot be ascertained merely from the outside
packaging of the cargo. (UCPB General Insurance Period Not Mandatory:
vs. Aboitiz Shipping, GR no. 168433, February 10, - Failure to file a notice of claim within the given
2009) period will not bar recovery. (Belgian overseas
Chartering and Shipping vs. Philippine First
Insurance, GR no. 143133, June 5, 2002)
Notice of Claim Mandatory:
- The filing of a claim with the carrier within the time
limitation therefor under Art. 366 (Code of DOLE PHILIPPINES, INC. vs. MARITIME CO.
Commerce) actually constitutes a condition GR no. L-61352, February 27, 1987
precedent to the accrual of a right of action against
a carrier for damages caused to the merchandise. Dole concedes that its action is subject to the one-year period of
(UCPB General Insurance vs. Aboitiz Shipping, limitation prescribe in the above-cited provision. The substance
of its argument is that since the provisions of the Civil Code are,
Supra)
by express mandate of said Code, suppletory of deficiencies in
- The rule that imposes the prescriptive period is the Code of Commerce and special laws in matters governed by
also consistent with the procedural rule the “before the latter, and there being "*** a patent deficiency *** with respect
an action can properly be commenced all the to the tolling of the prescriptive period ***" provided for in the
essential elements of the cause of action must be Carriage of Goods by Sea Act, prescription under said Act is
in existence, that is, the cause of action must be subject to the provisions of Article 1155 of the Civil Code on

TRANSPORTATION LAW
Morillo Notes
- Consequently, an action for damages for breach of
tolling and because Dole's claim for loss or damage made on
May 4, 1972 amounted to a written extrajudicial demand which contract of carriage prescribed within 6 years if no
would toll or interrupt prescription under Article 1155, it operated bill of lading or any written contract has been
to toll prescription also in actions under the Carriage of Goods by issued. If there is a written contract or bill of
Sea Act. To much the same effect is the further argument based lading, the action prescribed in 10 years. It is
on Article 1176 of the Civil Code which provides that the rights believed that this rule likewise applies to carriage of
and obligations of common carriers shag be governed by the passengers for domestic transportation. (Aquino &
Code of Commerce and by special laws in all matters not Hernando, p. 250)
regulated by the Civil Code.
These arguments might merit weightier consideration were it not PRESCRIPTION IN INTERNATIONAL
for the fact that the question has already received a definitive CARRIAGE OF GOODS
answer, adverse to the position taken by Dole, in The Yek Tong
Lin Fire & Marine Insurance Co., Ltd. vs. American President
Lines, Inc. There, in a parallel factual situation, where suit to PRESCRIPTION IN INTERNATIONAL CARRIAGE OF
recover for damage to cargo shipped by vessel from Tokyo to
GOODS:
Manila was filed more than two years after the consignee's
receipt of the cargo, this Court rejected the contention that an
- The action for damages under COGSA for
extrajudicial demand toiled the prescriptive period provided for in international carriage of goods must be filed within
the Carriage of Goods by Sea Act, viz: a period of 1 year commences from discharge.
“In the second assignment of error plaintiff-appellant argues that (Asian Terminals vs. Philam Insurance, GR no.
it was error for the court a quo not to have considered the action 181163, July 24, 2013)
of plaintiff-appellant suspended by the extrajudicial demand
which took place, according to defendant's own motion to Who can invoke?
dismiss on August 22, 1952. We notice that while plaintiff avoids
- The carrier and the ship may put up the defense of
stating any date when the goods arrived in Manila, it relies upon
the allegation made in the motion to dismiss that a protest was prescription if the action for damages is not
filed on August 22, 1952 — which goes to show that plaintiff- brought within 1 year after the delivery of the
appellant's counsel has not been laying the facts squarely before goods or the date when the goods should have
the court for the consideration of the merits of the case. We have been delivered. (Insurance Company of North
already decided that in a case governed by the Carriage of America vs. Asian Terminal, GR no. 180784,
Goods by Sea Act, the general provisions of the Code of Civil February 15, 2012)
Procedure on prescription should not be made to apply. (Chua - It has been held that not only the shipper, but also
Kuy vs. Everett Steamship Corp., G.R. No. L-5554, May 27,
the consignee or egal holder of the bill may invoke
1953.) Similarly, we now hold that in such a case the general
provisions of the new Civil Code (Art. 1155) cannot be made to the prescriptive period. (Belgian Overseas
apply, as such application would have the effect of extending the Chartering and Shipping vs. Philippine First
one-year period of prescription fixed in the law. It is desirable Insurance, GR no. 143133, June 5, 2002)
that matters affecting transportation of goods by sea be decided
in as short a time as possible; the application of the provisions of Effect of Demand:
Article 1155 of the new Civil Code would unnecessarily extend - The period is not suspended by an extrajudicial
the period and permit delays in the settlement of questions demand. (DOLE Philippines vs. Maritime Co., 148
affecting transportation, contrary to the clear intent and purpose
SCRA 118)
of the law. * * *”
- Art. 1155, NCC, cannot be applied because
Moreover, no different result would obtain even if the Court were matters affecting transportation of goods by sea
to accept the proposition that a written extrajudicial demand should be decided in as short a time as possible.
does toll prescription under the Carriage of Goods by Sea Act.
The demand in this instance would be the claim for damage-filed Delay:
by Dole with Maritime on May 4, 1972. The effect of that demand - Damage arising from delay or late delivery is not
would have been to renew the one- year prescriptive period from the damage or loss contemplated under the
the date of its making. Stated otherwise, under Dole's theory,
COGSA. The goods are not actually lost or
when its claim was received by Maritime, the one-year
prescriptive period was interrupted — "tolled" would be the more damaged. The applicable period is 10 years. (Ang
precise term — and began to run anew from May 4, 1972, vs. American Steamship Agencies, 125 SCRA 543)
affording Dole another period of one (1) year counted from that
date within which to institute action on its claim for damage. Collision Cases:
Unfortunately, Dole let the new period lapse without filing action. - The rule applies in collision cases. However, 1 year
It instituted Civil Case No. 91043 only on June 11, 1973, more period starts not from the date of the collision but
than one month after that period has expired and its right of
when the goods should have been delivered, had
action had prescribed.
the cargos been saved. (Maritime Company vs. CA,
164 SCRA 593)
PRESCRIPTION IN OVERLAND TRANSPORTATION
AND COASTWISE SHIPPING RECOVERABLE DAMAGES
PRESCRIPTION IN OVERLAND TRANSPORTATION AND RECOVERABLE DAMAGES:

COASTWISE SHIPPING: - “Damages” is the pecuniary compensation,
- Under the Civil Code, the extinctive period is 6 recompense, or satisfaction for an injury sustained,
years if there is no written contract and 10 years if or as otherwise expressed, the pecuniary
there is a written contract. (Arts. 1145 & 1144, consequences that the imposes for the breach of
NCC)


TRANSPORTATION LAW
Morillo Notes
some duty or violation of some rights. (Aquino & Determination of Amount of Liability in Carriage.
Hernando, p. 310)
ARTICLE 372. The value of the goods which the carrier must pay
in cases if loss or misplacement shall be determined in
EXTENT OF RECOVERY: accordance with that declared in the bill of lading, the shipper
Article 2201. In contracts and quasi-contracts, the damages for not being allowed to present proof that among the goods
which the obligor who acted in good faith is liable shall be those declared therein there were articles of greater value and money.
that are the natural and probable consequences of the breach of
the obligation, and which the parties have foreseen or could have Horses, vehicles, vessels, equipment and all other principal and
reasonably foreseen at the time the obligation was constituted. accessory means of transportation shall be especially bound in
favor of the shipper, although with respect to railroads said
In case of fraud, bad faith, malice or wanton attitude, the obligor liability shall be subordinated to the provisions of the laws of
shall be responsible for all damages which may be reasonably concession with respect to the property, and to what this Code
attributed to the non-performance of the obligation. (Art. 2201, established as to the manner and form of effecting seizures and
NCC) attachments against said companies. (Art. 372, Code of
Commerce)
Applied to Common Carrier - The carrier in good faith is

liable only to pay for the damages that are the natural and NOTE: While the Civil Code contains provisions making the
probable consequences of the breach of the obligation, and common carrier liable for loss/damage to the goods transported
which the parties have foreseen or could have reasonably it failed to outline the manner of determining the amount of such
foreseen at the time the obligation was constituted. liability. Art. 372, Code of Commerce, fills in this gap. (Philam
Insurance vs. Heung-A Shipping Corp., GR no. 187701 and
However, if the carrier is in bad faith or was guilty of gross
187812, July 23, 2014)
negligence, the said carrier is liable for all damages. whether
the same can be foreseen or not.
- However, in COGSA, the shipper’s failure to
Carrier’s Right of Recourse - The carrier who may be declare the value of the goods in the bill of lading,
compelled to pay damages for the loss or damage to the the limited provision under Sec. 4, par. 5, COGSA,
goods or passengers has the right of recourse against the applies.
employee who committed the negligent, intentional or
Neither the carrier nor the ship shall be responsible in
fraudulent act. (Sarkies Tour vs. IAC, GR no. 63723, any event for loss or damage to or in connection with
September 2, 1983) the transportation of the goods if the nature or value
thereof has been knowingly and fraudulently misstated
KINDS OF DAMAGES: by the shipper in the bill of lading. (Sec. 4 (5), COGSA)
1. Moral;
2. Exemplary or Corrective;
Valuation of Goods:
3. Nominal;
- In the case of goods, the plaintiff is entitled to their
4. Temperate or Moderate;
value at the time of destruction. Normally, the
5. Actual or Compensatory; and
award is the sum of money which the plaintiff
6. Liquidated damages. (Art. 2197, NCC)
would have to pay in the market for identical or
essentially similar goods, plus in proper cases,
ACTUAL OR COMPENSATORY DAMAGES damages for the loss of use during the period
before replacement.
- In case of profit-earning chattels, what has to be
MEANING OF ACTUAL OR COMPENSATORY DAMAGES: assessed is the value of the chattel to its owner as
- Except as provided by law or by stipulation, one is a going concern at the time and place of the loss.
entitled to an adequate compensation only for such (PNOC Shipping and Transport vs. CA, Supra)
pecuniary loss suffered by him as he has duly
proved. Such compensation is referred to as actual Damages in Personal Injury Cases:
or compensatory damages. (Art. 2199, NCC) - Personal injury and death entitles the claimant to all
- Indemnification for damages shall comprehend not medical expenses as well as other reasonable
only the value of the loss suffered, but also that of expenses that he incurred to treat his or his
the profits which the obligee failed to obtain. (Art. relative’s injuries. (Gatchaian vs. Delim, 203 SCRA
2200, NCC) 126)
KINDS OF ACTUAL DAMAGES: DAMAGES IN CASE OF DEATH:
1. Dano Emergente - the loss of what a person - In case of death, the plaintiff is entitled to the
already possesses. amount that he spent during the wake and funeral
2. Lucro Cesante - the failure to receive as a benefit of the deceased. However, expenses after the
that would have pertained to him. (Art. 2205, NCC; burial are not compensable. The heirs are not
Integrated Packing Corp. vs. CA, 333 SCRA 170) entitled to an award of damages for the expenses
incurred relating to the 9th day, 40th day and 1st
BURDEN OF PROOF: year death anniversaries. (Victory Liner vs. Heirs of
- The burden of proof rest on the plaintiff who is Andres Malecdan, GR no. 154278, December 27,
claiming actual damages against the carrier. PNOC 2002)
Shipping and Transport vs. CA, GR no. 107518,
October 8, 1988)

TRANSPORTATION LAW
Morillo Notes
Heirs Entitlement for Damages: 6. Upon presentation of special circumstances, the
indemnification for loss of earning capacity may be
Article 2206. The amount of damages for death caused by a
crime or quasi-delict shall be at least three thousand pesos, even
sustained although the victim is unemployed,
though there may have been mitigating circumstances. In because compensation of this nature is awarded
addition: not for loss of time or earnings but for loss of the
1. The defendant shall be liable for the loss of the earning deceased’s power or ability to earn money. (Sps.
capacity of the deceased, and the indemnity shall be Perna vs. Sps. Nicolas, GR no. 157917, August 29,
paid to the heirs of the latter; such indemnity shall in 2012)
every case be assessed and awarded by the court,
unless the deceased on account of permanent
ATTORNEY’S FEES:
physical disability not caused by the defendant, had no
earning capacity at the time of his death; Article 2208. In the absence of stipulation, attorney's fees and
2. If the deceased was obliged to give support according expenses of litigation, other than judicial costs, cannot be
to the provisions of article 291, the recipient who is not recovered, except:
an heir called to the decedent's inheritance by the law 1. When exemplary damages are awarded;
of testate or intestate succession, may demand 2. When the defendant's act or omission has compelled
support from the person causing the death, for a the plaintiff to litigate with third persons or to incur
period not exceeding five years, the exact duration to expenses to protect his interest;
be fixed by the court; 3. In criminal cases of malicious prosecution against the
3. The spouse, legitimate and illegitimate descendants plaintiff;
and ascendants of the deceased may demand moral 4. In case of a clearly unfounded civil action or
damages for mental anguish by reason of the death of proceeding against the plaintiff;
the deceased. (Art. 2206, Civil Code) 5. Where the defendant acted in gross and evident bad
faith in refusing to satisfy the plaintiff's plainly valid,
just and demandable claim;
Fixed Damages: 6. In actions for legal support;
- The amount of fixed damages contemplated under 7. In actions for the recovery of wages of household
Art. 2206, NCC, is increased now to P50,000.00. helpers, laborers and skilled workers;
(Pestano vs. Sps. Paz, GR no. 139875, December 8. In actions for indemnity under workmen's
4, 2000) compensation and employer's liability laws;
9. In a separate civil action to recover civil liability arising
from a crime;
Loss of earning capacity (Formula for Art. 2206, NCC):
10. When at least double judicial costs are awarded;
- The amount of loss of earning capacity that should 11. In any other case where the court deems it just and
be in accordance with Art. 2206, par. 1, NCC. equitable that attorney's fees and expenses of
litigation should be recovered.
FORMULA:
In all cases, the attorney's fees and expenses of litigation must
Life Expectancy x [Gross Annual Income less
be reasonable. (Art. 2208, NCC)
Necessary Living Expenses] = NET EARNING
CAPACITY
Award of Attorney’s Fees:
1. The first factor, ie, life expectancy is computed by - In awarding attorney’s fees, the trial court must
applying the formula (⅔ x 80 → age at death) state the factual, legal, or equitable justification for
adopted in the American Expectancy Table of awarding the same, bearing in mind that the award
Mortality or the Actuarial Combined Experience of attorney’s fees is the exception, not the general
Table of Mortality. rule, and it is not sound public policy to place a
2. With respect to Net Earnings, the proper penalty on the right to litigate; nor should attorney's
computation should be based on the gross income fees be awarded every time a party wins a lawsuit.
of the victim would have incurred if he were alive. The matter of attoney;s fees cannot be dealt with
(People vs. Mataro, GR no. 130378, March , 2001) only in the dispositive portion of the decision. The
3. The amount of the living expenses must also be text of the decision must state the reason behind
established to determine the net earnings. the award of attorney’s fees. Otherwise, its award
However, the SC ruled that the amount thereof is is totally unjustified. (PAL vs. CA, GR no. 123238,
fixed at 50% of the gross income in the absence of September 22, 2008)
proof of the amount of living expenses to be
deducted from the gross income. (Metro Manila Instances where Attorney’s Fees is available in Contract
Transit vs. CA, GR nos. 116617 & 126395, of Carriage:
November 16, 1998) 1. When exemplary damages are awarded;
4. The above rules on loss of earning capacity 2. When the defendant's act or omission has
applies when the breach of the carrier resulted in compelled the plaintiff to litigate with third persons
the plaintiff’s permanent incapacity. (Borromeo vs. or to incur expenses to protect his interest;
MERALCO, 44 Phil. 165) 3. In case of a clearly unfounded civil action or
5. Loss of earning capacity must be established proceeding against the plaintiff;
through documentary proof. By way of exception, 4. Where the defendant acted in gross and evident
documentary is not necessary in the following bad faith in refusing to satisfy the plaintiff's plainly
cases: (1) Self-employed victim and earning less valid, just and demandable claim;
than minimum wage; (2) Daily wage earner earning 5. When at least double judicial costs are awarded;
less than minimum. (Serra vs. Mumar, GR no. 6. In any other case where the court deems it just and
193861, March 14, 2012) equitable that attorney's fees and expenses of
litigation should be recovered. (Art. 2208, pars.


TRANSPORTATION LAW
Morillo Notes
1,2,4,5,10,11, NCC) 2. Where the carrier is guilty of fraud or bad faith; or
3. Where the negligence of the carrier is so gross and
INTERESTS: reckless as to virtually amount to bad faith. (PAL
- A claim for damages based on breach of contract vs. CA, GR no. 123238, September 22, 2008)
is not done based on loan or forbearance of
money.
TRANS WORLD AIRLINES vs. CA
- The rate of legal interest is 6% per annum (BSP GR no. 78656, August 30, 1988
Circular No. 799, dated July 1, 2013)
- When an obligation, not constituting a loan for Moral and Exemplary Damages were awarded in this case.
forbearance of money is breached, an interest on
the amount of damages awarded may be imposed The discrimination is obvious and the humiliation to which private
at the rate of 6% per annum. (Eastern Shipping respondent was subjected is undeniable. Consequently, the
lines vs. CA, GR no. 97412, July 12, 1994) award of moral and exemplary damages by the respondent court
is in order. At the time of this unfortunate incident, the private
respondent was a practicing lawyer, a senior partner of a big law
MORAL DAMAGES firm in Manila. He was a director of several companies and was
active in civic and social organizations in the Philippines.
Considering the circumstances of this case and the social
MORAL DAMAGES: standing of private respondent in the community, he is entitled to
the award of moral and exemplary damages. However, the moral
Article 2217. Moral damages include physical suffering, mental damages should be reduced to P300,000.00, and the exemplary
anguish, fright, serious anxiety, besmirched reputation, wounded damages should be reduced to P200,000.00. This award should
feelings, moral shock, social humiliation, and similar injury. be reasonably sufficient to indemnify private respondent for the
Though incapable of pecuniary computation, moral damages humiliation and embarrassment that he suffered and to serve as
may be recovered if they are the proximate result of the an example to discourage the repetition of similar oppressive
defendant's wrongful act for omission. (Art. 2217, NCC) and discriminatory acts.
Petitioner sacrificed the comfort of its first class passengers

Rationale - Moral Damages are not awarded to punish the including private respondent Vinluan for the sake of economy.
defendant but to compensate the victim. (Dela Serna vs. CA, Such inattention and lack of care for the interest of its
233 SCRA 325) passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which
REQUISITES FOR MORAL DAMAGES: entitles the passenger to the award of moral damages. More so
1. There must be an injury, whether physical, mental in this case where instead of courteously informing private
respondent of his being downgraded under the circumstances,
or psychological, clearly sustained by the claimant;
he was angrily rebuffed by an employee of petitioner.
2. There must be a culpable act or omission factually
established;
3. The wrongful act act or omission of the defendant Gross Negligence:
is the proximate cause of the injury sustained by - It implies a want or absence of or failure to exercise
the claimant; and even slight care or diligence, or the entire absence
4. The award for damages is predicated on any of the of care. It evinces a thoughtless disregard of
cases stated under Art. 2219. (Expert Travel & consequences without exerting any effort to avoid
tours vs. CA, GR no. 130030, June 25, 1999) them. (BPI Investment Corp. vs. DG Carreon Corp.,
422 Phil. 367)
Examples:
Article 2219. Moral damages may be recovered in the following
and analogous cases: - A carrier’s utter lack of care for and sensitivity to
1. A criminal offense resulting in physical injuries; the needs of its passengers constitutes gross
2. Quasi-delicts causing physical injuries; negligence and is no different from fraud, malice or
3. Seduction, abduction, rape, or other lascivious acts; bad faith. (Singson vs. CA, GR no. 119995,
4. Adultery or concubinage; November 18, 1997)
5. Illegal or arbitrary detention or arrest; - A carrier’s inattention to, and lack of care for, the
6. Illegal search; interest of its passengers who are entitled to its
7. Libel, slander or any other form of defamation;
utmost consideration, particularly as to their
8. Malicious prosecution;
9. Acts mentioned in article 309; convenience, amount to bad faith and entitles the
10. Acts and actions referred to in articles 21, 26, 27, 28, passenger to an award of moral damages. (PAL vs.
29, 30, 32, 34, and 35. CA, 326 Phil. 823 (1996))
The parents of the female seduced, abducted, raped, or abused,

referred to in No. 3 of this article, may also recover moral NOMINAL DAMAGES
damages.
The spouse, descendants, ascendants, and brothers and sisters NOMINAL DAMAGES:
may bring the action mentioned in No. 9 of this article, in the Article 2221. Nominal damages are adjudicated in order that a
order named. (Art. 2219, NCC) right of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him.
Instances were Moral Damages may be recovered in a
(Art. 2221, NCC)
Breach of Contract of Air Carriage:
1. Where the mishap results in the death of a
passenger; or Article 2222. The court may award nominal damages in every

TRANSPORTATION LAW
Morillo Notes
obligation arising from any source enumerated in article 1157, or
in every case where any property right has been invaded. (Art. Article 2233. Exemplary damages cannot be recovered as a
2222, NCC) matter of right; the court will decide whether or not they should
be adjudicated. (Art. 2233, NCC)
Article 2223. The adjudication of nominal damages shall Article 2234. While the amount of the exemplary damages need
preclude further contest upon the right involved and all not be proved, the plaintiff must show that he is entitled to moral,
accessory questions, as between the parties to the suit, or their temperate or compensatory damages before the court may
respective heirs and assigns. (Art. 2223, NCC) consider the question of whether or not exemplary damages
should be awarded. In case liquidated damages have been
agreed upon, although no proof of loss is necessary in order that
The assessment of nominal damages is left to the discretion such liquidated damages may be recovered, nevertheless, before
of the court according to the circumstances of the case. the court may consider the question of granting exemplary in
(Ventanilla vs. Centeno, 1 SCRA 215) addition to the liquidated damages, the plaintiff must show that
he would be entitled to moral, temperate or compensatory
damages were it not for the stipulation for liquidated damages.
TEMPERATE OR MODERATE DAMAGES (Art. 2234, NCC)
Article 2235. A stipulation whereby exemplary damages are

TEMPERATE OR MORATE DAMAGES: renounced in advance shall be null and void. (Art. 2235, NCC)
Article 2224. Temperate or moderate damages, which are more

than nominal but less than compensatory damages, may be REQUISITES FOR THE AWARD OF EXEMPLARY
recovered when the court finds that some pecuniary loss has DAMAGES:
been suffered but its amount can not, from the nature of the 1. They may be imposed by way of example in
case, be provided with certainty. (Art. 2224, NCC)
addition to compensatory damages, and only after
claimant’s right to them has been established;
2. They cannot be recovered as a matter of right, their
Article 2225. Temperate damages must be reasonable under the
determination depending upon the amount of
circumstances. (Art. 2225, NCC)
compensatory damages that may be awarded to
the claimant;
Rationale - There are cases where from the nature of the 3. The act must be accompanied by bad faith or done
case, definite proof of pecuniary loss cannot be offered, in wantpn, fraudulent, oppressive or malevolent
although the court is convinced that there has been such manner. (PNB vs. CA, 256 SCRA 44)
loss. For instances, injury to one’s commercial credit or to
the goodwill of a business firm is often hard to show with
LIQUIDATED DAMAGES
certainty in terms of money. Should damages be denied for
that reason? The judge should be empowered to calculate
moderate damages in such cases, rather than that the LIQUIDATED DAMAGES:
plaintiff should suffer, without redress, from the defendant’s
Article 2226. Liquidated damages are those agreed upon by the
wrongful act. (Report of the Code Commission)
parties to a contract, to be paid in case of breach thereof. (Art.
2226, NCC)
Temperate Damages were awarded were awarded against a
jeepney operator where the plaintiff suffered losses that
cannot be quantified in monetary terms. (Sps. Hernandez Article 2227. Liquidated damages, whether intended as an
vs. Sps. Dolor, GR no. 160286, July 30, 2004) indemnity or a penalty, shall be equitably reduced if they are
iniquitous or unconscionable. (Art. 2227, NCC)
EXEMPLARY OR CORRECTIVE DAMAGES
Article 2228. When the breach of the contract committed by the
EXEMPLARY OR CORRECTIVE DAMAGES: defendant is not the one contemplated by the parties in agreeing
upon the liquidated damages, the law shall determine the
Article 2229. Exemplary or corrective damages are imposed, by measure of damages, and not the stipulation. (Art. 2228, NCC)
way of example or correction for the public good, in addition to
the moral, temperate, liquidated or compensatory damages. (Art.
2229, NCC)
Article 2230. In criminal offenses, exemplary damages as a part

of the civil liability may be imposed when the crime was PART 2: AVIATION LAW
committed with one or more aggravating circumstances. Such
damages are separate and distinct from fines and shall be paid
to the offended party. (Art. 2230, NCC)
Article 2231. In quasi-delicts, exemplary damages may be THE AIRCRAFT

granted if the defendant acted with gross negligence. (Art. 2231, AND CIVIL AVIATION
NCC)
Article 2232. In contracts and quasi-contracts, the court may

award exemplary damages if the defendant acted in a wanton, APPLICABLE LAWS:
fraudulent, reckless, oppressive, or malevolent manner. (Art. 1. Aforesaid Civil Code provisions;
2232, NCC) 2. RA 9497 (Civil Aviation Authority Act of 2008;


TRANSPORTATION LAW
Morillo Notes
3. Civil Aviation Regulations issued by CAAP - Application for certificate of registration shall be
4. RA no. 776 made in writing, signed and sworn to by the owner
5. Warsaw Convention; and or lessee of any aircraft or aircraft engine eligible
6. Chicago Convention on International Civil Aviation for registration.
(signed on December 7, 1944) - The application shall also state: (a) the date and
7. The Montreal Convention place of filing; (b) the specification, construction
and technical description of the aircraft or aircraft
REGULATORY PERSPECTIVES: engine; and (c) such other information as may be
● Airline companies in the Philippines are subject to required by the Authority in such manner and form
different regulatory perspectives. as the Authority may prescribe by regulation. (Sec.
● Its authority too operate air services in the 45, Civil Aviation Authority of 2008)
Philippines derives from its legislative franchise and
is accordingly bound by whatever limitations that ISSUANCE OF CERTIFICATE OF REGISTRATION:
are presently in place or may be subsequently - Upon considering the application for registration,
incorporated in its franchise. should the Director find the aircraft or aircraft
● Philippine Airlines is subject to the other laws of engine eligible for registration, such aircraft shall be
the Philippines, including RA no. 776, which grants registered under the provision of this Act and the
regulatory power to the Civil Aeronautics Board owner thereof shall be issued a certificate of
(CAB) over the economic aspect of air registration. (Sec. 46, Civil Aviation Authority of
transportation. 2008)
● There is a very significant public interest in state - Such certificate shall be conclusive evidence of
regulation of air travel in view of considerations of nationality for international purposes, but not in
public safety, domestic and international any proceeding under the laws of the Republic of
commerce, as well as the fact that air travel the Philippines. (Sec. 44, CAA)
necessitates steady traversal of international - The certificate of registration is conclusive
boundaries, the amity between nations. (Kuwait evidence of ownership, except in a proceeding
Airways Corp. vs. PAL, (GR no. 156087, May 8, where such ownership is, or may be, at issue, (Sec.
2009) 44, CAA)
Civil Aviation - refers to the operation of any civil aircraft for NATIONALITY OF THE AIRCRAFT:
the purpose of general aviation operations, aerial work or - An aircraft shall acquire Philippine Nationality when
commercial air transport operations. (Sec. 3, Civil Aviation registered pursuant to this Act. (Sec. 46, CAA)
Authority Act of 2008) - The State of Registry refers to the State on whose
register the aircraft is entered. An aircraft is a
Aircraft - refers to any machine that can derive support in Philippine National if the same is registered with
the atmosphere from the reactions of the air other than the the Civil Aviation Authority of the Philippines. (Sec.
reactions of the air against the earth’s surface. (Sec. 3, Civil 47, RA 9497)
Aviation Authority Act of 2008)
REVOCATION OF CERTIFICATE OF REGISTRATION:
Philippine Aircraft - means an aircraft registered in the - Any certificate of registration may be revoked by
Philippines in accordance with the requirements of the Civil the Authority for any cause which renders the
Aviation Authority of 2008. (Sec. 3, Civil Aviation Authority aircraft ineligible for registration. (Sec. 48, CAA)
Act of 2008)
RECORDING OF CONVEYANCES
REGISTRATION OF AIRCRAFT
SEC. 49. Conveyance to be Recorded. - No conveyance made

WHO ARE ELIGIBLE FOR REGISTRATION? or executed, which affects the title to, or interest in, any aircraft
- Except as otherwise provided in the Constitution of Philippine registry, or any portion thereof shall be valid in
and existing treaty or treaties, no aircraft shall be respect to such aircraft or portion thereof against any person
eligible for registration unless it is owned by or other than the person by whom the conveyance is made or
leased to a citizen or citizens of the Philippines executed, his heirs, assignees, executors, administrators,
or corporations or associations organized under devisees, or successors in interest, and any person having actual
notice thereof, until such conveyance is recorded in the
the laws of the Philippines at least 60% of
Authority. Every such conveyance so recorded shall be valid as
whose capital is owned by Filipino Citizens. against all persons. Any instrument, recording of which is
That, under such rules and regulations to be required by the provisions of this Act, shall take effect from the
promulgated by the CAB, foreign-owned or date of its record in the books of the Authority, and not from the
registered aircraft may be registered if utilized date of its execution. (Sec. 49, CAA)
by members of aero clubs organized for
recreation, sport or the development of flying
skills as a prerequisite to any aeronautical SEC. 50. Form of Conveyance. - No conveyance may be
activities of such clubs within the Philippine recorded under the provisions of this Act unless it complies with
the requirements for the registration of documents similar to the
airspace. (Sec. 44, Civil Aviation Authority of 2008)
land registration process. The conveyance to be recorded shall
also state: (a) the interest in the aircraft of the person by whom
APPLICATION FOR AIRCRAFT REGISTRATION: such conveyance is made or executed or, in the case of a
contract of conditional sale, the interest of the vendor; and (b)

TRANSPORTATION LAW
Morillo Notes
Airman - refers to any individual who engages, as the
the interest transferred by the conveyance. (Sec. 50, CAA)
person in command or as pilot, mechanic, aeronautical
engineer, flight radio operator or member of the crew, in the
navigation of aircraft while under way and any individual
SEC. 51. Establishment of System of Recording. - The
Authority shall establish a national system for recording
who is directly in charge of inspection, maintenance,
documents that affect the title to or any interest in any aircraft overhauling, or repair of aircraft, aircraft engine, propellers,
registered in accordance with this Act and in any aircraft engine, or appliances and individual who serves in the capacity of
propeller, appliance or spare parts intended for use on any such an aircraft dispatcher or air traffic control operator. (Sec.3(n),
aircraft. (Sec. 51, CAA) RA 9497)
General Sales Agent - a person, who, pursuant to an

SEC. 52. Method of Recording. - The Authority shall record authority from an airline, by itself or through an agent, sells
conveyances delivered to it in the order of their receipt, in files or offers for sale any air transportation or negotiates for or
kept for that purpose, indexed to show: holds himself by solicitation, advertisement, or otherwise as
a. The identifying description of the aircraft;
one who sells, provides, furnishes, contracts or arranges for,
b. The names of the parties to the conveyance;
c. The date of the instrument and the date and time it is such air transportation. (Sec. 2(d), Chapter 1, CAB
recorded; Economic Regulation No. 8)
d. The interest in the aircraft transferred by the
conveyance; Cargo Sales Agent - any person who does not directly
e. If such conveyance is made as security for operate an aircraft for the purpose of engaging in air
indebtedness, the amount and date of maturity of such transportation or air commerce and who, as principal or
indebtedness; and agent, sells, or offers for sale any air transportation of
f. All particular estates, mortgages, liens, leases, orders
cargo, or negotiates for, or holds himself out by solicitation,
and other encumbrances and all decrees, instruments,
attachments or entries affecting aircraft and other advertisement or otherwise as one who provides, sells,
matters properly determined under this Act. (Sec. 52, furnishes, contracts or arranges for, such air transportation
CAA) of cargo. (Sec. 2(e), Chapter 1, CAB Economic Regulation
no. 8)
SEC. 53. Validity Before Filing. - Upon the establishment of a Air Freight Forwarders - any indirect air carrier which, in
recording system in accordance with the provisions of this Act, the ordinary and usual course of its undertaking, assembles
no document affecting the title to or any interest in such and consolidates or provides for assembling and
registered aircraft, aircraft engines, propellers, appliances, or consolidating such property and performs or provides for
spare parts shall be valid except as between the parties thereto, the performance of break-bulking and distributing
unless the document is registered in such recording system.
operations with respect to consolidated shipments, and is
(Sec. 53, CAA)
responsible for the transportation of property from the point
of receipt to the point of destination and utilizes for the
whole or any part of such transportation the services of a
AIR TRANSPORTATION IN GENERAL
direct air-carrier. (Sec. 2(a), Chapter 1, CAB Economic
Regulation no. 4)
Air Commerce or Commercial Air Transport Operation -
refers to and includes scheduled or non-scheduled air Off-line Carrier - any foreign air carrier not certificated by
transport services for pay or hire, the navigation of aircraft in the CAB, but who maintains office or who has designated
furtherance of a business, the navigation of aircraft from one or appointed agents or employees in the Philippines, who
place to another for operation in the conduct of a business, sells or offers for sale any air transportation in behalf of said
or an aircraft operation involving the transport of foreign air carrier and/or other, or negotiate for, or holds
passengers, cargo or mail for remuneration or hire. (Sec. 3 itself out by solicitation, advertisement, or otherwise sells,
(g), CAA) provides, furnishes, contracts, or arranges for such
transportation. (Sec. 2(b), Chapter 1, CAB Economic
Domestic Air Commerce - includes air commerce within Regulation No. 4)
limits of the Philippine Territory. (Sec. 3(mm, CAA)
Air Taxi Operator - an air carrier utilizing small aircraft for
Domestic Air Transport - means air transportation within charter trip and/or individual service transportation within
the limits of the Philippine territory. (Sec. 3(nn), CAA) the territory of the Republic of the Philippines with proper
certification and permit from the CAB. (Sec. 4(a), Chapter 1,
Foreign Air Transport - refers to air transportation between CAB Economic Regulation No. 5)
the Philippines and any place outside it or wholly outside of
the Philippines. (Sec. 3(pp), CAA) CHARTER OF AIRCRAFT
International Commercial Air Transport - refers to the
carriage by aircraft of persons or property for remuneration Charter flight or Charter trip:
or hire or the carriage of mail between any two or more - Air transportation performed by an air carrier where
countries (Sec. 3(ss), CAA) the entire capacity of one or more aircraft, or less
than the entire capacity of an aircraft, has been
engaged for the movement of persons and their
PERSONS INVOLVED IN AIR TRANSPORTATION personnel baggage or for the movement of
property on a time, mileage or trip basis. (Sec. 1(b),
Chapter 1, CAB Economic Regulation No. 2)


TRANSPORTATION LAW
Morillo Notes
CHARTER OF AIRCRAFT: Fifth Freedom of The Air - the right or privilege, in respect of
1. By a person for his own use (including a direct air scheduled international air services, granted by one State to
carrier when such aircraft is engaged solely for the another State to put down and to take on, in the territory of the
transportation of company personnel or first State, traffic coming from or destined to a third State (also
commercial traffic in cases of emergency); known as a Fifth Freedom Right).
2. By a representative (or representative acting jointly
of a group for the use of such group (provided no ICAO characterizes all "freedoms" beyond the Fifth as "so-
called" because only the first five "freedoms" have been officially
such representative is professionally engaged in
recognized as such by international treaty.
the formation of groups for transportation or in the
solicitation or sale of transportation services); or Sixth Freedom of The Air - the right or privilege, in respect of
3. By an airfreight forwarded holding a currently scheduled international air services, of transporting, via the home
effective permit. (Aquino & Hernando, p/ 344) State of the carrier, traffic moving between two other States (also
known as a Sixth Freedom Right). The so-called Sixth Freedom
CLASSIFICATION OF CHARTER OF AIRCRAFT: of the Air, unlike the first five freedoms, is not incorporated as
1. On-route Charter - refer to service performed by such into any widely recognized air service agreements such as
the "Five Freedoms Agreement".
an air carrier between points which said carrier is
authorized to provide service pursuant to its Seventh Freedom of The Air - the right or privilege, in respect
certificate of public convenience and necessity or of scheduled international air services, granted by one State to
foreign air carrier permit. (Sec. 2(c), CAB Economic another State, of transporting traffic between the territory of the
Regulation No. 2) granting State and any third State with no requirement to include
2. Off-Route Charter - refer to any charter that is not on such operation any point in the territory of the recipient State,
On-route. (Sec. 2(d), Supra) i.e the service need not connect to or be an extension of any
3. Pro-rata Charter - means a charter the cost of service to/from the home State of the carrier.
which is divided among the passengers
Eighth Freedom of The Air - the right or privilege, in respect of
transported. (Sec. 2(e), Supra) scheduled international air services, of transporting cabotage
4. Single Entity Charter - a charter the cost of which traffic between two points in the territory of the granting State on
is borne by the charterer and not by individual a service which originates or terminates in the home country of
passengers, directly or indirectly. (Sec. 2(f), Supra) the foreign carrier or (in connection with the so-called Seventh
5. Mixed charter - a charter the cost of which is Freedom of the Air) outside the territory of the granting State
borne, or pursuant to a contract may be borne, (also known as a Eighth Freedom Right or "consecutive
partly by the charter participants and partly by the cabotage").
charterer. (Sec. 2(g), Supra)
Ninth Freedom of The Air - the right or privilege of transporting
cabotage traffic of the granting State on a service performed
SOVEREIGNTY AND AIR FREEDOMS entirely within the territory of the granting State (also known as a
Ninth Freedom Right or "stand alone" cabotage).
Bilateral Systems of Air Traffic: Source: International Civil Aviation Organization (ICAO)
- Before airlines of treaty partners are able to launch
air services to, through and from another partner’s CANCELLATION OF
territory, the Chicago Convention requires that the COMMERCIAL AGREEMENT
two governments shall have negotiated a bilateral
treaty between them that will define the air traffic
rights each grants to the other during the life of the Cancellation of Commercial Agreement:
treaty. (Aquino & Hernando, p. 345) - The Philippine government through the Civil
Aeronautics Board (CAB) has the indispensable
FREEDOM OF THE AIR: authority to compel local air carriers to comply with
government determined policies, even at the
First Freedom of the Air - the right or privilege, in respect of expense of economic rights. The airline industry is
scheduled international air services, granted by one State to a sector where government abjuration is least
another State or States to fly across its territory without landing
desired. (Kuwait Airways Corp vs. PAL, GR no.
(also known as a First Freedom Right).
156087, May 8, 2009)
Second Freedom of the Air - the right or privilege, in respect of - The CAB has ample power under its organizing
scheduled international air services, granted by one State to charter, to compel an airline, in proper cases, to
another State or States to land in its territory for non-traffic terminate whatever commercial agreements the
purposes (also known as a Second Freedom Right). carrier may have,
- The CAN have general supervision and regulation
Third Freedom of The Air - the right or privilege, in respect of of, and jurisdiction and control over, air carriers as
scheduled international air services, granted by one State to
well as their property, property rights, equipment,
another State to put down, in the territory of the first State, traffic
coming from the home State of the carrier (also known as a
facilities and franchise. (Sec. 10, RA 776)
Third Freedom Right).
CABOTAGE
Fourth Freedom of The Air - the right or privilege, in respect of
scheduled international air services, granted by one State to
another State to take on, in the territory of the first State, traffic TWO TYPES OF CABOTAGE:
destined for the home State of the carrier (also known as a
1. Consecutive Cabotage - the right or privilege, in
Fourth Freedom Right).
respect of scheduled international air services, of

TRANSPORTATION LAW
Morillo Notes
transporting cabotage traffic between two points in RULES ON CARRY-ON BAGGAGE:
the territory of the granting State on a service
CARRY-ON BAGGAGE:
which originates or terminates in the home country (a) No person may allow the boarding of carry-on
of the foreign carrier or outside the territory of the baggage in to the passenger cabin unless it is
granting State. adequately and securely stowed in accordance with
2. Stand Alone Cabotage - the right or privilege of the operator's approved Operations Manual
transporting cabotage traffic of the granting State procedures.
on a service performed entirely within the territory (b) No person may allow aircraft passenger entry doors to
of the granting State. be closed in preparation for taxi or pushback unless at
least one required crew member has verified that each
article of baggage has been properly stowed in
NO CABORAGE IN THE PHILIPPINES: overhead racks with approved restraining devices or
- The Philippines has not granted the right of doors or in approved locations aft of the bulkhead.
cabotage in this jurisdiction. (c) No person may allow carry-on baggage to be stowed
in a location that would cause that location to be
loaded beyond its maximum placard mass limitation.
Note: The stowage locations shall be capable of restraining the

OBLIGATIONS OF CARRIER articles in crash impacts severe enough to induce the ultimate
IN AIR TRANSPORTATION inertia forces specified in the emergency landing conditions
under which the aircraft was type-certified. (8.9.2.14, Part 8, Civil
Aviation Regulations issued by CAAP
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE:

- The obligation to make sure that the aircraft is DUTY TO PASSENGER:
airworthy, that the vessel has a competent captain - Airline companies are hereby sternly admonished
and crew, and that the captain and his crew that it is their duty not only to cursorily instruct but
exercised extraordinary diligence in operating the to strictly require their personnel to be more
aircraft. (PAL vs. CA, GR no. L-46558, July 31, accommodating towards customers, passengers
1981) and the general public. After all, common carriers
- The carrier is deemed to have failed to exercise such as airline companies are in the business of
extraordinary diligence if the plane did not take the rendering public service, which is the primary
designated route and the tragic crash could have reason for their enfranchisement and recognition in
been avoided had it taken the said designated our law. Because the passengers in a contract of
route. (Abeto vs. PAL, 115 SCRA 489) carriage do not contract merely for transportation,
they have a right to be treated with kindness,
Meaning of Airworthiness: respect, courtesy and consideration. A contract to
68
- An aircraft, its engines, propellers, and other transport passengers is quite different in kind and
components and accessories, are of proper design degree from any other contractual relation, and
and construction, and are safe for air navigation generates a relation attended with public duty. The
purposes, such design and construction being operation of a common carrier is a business
consistent with accepted engineering practice and affected with public interest and must be directed
in accordance with aerodynamic laws and aircraft to serve the comfort and convenience of
science. (Sec. 3, CAA) passengers. Passengers are human beings with
69
human feelings and emotions; they should not be

TARIFF SYSTEM: treated as mere numbers or statistics for revenue.
(Saludo vs. CA, GR no. 95536, March 23, 1992)
- A tariff is a rule or condition of air travel and binds
the airline and passengers. (Aquino & Hernando, p.
349) Breach of Contract:
- Tariffs are developed and imposed by air carriers - The failure, without legal excuse, to perform or
with the approval of the CAB. These tariffs are comply with the terms of the contracts. (Cathay
provided for in the tickets that are binding although Pacific vs. Sps. Vazquez, GR no. 150843, March
they are in the nature of contracts of adhesion 14, 2003)
CARE OF BAGGAGE (LIABILITY OF AIR CARRIERS FOR Physical Injuries to Passengers:

FAILURE TO EXERCISE DUE DILIGENCE IN THE - There is breach of contract if the passenger was
injured because the airline personnel failed to
FOLLOWING CASES):
properly latch the door of a serving car that swung
1. The baggages of their passengers were either
open on takeoff and struck a passenger’s knee or
damaged or their contents were lost or stolen;
where there was improper monitoring by flight
2. The baggage were transported or diverted to
attendants of overheard luggage racks resulting in
another place;
a suitcase falling on a passenger’s head. (Aquino &
3. In case of off-loading of baggage;
Hernando, p. 355)
4. When there was delay in the delivery of the
baggage; or
5. If the baggage is lost altogether. (Pan American DOWNGRADING AND UPGRADING OF PASSENGERS:
- There is a breach of contract when an airline
Airways vs. IAC, 164 SCRA 268; Alitalia vs. IAC,
192 SCRA 9) company bumped off a passenger with confirmed
reservation or downgraded the passenger’s seat
accommodation from one class to a lower class,


TRANSPORTATION LAW
Morillo Notes
vice versa. (PAL vs. Lopez, GR no. 156654, the passenger in question from “transit passenger”
November 20, 2008) to “new passenger”.
CATHAY PACIFIC vs. SPS. VASQUEZ
GR no. 150843, March 4, 2003
RUDE TREATMENT:
- The carrier may be held liable for rude and
In this case, what happened was the reverse. The contract discourteous treatment of its passengers not only
between the parties was for Cathay to transport the Vazquezes by the crew inside the vessel but also the staff in
to Manila on a Business Class accommodation in Flight CX-905. the airport as well as the staff in the branch office
After checking-in their luggage at the Kai Tak Airport in Hong of the carrier. (Northwest airlines vs. Catapang, GR
Kong, the Vazquezes were given boarding cards indicating their no. 174364, July 30, 2009)
seat assignments in the Business Class Section. However,
during the boarding time, when the Vazquezes presented their
boarding passes, they were informed that they had a seat OVER-BOOKING:
change from Business Class to First Class. It turned out that the - Over-booking is the practice of air carriers of
Business Class was overbooked in that there were more selling confirmed reserved space beyond the actual
passengers than the number of seats. Thus, the seat seat capacity of the aircraft. (Sec. 2.13, CAB
assignments of the Vazquezes were given to waitlisted Economic Regulation no. 7)
passengers, and the Vazquezes, being members of the Marco
Polo Club, were upgraded from Business Class to First Class. CANCELLATION DUE TO ENGINE MALFUNCTION:
We note that in all their pleadings, the Vazquezes never denied SAVELLANO vs. NORTHWEST AIRLINES
that they were members of Cathay’s Marco Polo Club. They GR no. 151783, July 8, 2003
knew that as members of the Club, they had priority for
upgrading of their seat accommodation at no extra cost when an When, as a result of engine malfunction, a commercial airline is
opportunity arises. But, just like other privileges, such priority unable to ferry its passengers on the original contracted route, it
could be waived. The Vazquezes should have been consulted nonetheless has the duty of fulfilling its responsibility of carrying
first whether they wanted to avail themselves of the privilege or them to their contracted destination on the most convenient
would consent to a change of seat accommodation before their route possible. Failing in this, it cannot just unilaterally shuttle
seat assignments were given to other passengers. Normally, one them, without their consent, to other routes or stopping places
would appreciate and accept an upgrading, for it would mean a outside of the contracted sectors. However, moral damages
better accommodation. But, whatever their reason was and cannot be awarded without proof of the carriers bad faith, ill will,
however odd it might be, the Vazquezes had every right to malice or wanton conduct. Neither will actual damages be
decline the upgrade and insist on the Business Class granted in the absence of convincing and timely proof of loss.
accommodation they had booked for and which was designated But nominal damages may be allowed under the circumstances
in their boarding passes. They clearly waived their priority or in the case herein.
preference when they asked that other passengers be given the
upgrade. It should not have been imposed on them over their
vehement objection. By insisting on the upgrade, Cathay DENIED BOARDING PASSENGERS:
breached its contract of carriage with the Vazquezes. - General Rule: It is the air carrier’s duty to accept
and board a passenger with confirmed tickets if the
passenger presents himself on time in the airline
DELAY AND DIVERSION OF FLIGHT:
counter in the airport. (PAL vs. CA, GR no. 123238,
- Delay is the act of deferring a flight to a later time
September 22, 2008)
(Sec. 2(d), CAB Economic Regulation no. 7)
- Exception:
- Terminal Delay is a delay that occurs while
1. If the passenger refuses to comply with
passengers are still inside the terminal waiting for
the instructions regarding exit seating
boarding. (Sec. 2.8, CAB Economic Regulation No.
restrictions prescribed by the CAAP; or
9)
2. If a passenger has handicap that can be
- Tarmac Delay is a delay that occurs while
physically accommodated only by an exit
passengers are already on board the aircraft.
row seat. (Sec. 8.9.2.2, CAAP Civil
(Supra)
Aviation Regulations)
- In Japan Airlines vs. CA (GR no. 118664, August 7,
1998), the flight of the passenger to Manila was
cancelled because of the eruption of Mt. Pinatubo UNITED AIRLINES vs. CA
while on a stopover in Narita Airport in Japan. The GR no. 124110, April 20, 2001
same was considered a fortuitous event over which
the carrier had no control. The SC reiterated the Existing jurisprudence explicitly states that overbooking amounts
to bad faith, entitling passengers concerned to an award of moral
rule that airline passengers must take such risks
damages. In Alitalia Airways vs. Court of Appeals, where
incident to the mode of travel. Adverse weather passengers with confirmed booking were refused carriage on the
conditions or extreme climatic changes are some last minute, this Court held that when an airline issues a ticket to
of the perils involved in air travel, the a passenger confirmed on a particular flight, on a certain date, a
consequences of which the passenger must contract of carriage arises, and the passenger has every right to
assume or expect. Nevertheless, the fact that the except that he would fly on that flight and on that date. If he does
flight was cancelled due to a fortuitous event does not, then the carrier opens itself to a suit for breach of contract of
not mean that the carrier’s duty already ended. The carriage. Where an airline had deliberately overbooked, it took
the risk of having to deprive some passengers of their seats in
carrier was still obligated to look after the
case all of them would show up for check in. For the indignity
convenience and comfort of the passenger.
and inconvenience of being refused a confirmed seat on the last
therefore, the carrier was obligated to make the minute, said passenger is entitled to moral damages. (Emphasis
necessary arrangements to transport the supplied).
passenger on the first available flight. In this case,
the carrier failed to do so and it even reclassified

TRANSPORTATION LAW
Morillo Notes
and procedures and responsibility for delayed
However, the Court’s ruling in said case should be read in
consonance with existing laws, particularly, Economic and/or cancelled flights. These terms and
Regulations No. 7, as amended, of the Civil Aeronautics Board: conditions may include liability limitations, claim-
filing deadlines, and other crucial conditions. (Sec.
xxxxxxxxxxx 4, Chapter II, JAO no. 1)
What this Court considers as bad faith is the willful and 4.1 An air carrier shall cause the disclosure under this Section to
deliberate overbooking on the part of the airline carrier. The be printed on or attached to the passenger ticket and/or
above-mentioned law clearly states that when the overbooking boarding pass, or the incorporation of such terms and conditions
does not exceed ten percent (10%), it is not considered as of carriage by reference. Incorporation by reference means that
deliberate and therefore does not amount to bad faith. While the ticket and/or boarding pass shall clearly state that the
there may have been overbooking in this case, private complete terms and conditions of carriage are available for
respondents were not able to prove that the overbooking on perusal and/or review on the air carrier’s website, or in some
United Airlines Flight 1108 exceeded ten percent. other document that may be sent to or delivered by post or
electronic mail to the passenger upon his/her request.
Priority Rules: For the purpose of determining which

passenger holding confirmed reserved space shall be 4.2 The air carrier must also ensure that passengers receive an
denied boarding on an oversold flight, every carrier shall explanation of key terms identified on the ticket from any location
observe the following priorities: where the carrier’s tickets are sold, including travel agencies. In
(a) Thru Passengers Over Originating Passengers - case of online bookings, the air carrier must establish a system
wherein the purchaser is fully apprised of the required
Whenever a flight is scheduled via an intermediate
disclosures under this Section twice prior to the final submission
station, thru passengers on board said flight shall of his/her online offer to purchase.
have first priority at said intermediate station.
(b) Connecting Confirmed Passengers - Connecting
confirmed passengers excluding stop-over 4.3 Aside from the printing and/or publication of the above
passengers at any station shall have second disclosures, the same shall likewise be verbally explained to the
priority at the connecting intermediate stations. passenger by the air carrier and/or its agent/s in English and
(c) Originating Confirmed Passengers - Originating Filipino, or in a language that is easily understood by the
confirmed passengers at any station shall have purchaser, placing emphasis on the limitations and/or
third priority. restrictions attached to the ticket.
(d) Passengers with Conditional Reservation
Tickets - Passengers holding conditional
reservation tickets shall have fourth priority. 4.4 The key terms of a contract of carriage, which should
include, among others, the rebooking, refunding, baggage
(e) Chance Passengers - Chance passengers shall
allowance and check-in policies, must be provided to a
be accommodated on a “first come, first served” passenger and shall substantially be stated in the following
basis. (Sec. 4, CAB Economic Regulation No. 7) manner and, if done in print, must be in bold letters:
(English)
Amount of Compensation for Denied Boarding: “NOTICE:
1. For passengers for domestic flights - 100% of the The ticket that you are purchasing is subject to the following
value of the sector not flown, plus P3,000.00; conditions/restrictions:
2. For passengers for international flights - 100% of 1. _______________
the value of the sector not flown, plus P5,000.00 or 2. _______________
3. _______________
its equivalent in other currency.
3. In cases the airline provides for higher
Your purchase of this ticket becomes a binding contract on
compensation the same shall prevail. (Sec. 7, CAB your part to follow the terms and conditions of the ticket and
Economic Regulation no. 7 of the flight. Depending on the fare rules applicable to your
ticket, non-use of the same may result in forfeiture of the
fare or may subject you to the payment of penalties and
BILL OF RIGHTS FOR AIR PASSENGERS additional charges if you wish to change or cancel your
[DOTC-DTI Joint Administrative Order No. 1, booking.
Series of 2012]
For more choices and/or control in your flight plans, please
consider other fare types.”
RIGHT TO BE PROVIDED WITH ACCURATE
INFORMATION BEFORE PURCHASE (Filipino)
“PAALALA:
Ang tiket na ito ay binibili ninyo nang may mga kondisyon/
Right to Full, Fair, and Clear disclosure of the Service restriksyon:
Offered and All the terms and conditions of the Contract 1. ________________
of Carriage: 2. ________________
- Every passenger shall, before purchasing any ticket 3. ________________
for a contract of carriage by the air carrier or its
Sa pagpili at pagbili ng tiket na ito, kayo ay sumasang-ayon
agents, be entitled to the full, fair, and clear sa mga kondisyon at restriksyon na nakalakip dito, bilang
disclosure of all the terms and conditions of the kontrata ninyo sa air carrier. Depende sa patakarang angkop
contract of carriage about to be purchased. The sa iyong tiket, ang hindi paggamit nito ay maaaring
disclosure shall include, among others, documents magresulta sa pagwawalang bisa sa inyong tiket o sa
required to be presented at check-in, provisions on paniningil ng karagdagang bayad kung nais ninyong baguhin
check-in deadlines, refund and rebooking policies,


TRANSPORTATION LAW
Morillo Notes
Implementing Rules and Regulations. (Sec. 6, JAO
o kanselahin ang inyong tiket.
no. 1)
Para sa mas maraming pagpipilian at malawak na control sa - Air carriers shall provide to DTI a copy of its
inyong flight, inaanyayahan kayong bumili ng iba pang klase promotional materials for post audit not later than
ng tiket galing sa air carrier.” the publication, release, or launch date whichever
is earlier. (Sec. 6, JAO no. 1)
- It is understood that professional authorities for
- Any violation of the afore-stated provisions shall be those engaged in advertising, sales and promotion
a ground for the denial of subsequent applications may impose additional standards or measures to
for approval of promotional fare, or for the regulate their industry. (Sec. 6, JAO no. 1)
suspension or recall of the approval made on the
advertised fare/rate. (Sec. 4.5, JAO no. 1)
RIGHT TO RECEIVE THE FULL VALUE OF THE
Right to Clear and Non-Misleading Advertisements of, SERVICE PURCHASED
and Important Reminders Regarding Fares:
- Advertisements of fares shall be clear and not
Right to Transportation and Baggage Conveyance:
misleading. (Sec. 5, JAO no. 1)
- Every passenger is entitled to transportation,
- Major restrictions, such as those on rebookability
baggage conveyance and ancillary services, in
or refundability, which may be attached to certain
accordance with the terms and conditions of
fare types, shall be disclosed in full and in such a
contract of carriage with the air carrier. Thus, any
way that the passenger may fully understand the
violation of the terms and conditions of the
consequences of purchasing such tickets and the
contract of carriage due to the fault or negligence
effect of non-use thereof. (Sec. 5.1, JAO no.1)
of the air carrier shall entitle the passenger to
5.2 Every air carrier causing the publication of fare compensation or alternative arrangements, as
advertisements in any medium, shall likewise disclose the provided in this Air Passenger Bill of Rights, which
following: are acceptable to the passenger. (Sec. 7, JAO no.
(a) Conditions and restrictions attached to the fare type; 1)
(b) Refund and rebooking policies, if any;
(c) Baggage allowance policies;
(d) Government taxes and fuel surcharges; Right to be Processed for Check-In:
(e) Other mandatory fees and charges; - In accordance with the usual air carrier procedures,
(f) Contact details of the carrier (i.e. phone number, a passenger holding a confirmed ticket, whether
website, e-mail, etc.); and promotional or regular, with complete documentary
(g) Other information necessary to apprise the passenger requirements, and who has complied with the
of the conditions and the full/total price of the ticket check-in procedures, shall be processed
purchased. accordingly at the check-in counter within the
check-in deadline. The airline shall, therefore, and
Provided, that, in case of promotional fares, the additional
information shall be included: subject to infrastructure limitations, clearly
(h) Number of seats offered on a per sector basis; designate the boundaries of its assigned check-in
(i) The duration of the promo; and area/s or counter/s. (Sec. 8, JAO no. 1)
(j) The CAB Approval No. of Fares. - A passenger within the air carrier’s cordoned or
other designated check-in area as herein defined at
Provided, further, that, where there are differing conditions, such least one (1) hour before the published ETD shall
as fuel surcharge in relation to the points of destinations or not be considered late or a no-show, and shall not
origin, the advertisements of these carriers may provide only the
be denied check-in. The carrier shall exert utmost
range thereof and not the actual surcharge of each route.
diligence in ensuring that passengers within the
cordoned or other designated check-in area and/or
lined up at the check-in counters are checked in for
5.3 The above-mentioned required disclosures shall occupy not
less than one-third (1/3) of the advertising material. A copy of the their flights before the check-in deadline. (Sec. 8,
same shall be printed on or attached to the ticket in English and JAO no. 1)
Filipino. - A passenger who is late in accordance with the
preceding paragraph may be denied check-in and
In the case of broadcast media, it shall be enough that the air directed to a standby or rebooking counter, as the
carrier and/or advertising agent incorporate the foregoing terms case may be, for proper processing. (Sec. 8, JAO
and conditions by reference, as provided for in Section 4.1. no. 1)
- Any dispute under this Section shall be resolved by
Right against Misleading and Fraudulent Sales the air carrier on-site. For this purpose, the air
Promotion Practices: carrier must present to the passenger proof,
- Consistent with the declared policy of the State to including, but not limited to, closed-circuit
protect the interests of the consumers, which television monitor recordings, processing or
includes protection from misleading and fraudulent number slips issued at the entrance of the check-in
sales promotion practices, all sales promotion area, and other applicable or available means, that
campaigns and activities of air carriers shall be the latter failed to appear within the prescribed
carried out with honesty, transparency and time for the check-in procedure. (Sec. 8, JAO no. 1)
fairness, and in accordance with the requirements
of the Consumer Act of the Philippines, and its Right to Sufficient Processing Time:
- Passengers shall be given enough time before the
published ETD within which to go through the

TRANSPORTATION LAW
Morillo Notes
check-in and final security processes. For this
to give up their seats in exchange for air carrier
purpose, air carriers operating in international compensation.
airports and in other airports designated by the (c) The air carrier shall provide the interested passengers
DOTC shall open their check-in counters in such or volunteers a list of amenities and offers, which they
airports at least two (2) hours before the ETD. In can choose from, which list of amenities shall always
other airports, air carriers shall open their check-in include the option to be given priority booking in the
counters at least one (1) hour before the ETD. (Sec. next flight with available space or to be endorsed to
9, JAO no. 1) another air carrier upon payment of any fare difference,
and provided that space and other circumstances
- Air carriers operating in international airports and in
permit such accommodation, at the option of the
other airports designated by the DOTC shall open a passenger, and/or a cash incentive.
separate dedicated counter for a flight nearing (d) In case the number of volunteers is not enough to
check-in deadline to facilitate the checking in of resolve the overbooking, the air carrier shall increase
passengers at least one (1) hour before the the compensation package by certain degrees or by
published ETD. (Sec. 9.1, JAO no. 1) adding more amenities/services until the required
number of volunteers is met.
9.2 To ensure that PWDs and senior citizens shall have equal
access to air transportation services, air carriers shall at all times
and in all instances adhere to the mandate of Batas Pambansa
Blg. 344, otherwise known as An Act to Enhance the Mobility of 10.2 Government agencies and/or officials wanting to acquire
Disabled Persons by Requiring Certain Buildings, Institutions, aircraft space for official government purposes shall submit a
Establishments and Public Utilities to Install Facilities and Other written request justifying the requisition to the CAB, which shall
Devices, the provisions of the Expanded Senior Citizens Act of then make the request to the air carrier concerned, detailing:
2010, and other related laws. Accordingly, an air carrier shall (a) The number, identities, and affiliation of the persons
designate at least one (1) check-in counter which will prioritize requesting for space;
PWDs, senior citizens, and persons requiring special assistance (b) The date and time (if applicable) of the flight; and
or handling. If this is not practicable, the air carrier shall instead (c) The destination.
provide for priority handling and processing of such passengers.
The air carrier shall likewise coordinate with the appropriate Should government requisition result in passengers having to
authorities for the use of proper airport equipment, entryways, forego their confirmed space, the air carrier shall look for
and/or aerobridges, as the case may be, when the same are volunteers in accordance with Section 10.1.
available, to facilitate transactions, movement, boarding, and/or
disembarkation of PWDs, senior citizens, and/or persons Provided, that the air carrier shall have the right to claim from the
requiring special equipment, at the airport. requesting government entity the full-fare value of the seats
requisitioned by the latter.
Persons accompanying a PWD, a senior citizen, or a person
requiring special assistance or handling should also be
- The settling of compensation for passengers
accommodated at the designated check-in counter mentioned in
the preceding paragraph. It is the duty of an air carrier or its pursuant to this Section shall not be an excuse for
authorized agent to inform its passengers if additional costs will the undue delay of the flight’s ETD. (Sec. 10. 3,
be incurred for the use of facilities designed for passengers JAO no. 1)
needing special assistance in airports located in other countries.
It is the responsibility of a PWD to declare his/her need for RIGHT TO COMPENSATION

special assistance or handling to the airline, upon booking
his/her flight. If the PWD fails to do so, the airline may not be
held liable for any services it was not able to provide the Right to Compensation and Amenities in Case of
passenger and/or for any additional costs incurred for the use of Cancellation of Flight:
special assistance facilities.
11.1 In case of flight cancellation attributable to the carrier, a
passenger shall have the right to:
Right to Board Aircraft for the purpose of Flight: (a) Be notified beforehand via public announcement,
written/published notice and flight status update
- A passenger checked in for a particular flight has
service (text);
the right to board the aircraft for the purpose of (b) Be provided with the following, if he/she is already at
flight, except when there is legal or other valid the airport at the time of the announcement of the
cause, such as, but not limited to, immigration flight cancellation: sufficient refreshments or meals
issues, safety and security, health concerns, non- (e.g. snacks consisting of at least a bottle of water and
appearance at the boarding gate at the appointed a sandwich, or breakfast, lunch, or dinner, or a voucher
boarding time, or government requisition of space for the same, as the case may be); hotel
as provided for in Section 10.2. Other than these accommodation (conveniently accessible from the
airport); transportation from the airport to the hotel,
causes, no passenger may be denied boarding v.v.; free phone calls, text or e-mails, and first aid, if
without his/her consent. (Sec. 10, JAO no. 1) necessary; and
(c) Reimbursement of the value of the fare, including taxes
and surcharges, of the sector cancelled, or both/all
10.1 While it is an accepted practice for an air carrier to
sectors, in case the passenger decides not to fly the
overbook its flights, any expense, consequence, or
ticket or all the routes/sectors; or
inconvenience caused to affected passengers must be borne by
(d) Be endorsed to another air carrier without paying any
the air carrier, as follows:
fare difference, at the option of the passenger, and
(a) The air carrier shall determine the number of
provided that space and other circumstances permit
passengers in excess of the actual seat capacity of the
such re-accommodation; or
aircraft.
(e) Rebook the ticket, without additional charge, to the
(b) The air carrier shall announce that the flight is
next flight with available space, or, within thirty (30)
overbooked, and that it is looking for volunteers willing
days, to a future trip within the period of validity of the


TRANSPORTATION LAW
Morillo Notes
liquidated damages for all damages incurred by the
ticket. However, for rebooking made in excess of the
aforementioned thirty (30) days for a trip likewise within passenger as a result of the air carrier’s failure to
the validity of the ticket, fees and/or fare difference provide the passenger with a confirmed reserved
shall apply. seat.
Provided, that in case a carrier cancels a flight at least twenty-
four (24) hours before the ETD, it shall not be liable for the Provided that, while a confirmed reservation is
foregoing amenities, except, it shall be obliged to notify the necessary to make a passenger eligible for
passenger, and, in accordance with the preceding provisions, to compensation, a written confirmation issued by the
rebook or reimburse the passenger, at the option of the latter.
air carrier or its authorized agent qualifies the
passenger in this regard, even if the air carrier
- In case the air carrier cancels the flight because of cannot find the reservation in the electronic
force majeure, safety and/or security reasons, as records, as long as the passenger did not cancel
certified by the Civil Aviation Authority of the the reservation or miss a reconfirmation deadline.
Philippines, a passenger shall have the right to be (Sec. 13, JAO no. 1)
reimbursed for the full value of the fare. (Sec. 11.2,
JAO no.1) Right to Compensation for Delayed, Lost, and Damaged
- The provisions of this Section shall be the minimum Baggage:
entitlement of a passenger in case of cancellation, - A passenger shall have the right to have his/her
and shall not prohibit the air carrier from granting baggage carried on the same flight that such
more favourable conditions or recourses, as it may passenger takes, subject to considerations of
deem appropriate. (Sec. 11, 3, JAO no. 1) safety, security, or any other legal and valid cause.
(Sec. 14, JAO no. 1)
Right to Compensation and Amenities in case of Flight - In case a checked-in baggage has been off-loaded
Delay and Exceptions Thereto: for operational, safety, or security reasons, the air
carrier shall inform the passenger at the soonest
12.1 In case of Terminal Delay of at least three (3) hours after the
practicable time and in such manner that the
ETD, whether or not such is attributable to the carrier, a
passenger shall have the right to: passenger will readily know of the off-loading (i.e.
(a) Be provided with refreshments or meals (sufficient that his/her baggage has been off-loaded and the
snacks, breakfast, lunch, or dinner, as the case may reason therefor). If the passenger’s baggage has
be), free phone calls, text or e-mails, and first aid, if been off-loaded, the air carrier should make the
necessary; and appropriate report and give the passenger a copy
(b) Rebook or refund his/her ticket in accordance with the thereof, even if it had already announced that the
preceding Section or be endorsed to another carrier, in baggage would be on the next flight.
accordance with the preceding Section.
- The air carrier shall carry the off-loaded baggage in
the next flight with available space, and deliver the
same to the passenger either personally or at
12.2 In case such Terminal Delay extends to at least six (6) hours
after the ETD for causes attributable to the carrier, it shall be
his/her residence. For every twenty-four (24) hours
deemed cancelled for the purpose of making available to the of delay in such delivery, the air carrier shall tender
passenger the rights and amenities required to be provided in an amount of Two Thousand Pesos (Php2,000.00)
case of actual cancellation, as provided for in Section 11.1; and to the passenger, as compensation for the
in addition, an affected passenger shall be given the following: inconvenience the latter experienced. A fraction of
(a) Additional compensation equivalent to at least the a day shall be considered as one day for purposes
value of the sector delayed or deemed cancelled to be of calculating the compensation. For the purposes
paid in the form of cash or voucher, at the discretion of
of this section, the twenty four (24)-hour period
the air carrier; and
(b) The right to board the flight if it takes place more than
shall commence one (1) hour from the arrival of the
six (6) hours after the ETD and the affected passenger flight of the passenger carrying such baggage.
has not opted to rebook and/or refund. For this (Sec. 14.1, JAO no. 1)
purpose, the air carrier is obliged to exert all efforts to
14.2 Should such baggage, whether carried on the same or a
contact the passenger for the flight.
later flight, be lost or suffer any damage attributable to the air
carrier, the passenger shall be compensated in the following
- A passenger shall likewise have the right to be manner:
(a) For international flights, the relevant convention shall
provided with sufficient food and beverage, in
apply.
cases of Tarmac Delay of at least two (2) hours (b) For domestic flights, upon proof, a maximum amount
after the ETD, reckoned from the closing of the equivalent to half of the amount in the relevant
aircraft doors, or when the aircraft is at the gate convention (for international flights) in its Peso
with the doors still open but passengers are not equivalent.
allowed to deplane. (Sec. 12.3, JAO no. 1)
- The provisions of this Section shall be the minimum
- For compensation purposes, a passenger’s
entitlement of a passenger in case of delay and
baggage is presumed to have been permanently
shall not prohibit the air carrier from granting more
and totally lost, if within a period of 7 days,
favourable conditions or recourses, as it may deem
counted from the time the passenger or consignee
appropriate. (Sec. 12.4, JAO no. 1)
should have received the same, the baggage is not
delivered to said passenger or consignee. (Sec.
Compensation under Sec. 10 as Liquidated Damages:
14.3, JAO no. 1)
- The compensation provided in Section 10, if
accepted by the passenger, shall constitute

TRANSPORTATION LAW
Morillo Notes
Right to Compensation in Case of Death or Bodily Injury between the passenger and the air carrier”. (Sec. 9,
of a Passenger: RA 6235)
- For international flights, in case of death or bodily
injury sustained by a passenger, the relevant Instances where the Director General of CAAP may
Convention and inter-carrier agreement shall apply. detain a Civil Aircraft:
However, for an international carriage performed 1. The aircraft may not be airworthy; or
under the 1966 Montreal Inter-Carrier Agreement, 2. The airman may not be qualified or physically pr
which includes a point in the United States of mentally capable for the flight; or
America as a point of origin, a point of destination 3. The operation would cause imminent danger to
or agreed stopping place, the limit of liability for persons or property on the ground (Sec. 39, RA
each passenger for death, wounding or other 9497)
bodily injury shall be the sum of Seventy-Five
Thousand United States Dollars (US$75,000.00),
SALUDO vs. CA
inclusive of legal fees and costs. Provided, in the GR no. 95536, March 23, 1992
case of a claim brought in a state where a provision
is made for a separate award for legal fees and It is the right of the carrier to require good faith on the part of
costs, the limit shall be the sum of Fifty-Eight those persons who deliver goods to be carried, or enter into
Thousand United States Dollars (US$58,000.00), contracts with it, and inasmuch as the freight may depend on the
exclusive of legal fees and costs. value of the article to be carried, the carrier ordinarily has the
- For domestic flights, the compensation shall be right to inquire as to its value. Ordinarily, too, it is the duty of the
carrier to make inquiry as to the general nature of the articles
based on the stipulated amount in the relevant
shipped and of their value before it consents to carry them; and
convention which governs international flights, the its failure to do so cannot defeat the shipper's right to recovery
same to be given in Peso denominations. (Sec. 15, of the full value of the package if lost, in the absence of showing
JAO no. 1) of fraud or deceit on the part of the shipper. In the absence of
more definite information, the carrier has a the right to accept
Right to immediate Payment of Compensation: shipper's marks as to the contents of the package offered for
- An air carrier liable for any and all compensations transportation and is not bound to inquire particularly about them
provided by these rules shall make the same in order to take advantage of a false classification and where a
shipper expressly represents the contents of a package to be of
available to the affected passenger at the air
a designated character, it is not the duty of the carrier to ask for
carrier’s counters at the airport on the date when a repetition of the statement nor disbelieve it and open the box
the occasion entitling the passenger to and see for itself. However, where a common carrier has
compensation occurred, or at the main office or reasonable ground to suspect that the offered goods are of a
any branch of the air carrier at the discretion of the dangerous or illegal character, the carrier has the right to know
passenger. The air carrier shall tender a check for the character of such goods and to insist on an inspection, if
the amount specified, or cash, or the document reasonable and practical under the circumstances, as a condition
necessary to claim the compensation or benefits of receiving and transporting such goods.
mentioned above; Provided, that such document
It can safely be said then that a common carrier is entitled to fair
shall be convertible to cash within fifteen (15) days representation of the nature and value of the goods to be carried,
from the date when the occasion entitling the with the concomitant right to rely thereon, and further noting at
passenger to such compensation occurred. (Sec. this juncture that a carrier has no obligation to inquire into the
16, JAO no. 1) correctness or sufficiency of such information. The consequent
duty to conduct an inspection thereof arises in the event that
there should be reason to doubt the veracity of such
INSPECTION OF AIRCRAFT AND CARGO representations. Therefore, to be subjected to unusual search,
[mandated by RA 6235] other than the routinary inspection procedure customarily
undertaken, there must exist proof that would justify cause for
apprehension that the baggage is dangerous as to warrant
INSPECTION OF AIRCRAFT AND CARGO: exhaustive inspection, or even refusal to accept carriage of the
- Air companies which operate as public utilities or same; and it is the failure of the carrier to act accordingly in the
operators of aircraft which are for hire are face of such proof that constitutes the basis of the common
authorized to open and investigate suspicious carrier's liability.
packages and cargoes in the presence of the
owner or shipper, or his authorized representatives
if present; in order to help the authorities in the
enforcement of the provisions of RA 6235. If the
owner, shipper or his representative refuses to THE WARSAW CONVENTION AND
have the same opened and inspected, the airline or MONTREAL CONVENTION (1999)
air carrier is authorized to refuse the loading
thereof. (Sec. 8, RA. 6235)
- Every ticket issued to a passenger by the airline or
air carrier concerned shall contain among others THE WARSAW CONVENTION
the following condition printed: “Holder hereof and
his hand-carried luggage(s) are subject to search
for, and seizure of, prohibited materials or BINDING EFFECT/COVERAGE:
substances. A holder who refuses to be seached - The Warsaw Convention applies to all international
shall not be allowed to board the aircraft and such transport of persons, baggage or goods performed
condition shall constitute a part of the contract by an aircraft gratuitously pr for hire.


TRANSPORTATION LAW
Morillo Notes
PURPOSES:
unless the consignor has made, at the time when the package
- The Warsaw Convention seeks to accommodate or was handed over to the carrier, a special declaration of the value
balance the interests of passengers seeking at delivery and has paid a supplementary sum if the case so
recovery for personal injuries and the interests of requires. In that case the carrier will be liable to pay a sum not
air carriers seeking to limit potential liability. It exceeding the declared sum, unless he proves that that sum is
employs a scheme of strict liability favoring greater than the actual value to the consignor at delivery.
passengers and imposing damage caps to benefit
air carriers. (3) As regards objects of which the passenger takes charge
himself the liability of the carrier is limited to 5,000 francs per
- The cardinal purpose of the Warsaw Convention is
passenger.
to provide uniformity of rules governing claims
arising from international air travel; thus, it (4) The sums mentioned above shall be deemed to refer to the
precludes a passenger from maintaining an action French franc consisting of 65 ½ milligrams gold of millesimal
for personal injury damages under local law when fineness 900. These sums may be converted into any national
his or her claim does not satisfy the conditions of currency in round figures.
liability under the Convention. (PAL vs. Savillo, GR
no. 149547, July 4, 2008)
The Convention purports to limit the liability of the
carriers in the following manner:
CONSTITUTIONALITY OF THE WARSAW CONVENTION:
- The treaty which is the subject matter of this ALITALIA vs. IAC
petition was a joint legislative-executive act. The GR no. 71929, December 4, 1990
presumption is that it was first carefully studied and
The Convention also purports to limit the liability of the carrier in
determined to be constitutional before it was
the following manner:
adopted and given the force of law in this country. 1. In the carriage of passengers the liability of the carrier
(Santos III vs. Northwest Orient Airlines, GR no. for each passenger is limited to the sum of 250,000
101538, June 23, 1992) francs. *** Nevertheless, by special contract, the
carrier and the passenger may agree to a higher limit
INSTANCES OF LIABILITY FOR INTERNATIONAL AIR of liability.
TRANSPORTATION: 2. a) In the carriage of registered baggage and of cargo,
the liability of the carrier is limited to a sum of 250
ART. 17: The carrier is liable for damage sustained in the event francs per kilogramme, unless the passenger or
of the death or wounding of a passenger or any other bodily consignor has made, at the time when the package
injury suffered by a passenger, if the accident which caused the was handed over to the carrier, a special declaration of
damage so sustained took place on board the aircraft or in the interest in delivery at destination and has paid a
course of any of the operations of embarking or disembarking. supplementary sum if the case so requires. In that
case the carrier, will be liable to pay a sum not
ART. 18: (1) The carrier is liable for damage sustained in the exceeding the declared sum, unless he proves that
event of the destruction or loss of, or of damage to, any that sum is greater than the actual value to the
registered luggage or any goods, if the occurrence which caused consignor at delivery.
the damage so sustained took place during the carriage by air.
b) In the case of loss, damage or delay of part of
(2) The carriage by air within the meaning of the preceding registered baggage or cargo, or of any object
paragraph comprises the period during which the luggage or contained therein, the weight to be taken into
goods are in charge of the carrier, whether in an aerodrome or on consideration in determining the amount to which the
board an aircraft, or, in the case of a landing outside an carrier's liability is limited shall be only the total weight
aerodrome, in any place whatsoever. of the package or packages concerned. Nevertheless,
when the loss, damage or delay of a part of the
(3) The period of the carriage by air does not extend to any registered baggage or cargo, or of an object contained
carriage by land, by sea or by river performed outside an therein, affects the value of other packages covered by
aerodrome. If, however, such a carriage takes place in the the same baggage check or the same air waybill, the
performance of a contract for carriage by air, for the purpose of total weight of such package or packages shall also be
loading, delivery or transshipment, any damage is presumed, taken into consideration in determining the limit of
subject to proof to the contrary, to have been the result of an liability.
event which took place during the carriage by air. 3. As regards objects of which the passenger takes
charge himself the liability of the carrier is limited to
ART. 19: The carrier is liable for damage occasioned by delay in 5000 francs per passenger.
the carriage by air of passengers, luggage or goods. 4. The limits prescribed ** shall not prevent the court from
awarding, in accordance with its own law, in addition,
the whole or part of the court costs and of the other
Limitations for Action for Damages covered by the expenses of litigation incurred by the plaintiff. The
above-quoted provisions: foregoing provision shall not apply if the amount of the
damages awarded, excluding court costs and other
ART. 22: (1) In the carriage of passengers the liability of the expenses of the litigation, does not exceed the sum
carrier for each passenger is limited to the sum of 125,000 which the carrier has offered in writing to the plaintiff
francs. Where, in accordance with the law of the Court seised of within a period of six months from the date of the
the case, damages may be awarded in the form of periodical occurrence causing the damage, or before the
payments, the equivalent capital value of the said payments shall commencement of the action, if that is later.
not exceed 125,000 francs. Nevertheless, by special contract,
the carrier and the passenger may agree to a higher limit of
liability. MEANING OF INTERNATIONAL TRANSPORTATION:
1. The place of departure and the place of destination
(2) In the carriage of registered luggage and of goods, the liability
are within the territories of two contracting
of the carrier is limited to a sum of 250 francs per kilogram,

TRANSPORTATION LAW
Morillo Notes
countries regardless of whether or not there was a application of the Civil Code and other pertinent
break in the transportation or transshipment; local laws.
2. The place of departure and the place of destination - Hence, a complaint for quasi-delict can still be filed
are within the territory of a single contracting even if the filing is beyond the prescriptive period
country if there is an agreed stopping place within provided for under the Convention so long as it is
a territory subject to the sovereignty, mandate or within the prescriptive period of 4 years under the
authority of another power, even though the power Civil Code.
is not a party to the Convention. (Mapa vs. CA, GR
no. 122308, july 8, 1997)
ALITALIA vs. IAC
GR no. 71929, Dec. 4, 1990
WHEN INTERNATIONAL CARRIER IS LIABLE: The carrier
is liable if the passenger’s injury was inflicted: The [Warsaw] Convention does not thus operate as an exclusive
1. On board the aircraft; or enumeration of the instances of an airline's liability, or as an
2. In the course of any of the operations of absolute limit of the extent of that liability. Such a proposition is
embarking; or not borne out by the language of the Convention, as this Court
3. In the course of disembarking; or has now, and at an earlier time, pointed out. Moreover, slight
reflection readily leads to the conclusion that it should be
4. When there was or because of delay.
deemed a limit of liability only in those cases where the cause of
5. In case of baggage or goods that are checked in, the death or injury to person, or destruction, loss or damage to
the carrier liable if damage occurs during air property or delay in its transport is not attributable to or attended
transportation or when there is delayed. (Sec. 17- by any wilful misconduct, bad faith, recklessness, or otherwise
19, Warsaw Convention) improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special
LIMIT OF LIABILITY: or extraordinary form of resulting injury. The Convention's
- The liability of the carrier for injuries to passengers provisions, in short, do not "regulate or exclude liability for other
breaches of contract by the carrier" or misconduct of its officers
under Warsaw Convention is 250,000 francs.
and employees, or for some particular or exceptional type of
However, by special contract, the carrier and the damage.
passenger may agree to a higher limit of liability.
(Alitalia vs IAC, GR no. 71929, December 4, 1990)
- In case of registered baggage and cargoes → the UNITED AIRLINES vs. UY
limit of liability is 250 francs per kilogramme. GR no. 127768, November 19, 1999
- If the passenger or consignor has made, at the time
when the package was handed over to the carrier, Within our jurisdiction we have held that the Warsaw Convention
a special declaration of interest in delivery at can be applied, or ignored, depending on the peculiar facts
destination and has paid a supplementary sum if presented by each case. Thus, we have ruled that the
the case so requires, the carrier will be liable to pay Convention's provisions do not regulate or exclude liability for
other breaches of contract by the carrier or misconduct of its
a sum not exceeding the declared sum, unless he
officers and employees, or for some particular or exceptional
proves that sum is greater than the actual value to type of damage. Neither may the Convention be invoked to
the consignor at delivery. justify the disregard of some extraordinary sort of damage
- If case of objects that the passenger takes charge resulting to a passenger and preclude recovery therefor beyond
himself, the limit of liability is 5,000 francs per the limits set by said Convention. Likewise, we have held that the
passenger. Convention does not preclude the operation of the Civil Code
and other pertinent laws. It does not regulate, much less exempt,
Tariff Limitations: the carrier from liability for damages for violating the rights of its
passengers under the contract of carriage, especially if willful
- An air carrier is not liable for the loss of baggage in
misconduct on the part of the carrier's employees is found or
an amount in excess of the limits specified in the established
tariff which was filed with the proper authorities,
such tariff being binding on the passenger
regardless of the passenger's lack of knowledge PAL vs. SAVILLO
thereof or assent thereto. This doctrine is GR no. 149547, July 4, 2008
recognized in this jurisdiction. (British Airways vs.
CA, GR no. 121824, January 29, 1998) In United Airlines v. Uy, this Court distinguished between the (1)
damage to the passenger’s baggage and (2) humiliation he
DEFENSES AGAINST LIMIT OF LIABILITY (WHEN LIMIT suffered at the hands of the airline’s employees. The first cause
OF LIABILITY IS NOT APPLICABLE): of action was covered by the Warsaw Convention which
prescribes in two years, while the second was covered by the
1. In case of willful misconduct,
provisions of the Civil Code on torts, which prescribes in four
2. Gross negligence; years.
3. Absence of baggage check;
4. If there was waiver on the part of the carrier; and Similar distinctions were made in American jurisprudence. In
5. If the carrier is estopped from invoking the Mahaney v. Air France, a passenger was denied access to an
provision on limit of liability. airline flight between New York and Mexico, despite the fact that
she held a confirmed reservation. The court therein ruled that if
TORT LIABILITY: the plaintiff were to claim damages based solely on the delay she
experienced – for instance, the costs of renting a van, which she
- The Warsaw Convention does not provide for an
had to arrange on her own as a consequence of the delay – the
exclusive enumeration of instances when the complaint would be barred by the two-year statute of limitations.
carrier is liable. It does not provide for an absolute However, where the plaintiff alleged that the airlines subjected
limit of liability and it does not preclude the her to unjust discrimination or undue or unreasonable preference


TRANSPORTATION LAW
Morillo Notes
or disadvantage, an act punishable under the United States laws, confrontation with the flight attendant during an international
then the plaintiff may claim purely nominal compensatory flight to Mexico. The United States Court of Appeals (9th Circuit)
damages for humiliation and hurt feelings, which are not held that the "Warsaw Convention governs actions arising from
provided for by the Warsaw Convention. In another case, Wolgel international air travel and provides the exclusive remedy for
v. Mexicana Airlines, the court pronounced that actions for conduct which falls within its provisions." It further held that the
damages for the "bumping off" itself, rather than the incidental said Convention "created no exception for an injury suffered as a
damages due to the delay, fall outside the Warsaw Convention result of intentional conduct" which in that case involved a claim
and do not prescribe in two years. for intentional infliction of emotional distress.
It is thus settled that allegations of tortious conduct committed

VENUE OF ACTION: The plaintiff must bring the action for against an airline passenger during the course of the international
damages before: carriage do not bring the case outside the ambit of the Warsaw
1. the court where the carrier is domiciled; Convention. (Luiller vs. British Airways, Supra)
2. the court where the carrier has its principal place of
business;
NOTICE OF CLAIM OR COMPLAINT:
3. the court where the carrier has an establishment by
which the contract has been made; or ART. 26: (1) Receipt by the person entitled to delivery of luggage
4. the court of the place of destination. (Art. 28(1), or goods without complaint is prima facie evidence that the same
Warsaw Convention) have been delivered in good condition and in accordance with
the document of carriage.
LUILLER vs. BRITISH AIRWAYS (2) In the case of damage, the person entitled to delivery must
GR no. 171092, March 15, 2010 complain to the carrier forthwith after the discovery of the
damage, and, at the latest, within three days from the date of
A number of reasons tends to support the characterization of receipt in the case of luggage and seven days from the date of
Article 28(1) as a jurisdiction and not a venue provision. First, the receipt in the case of goods. In the case of delay the complaint
wording of Article 32, which indicates the places where the must be made at the latest within fourteen days from the date on
action for damages "must" be brought, underscores the which the luggage or goods have been placed at his disposal.
mandatory nature of Article 28(1). Second, this characterization is
consistent with one of the objectives of the Convention, which is (3) Every complaint must be made in writing upon the document
to "regulate in a uniform manner the conditions of international of carriage or by separate notice in writing despatched within the
transportation by air." Third, the Convention does not contain times aforesaid.
any provision prescribing rules of jurisdiction other than Article
28(1), which means that the phrase "rules as to jurisdiction" used (4) Failing complaint within the times aforesaid, no action shall lie
in Article 32 must refer only to Article 28(1). In fact, the last against the carrier, save in the case of fraud on his part.
sentence of Article 32 specifically deals with the exclusive
enumeration in Article 28(1) as "jurisdictions," which, as such,
cannot be left to the will of the parties regardless of the time When notice of claim or complaint is not applicable:
when the damage occurred. - The requirement that there is a notice of claim
within the given period is not applicable if there is
xxxx fraud on the part of the carrier.
- In addition, the failure on the part of the passenger
In other words, where the matter is governed by the Warsaw to file a notice of claim within the prescribed period
Convention, jurisdiction takes on a dual concept. Jurisdiction in
is also excused if such delay can be attributed to
the international sense must be established in accordance with
Article 28(1) of the Warsaw Convention, following which the the acts or omissions of the carrier. This includes
jurisdiction of a particular court must be established pursuant to situations when the carrier prevented the
the applicable domestic law. Only after the question of which performance of the obligation as provided for
court has jurisdiction is determined will the issue of venue be under Art. 1186, NCC ( PAL vs. CA & Mejia, GR no.
taken up. This second question shall be governed by the law of 119706, March 14, 1996)
the court to which the case is submitted.
PRESCRIPTION:
The filing of the case in the proper venues provided for ART. 29: (1) The right to damages shall be extinguished if an
under Art. 28(1) of the Warsaw Convention is still action is not brought within two years, reckoned from the date of
required even if there are allegations of tortious conduct arrival at the destination, or from the date on which the aircraft
committed against as airline passenger during the ought to have arrived, or from the date on which the carriage
stopped.
course of the international carriage:
Relevant to this particular issue is the case of Carey v. United (2) The method of calculating the period of limitation shall be
Airlines, where the passenger filed an action against the airline determined by the law of the Court seised of the case.
arising from an incident involving the former and the airline’s
flight attendant during an international flight resulting to a heated
exchange which included insults and profanity. The United Not Applicable to Other Causes of Action:
States Court of Appeals (9th Circuit) held that the "passenger's - The two-year prescriptive period does not apply if
action against the airline carrier arising from alleged the cause of action is based on quasi-delict.
confrontational incident between passenger and flight attendant (United Airlines vs. Uy, GR no. 127768, November
on international flight was governed exclusively by the Warsaw 19, 1999)
Convention, even though the incident allegedly involved
intentional misconduct by the flight attendant.”
SUCCESSIVE CARRIERS:
In Bloom v. Alaska Airlines, the passenger brought nine causes - Transportation to be performed by several
of action against the airline in the state court, arising from a successive carriers shall be deemed, for the
purposes of this (warsaw) convention, to be one

TRANSPORTATION LAW
Morillo Notes
undivided transportation, if it has been regarded by
a luggage ticket having been delivered, or if the luggage ticket
the parties as a single operation, whether it has does not contain the particulars set out at (d), (f) and (h) above,
been agreed upon under the form of a single the carrier shall not be entitled to avail himself of those
contract or a series of contracts, and it shall not provisions of the Convention which exclude or limit his liability.
lose its international character merely because one
contractor series of contracts is to be performed
entirely within the territory subject of the Air Waybill/Air Consignment Note
sovereignty, suzerainty, mandate or authority of the
same high contracting party. (Art. 1(3), Warsaw ARTICLE 5: (1) Every carrier of goods has the right to require the
Convention) consignor to make out and hand over to him a document called
an "air consignment note"; every consignor has the right to
require the carrier to accept this document.
LIABILITY OF AGENT:
- The fact that a successive carrier is considered an (2) The absence, irregularity or loss of this document does not
agent does not necessarily excuse the agent from affect the existence or the validity of the contract of carriage
liability. The agent is liable for its own negligent which shall, subject to the provisions of Article 9, be none the
acts or omission in the performance of its duties. less governed by the rules of this Convention.
(British Airways vs. CA, GR no. 121824, January
29, 1998) ARTICLE 6: (1) The air consignment note shall be made out by
the consignor in three original parts and be handed over with the
goods.
FORMALITIES:
Passenger Ticket (2) The first part shall be marked "for the carrier," and shall be
signed by the consignor. The second part shall be marked "for
ARTICLE 3: (1) For the carriage of passengers the carrier must the consignee"; it shall be signed by the consignor and by the
deliver a passenger ticket which shall contain the following carrier and shall accompany the goods. The third part shall be
particulars: signed by the carrier and handed by him to the consignor after
a. The place and date of issue; the goods have been accepted.
b. The place of departure and of destination;
c. The agreed stopping places, provided that the carrier (3) The carrier shall sign on acceptance of the goods.
may reserve the right to alter the stopping places in
case of necessity, and that if he exercises that right, (4) The signature of the carrier may be stamped; that of the
the alteration shall not have the effect of depriving the consignor may be printed or stamped.
carriage of its international character;
d. The name and address of the carrier or carriers; (5) If, at the request of the consignor, the carrier makes out the
e. A statement that the carriage is subject to the rules air consignment note, he shall be deemed, subject to proof to
relating to liability established by this Convention. the contrary, to have done so on behalf of the consignor.
(2) The absence, irregularity or loss of the passenger ticket does ARTICLE 7: The carrier of goods has the right to require the
not affect the existence or the validity of the contract of carriage, consignor to make out separate consignment notes when there
which shall none the less be subject to the rules of this is more than one package.
Convention. Nevertheless, if the carrier accepts a passenger
without a passenger ticket having been delivered he shall not be ARTICLE 8: The air consignment note shall contain the following
entitled to avail himself of those provisions of this Convention particulars:
which exclude or limit his liability. (a) The place and date of its execution;
(b) The place of departure and of destination;
(c) The agreed stopping places, provided that the carrier
may reserve the right to alter the stopping places in
Baggage Check
case of necessity, and that if he exercises that right
the alteration shall not have the effect of depriving the
ARTICLE 4: (1) For the carriage of luggage, other than small
carriage of its international character;
personal objects of which the passenger takes charge himself,
(d) The name and address of the consignor;
the carrier must deliver a luggage ticket.
(e) The name and address of the first carrier;
(f) The name and address of the consignee, if the case so
(2) The luggage ticket shall be made out in duplicate, one part for
requires;
the passenger and the other part for the carrier.
(g) The nature of the goods;
(h) The number of the packages, the method of packing
(3) The luggage ticket shall contain the following particulars:
and the particular marks or numbers upon them;
a. The place and date of issue;
(i) The weight, the quantity and the volume or dimensions
b. The place of departure and of destination;
of the goods;
c. The name and address of the carrier or carriers;
(j) The apparent condition of the goods and of the
d. The number of the passenger ticket;
packing;
e. A statement that delivery of the luggage will be made
(k) The freight, if it has been agreed upon, the date and
to the bearer of the luggage ticket;
place of payment, and the person who is to pay it;
f. The number and weight of the packages;
(l) If the goods are sent for payment on delivery, the price
g. The amount of the value declared in accordance with
of the goods, and, if the case so requires, the amount
Article 22(2);
of the expenses incurred;
h. A statement that the carriage is subject to the rules
(m) The amount of the value declared in accordance with
relating to liability established by this Convention.
Article 22 (2);
(n) The number of parts of the air consignment note;
(4) The absence, irregularity or loss of the luggage ticket does
(o) The documents handed to the carrier to accompany
not affect the existence or the validity of the contract of carriage,
the air consignment note;
which shall none the less be subject to the rules of this
(p) The time fixed for the completion of the carriage and a
Convention. Nevertheless, if the carrier accepts luggage without
brief note of the route to be followed, if these matters


TRANSPORTATION LAW
Morillo Notes
have been agreed upon;
(q) A statement that the carriage is subject to the rules (3) If the carrier admits the loss of the goods, or if the goods have
relating to liability established by this Convention not arrived at the expiration of seven days after the date on
which they ought to have arrived, the consignee is entitled to put
ARTICLE 9: If the carrier accepts goods without an air into force against the carrier the rights which flow from the
consignment note having been made out, or if the air contract of carriage.
consignment note does not contain all the particulars set out in
Article 8(a) to (i) inclusive and (q), the carrier shall not be entitled ARTICLE 14: The consignor and the consignee can respectively
to avail himself of the provisions of this Convention which enforce all the rights given them by Articles 12 and 13, each in
exclude or limit his liability. his own name, whether he is acting in his own interest or in the
interest of another, provided that he carries out the obligations
ARTICLE 10: (1) The consignor is responsible for the correctness imposed by the contract.
of the particulars and statements relating to the goods which he
inserts in the air consignment note. ARTICLE 15: (1) Articles 12, 13 and 14 do not affect either the
relations of the consignor or the consignee with each other or the
(2) The consignor will be liable for all damage suffered by the mutual relations of third parties whose rights are derived either
carrier or any other person by reason of the irregularity, from the consignor or from the consignee.
incorrectness or incompleteness of the said particulars and
statements. (2) The provisions of Articles 12, 13 and 14 can only be varied by
express provision in the air consignment note.
ARTICLE 11: (1) The air consignment note is prima facie
evidence of the conclusion of the contract, of the receipt of the ARTICLE 16: (1) The consignor must furnish such information
goods and of the conditions of carriage. and attach to the air consignment note such documents as are
necessary to meet the formalities of customs, octroi or police
(2) The statements in the air consignment note relating to the before the goods can be delivered to the consignee. The
weight, dimensions and packing of the goods, as well as those consignor is liable to the carrier for any damage occasioned by
relating to the number of packages, are prima facie evidence of the absence, insufficiency or irregularity of any such information
the facts stated; those relating to the quantity, volume and or documents, unless the damage is due to the fault of the
condition of the goods do not constitute evidence against the carrier or his agents.
carrier except so far as they both have been, and are stated in
the air consignment note to have been, checked by him in the (2) The carrier is under no obligation to enquire into the
presence of the consignor, or relate to the apparent condition of correctness or sufficiency of such information or documents.
the goods.
ARTICLE 12: (1) Subject to his liability to carry out all his Effect of Non-Compliance:
obligations under the contract of carriage, the consignor has the - Non compliance with the mandatory provisions on
right to dispose of the goods by withdrawing them at the formality may result in the non-application of the
aerodrome of departure or destination, or by stopping them in limit of liability. (PAL vs. CA, GR no. L-44936,
the course of the journey on any landing, or by calling for them to September 25, 1992)
be delivered at the place of destination or in the course of the
journey to a person other than the consignee named in the air
consignment note, or by requiring them to be returned to the THE MONTREAL CONVENTION
aerodrome of departure. He must not exercise this right of
disposition in such a way as to prejudice the carrier or other
consignors and he must repay any expenses occasioned by the SCOPE OF APPLICATION:
exercise of this right. - This Convention applies to all international carriage
of persons, baggage or cargo performed by aircraft
(2) If it is impossible to carry out the orders of the consignor the
carrier must so inform him forthwith.
for reward. It applies equally to gratuitous carriage
by aircraft performed by an air transport
(3) If the carrier obeys the orders of the consignor for the undertaking. (Art. 1(1), Montreal Convention)
disposition of the goods without requiring the production of the
part of the air consignment note delivered to the latter, he will be LIABILITY OF CARRIER IN CASE OF DEATH AND
liable, without prejudice to his right of recovery from the INJURY OF PASSENGERS:
consignor, for any damage which may be caused thereby to any - The carrier is liable for damage sustained in case of
person who is lawfully in possession of that part of the air
death or bodily injury of a passenger upon
consignment note.
condition only that the accident which caused the
(4) The right conferred on the consignor ceases at the moment death or injury took place on board the aircraft or in
when that of the consignee begins in accordance with Article 13. the course of any of the operations of embarking or
Nevertheless, if the consignee declines to accept the disembarking. (Art. 17(1), Montreal Convention)
consignment note or the goods, or if he cannot be - The carrier is liable for damage sustained in case of
communicated with, the consignor resumes his right of destruction or loss of, or of damage to, checked
disposition. baggage upon condition only that the event which
caused the destruction, loss or damage took place
ARTICLE 13: (1) Except in the circumstances set out in the
preceding Article, the consignee is entitled, on arrival of the
on board the aircraft or during any period within
goods at the place of destination, to require the carrier to hand which the checked baggage was in the charge of
over to him the air consignment note and to deliver the goods to the carrier. However, the carrier is not liable if and
him, on payment of the charges due and on complying with the to the extent that the damage resulted from the
conditions of carriage set out in the air consignment note. inherent defect, quality or vice of the baggage. In
the case of unchecked baggage, including
(2) Unless it is otherwise agreed, it is the duty of the carrier to personal items, the carrier is liable if the damage
give notice to the consignee as soon as the goods arrive.

TRANSPORTATION LAW
Morillo Notes
resulted from its fault or that of its servants or COMPENSATION IN CASE OF DEATH OR INJURY OF
agents. (Art. 17(2), Montreal Convention) PASSENGERS:
- If the carrier admits the loss of the checked
1. For damages arising under paragraph 1 of Article 17 not
baggage, or if the checked baggage has not exceeding 100 000 Special Drawing Rights for each
arrived at the expiration of twenty-one days after passenger, the carrier shall not be able to exclude or limit its
the date on which it ought to have arrived, the liability.
passenger is entitled to enforce against the carrier 2. The carrier shall not be liable for damages arising under
the rights which flow from the contract of carriage. paragraph 1 of Article 17 to the extent that they exceed for
(Art. 17(3), Montreal Convention) each passenger 100 000 Special Drawing Rights if the
- Unless otherwise specified, in this Convention the carrier proves that:
a. such damage was not due to the negligence or
term „baggage“ means both checked baggage and
other wrongful act or omission of the carrier or its
unchecked baggage. (Art. 17(4), Montreal servants or agents; or
Convention) b. such damage was solely due to the negligence or
other wrongful act or omission of a third party.
LIABILITY OF CARRIER IN CASE OF DAMAGE TO
CARGO:
- The carrier is liable for damage sustained in the LIMITS OF LIABILITY IN RELATION TO DELAY,
event of the destruction or loss of, or damage to, BAGGAGE AND CARGO:
cargo upon condition only that the event which - In the case of damage caused by delay as
caused the damage so sustained took place during specified in Article 19 in the carriage of persons,
the carriage by air. (Art. 18(1), Montreal Convention) the liability of the carrier for each passenger is
- limited to 4 150 Special Drawing Rights. (Art. 22(1),
Montreal Convention)
When Carrier is not liable: The carrier is not liable if and to - In the carriage of baggage, the liability of the carrier
the extent it proves that the destruction, or loss of, or in the case of destruction, loss, damage or delay is
damage to, the cargo resulted from one or more of the limited to 1 000 Special Drawing Rights for each
following: passenger unless the passenger has made, at the
1. inherent defect, quality or vice of that cargo; time when the checked baggage was handed over
2. defective packing of that cargo performed by a to the carrier, a special declaration of interest in
person other than the carrier or its servants or delivery at destination and has paid a
agents; supplementary sum if the case so requires. In that
3. an act of war or an armed conflict; case the carrier will be liable to pay a sum not
4. an act of public authority carried out in connection exceeding the declared sum, unless it proves that
with the entry, exit or transit of the cargo. (Art. the sum is greater than the passenger’s actual
18(2), Montreal Convention) interest in delivery at destination. (Art. 22(2),
Montreal Convention)
LIABILITY OF CARRIER IN CASE OF DELAY: - In the carriage of cargo, the liability of the carrier in
- The carrier is liable for damage occasioned by the case of destruction, loss, damage or delay is
delay in the carriage by air of passengers, baggage limited to a sum of 17 Special Drawing Rights per
or cargo. Nevertheless, the carrier shall not be kilogramme, unless the consignor has made, at the
liable for damage occasioned by delay if it proves time when the package was handed over to the
that it and its servants and agents took all carrier, a special declaration of interest in delivery
measures that could reasonably be required to at destination and has paid a supplementary sum if
avoid the damage or that it was impossible for it or the case so requires. In that case the carrier will be
them to take such measures. (Art. 19, Montreal liable to pay a sum not exceeding the declared
Convention) sum, unless it proves that the sum is greater than
the consignor’s actual interest in delivery at
LIABILITY OF CARRIER IN CASE OF EXONERATION: destination. (Art. 22(3), Montreal Convention)
- If the carrier proves that the damage was caused - In the case of destruction, loss, damage or delay of
or contributed to by the negligence or other part of the cargo, or of any object contained
wrongful act or omission of the person claiming therein, the weight to be taken into consideration in
compensation, or the person from whom he or she determining the amount to which the carrier’s
derives his or her rights, the carrier shall be wholly liability is limited shall be only the total weight of
or partly exonerated from its liability to the claimant the package or packages concerned. Nevertheless,
to the extent that such negligence or wrongful act when the destruction, loss, damage or delay of a
or omission caused or contributed to the damage. part of the cargo, or of an object contained therein,
- When by reason of death or injury of a passenger affects the value of other packages covered by the
compensation is claimed by a person other than same air waybill, or the same receipt or, if they
the passenger, the carrier shall likewise be wholly were not issued, by the same record preserved by
or partly exonerated from its liability to the extent the other means referred to in paragraph 2 of
that it proves that the damage was caused or Article 4, the total weight of such package or
contributed to by the negligence or other wrongful packages shall also be taken into consideration in
act or omission of that passenger. determining the limit of liability. (Art. 22(4), Montreal
- This Article applies to all the liability provisions in Convention)
this Convention, including paragraph 1 of Article - The foregoing provisions of paragraphs 1 and 2 of
21. (Art. 20, Montreal Convention) this Article shall not apply if it is proved that the
damage resulted from an act or omission of the


TRANSPORTATION LAW
Morillo Notes
carrier, its servants or agents, done with intent to
cause damage or recklessly and with knowledge
GENERAL CONCEPTS
that damage would probably result; provided that,
in the case of such act or omission of a servant or OF MARITIME LAW
agent, it is also proved that such servant or agent
was acting within the scope of its employment.
(Art. 22(5), Montreal Convention) DEFINITION OF MARITIME LAW:
- The limits prescribed in Article 21 and in this Article - It is a system of laws which particularly relates to
shall not prevent the court from awarding, in the affairs and business of the sea, to ships, their
accordance with its own law, in addition, the whole crews and navigation, and to marine conveyance of
or part of the court costs and of the other expenses persons and property. (Francisco, Law on
of the litigation incurred by the plaintiff, including Transportation, p. 254)
interest. The foregoing provision shall not apply if - It is that system of law which particularly relates to
the amount of the damages awarded, excluding marine commerce and navigation, to business
court costs and other expenses of the litigation, transacted at sea or relating to navigation, to ships
does not exceed the sum which the carrier has and shipping, to seamen, to the transportation of
offered in writing to the plaintiff within a period of persons and property by sea and to marine affairs
six months from the date of the occurrence generally. (Black’s law Dictionary, p. 969)
causing the damage, or before the commencement
of the action, if that is later. (Art. 22(6), Montreal REAL AND HYPOTHECARY NATURE:
Convention)
YANGCO vs. LASERNA
GR no. L-47447-49, October 29, 1941
JURISDICTION:
- An action for damages must be brought, at the "That which distinguishes the maritime from the civil law and
option of the plaintiff, in the territory of one the even from the mercantile law in general is the real and
States Parties, either before the court of the hypothecary nature of the former, and the many securities of a
domicile of the carrier or of its principal place of real nature that maritime customs from time immemorial, the
business, or where it has a place of business laws, the codes, and the later jurisprudence, have provided for
through which the contract has been made or the protection of the various and conflicting interests which are
before the court at the place of destination. (Art. ventured and risked in maritime expeditions, such as the
interests of the vessel and of the agent, those of the owners of
33(1), Montreal Convention)
the cargo and consignees, those who salvage the ship, those
- In respect of damage resulting from the death or who make loans upon the cargo, those of the sailors and
injury of a passenger, an action may be brought members of the crew as to their wages, and those of a
before one of the courts mentioned in paragraph 1 constructor as to repairs made to the vessel.
of this Article, or in the territory of a State Party in
which at the time of the accident the passenger "As evidence of this real nature of the maritime law we have (1)
has his or her principal and permanent residence the limitation of the liability of the agents to the actual value of
and to or from which the carrier operates services the vessel and the freight money, and (2) the right to retain the
cargo and the embargo and detention of the vessel even in
for the carriage of passengers by air, either on its
cases where the ordinary civil law would not allow more than a
own aircraft, or on another carrier’s aircraft personal action against the debtor or person liable. It will be
pursuant to a commercial agreement, and in which observed that these rights are correlative, and naturally so,
that carrier conducts its business of carriage of because if the agent can exempt himself from liability by
passengers by air from premises leased or owned abandoning the vessel and freight money, thus avoiding the
by the carrier itself or by another carrier with which possibility of risking his whole fortune in the business, it is also
it has a commercial agreement. (Art. 33(2), just that his maritime creditor may for any reason attach the
Montreal Convention) vessel itself to secure his claim without waiting for a settlement
of his rights by a final judgment, even to the prejudice of a third
- Questions of procedure shall be governed by the
person.
law of the court seized of the case. (Art. 33(4),
Montreal Convention) "This repeals the civil law to such an extent that, in certain cases,
where the mortgaged property is lost no personal action lies
against the owner or agent of the vessel. For instance, where the
Article 55 — Relationship with other Warsaw Convention
vessel is lost the sailors and members of the crew cannot
Instruments
recover their wages; in case of collision, the liability of the agent
is limited as aforesaid, and in case of shipwreck, those who loan
This Convention shall prevail over any rules which apply to
their money on the vessel and cargo lose all their rights and
international carriage by air x x “between States Parties to this
cannot claim reimbursement under the law.
Convention by virtue of those States commonly being Party to x
x the Convention for the Unification of Certain Rules Relating to
"There are two reasons why it is impossible to do away with
International Carriage by Air Signed at Warsaw on 12 October
these privileges, to wit: (1) The risk to which the thing is exposed,
1929 (hereinafter called the Warsaw Convention);”
and (2) the real nature of the maritime law, exclusively real,
according to which the liability of the parties is limited to a thing
which is at the mercy of the waves. If the agent is only liable with
the vessel and freight money and both may be lost through the
accidents of navigation it is only just that the maritime creditor
have some means to obviating this precarious nature of his rights
PART 3: MARITIME LAW by detaining the ship, his only security, before it is lost.
"The liens, tacit or legal, which may exist upon the vessel and

TRANSPORTATION LAW
Morillo Notes
captain. (Manila Steamship vs. Abdulhaman, 100
which a purchaser of the same would be obliged to respect and
recognize are — in addition to those existing in favor of the State Phil. 32);
by virtue of the privileges which are granted to it by all the laws 2. Where the vessel is insured;
— pilot, tonnate, and port dues and other similar charges, the 3. In Workmen’s compensation claims (Abueg vs. San
wages of the crew earned during the last voyage as provided in Diego, 77 Phil. 730); and
article 646 of the Code of Commerce, salvage dues under article 4. While the total destruction of the vessel
842, the indemnification due to the captain of the vessel in case extinguishes a maritime lien, as there is no longer
his contract is terminated on account of the voluntary sale of the any risk to which it can attach, the total destruction
ship and the insolvency of the owner as provided in article 608,
of the vessel does not affect the liability of the
and all other liabilities arising from collisions under articles 837
and 838." owner for repairs of the vessel completed before its
loss. (Government of the Philippines vs. Maritime,
45 Phil. 805)
LIMITED LIABILITY RULE
PROTEST - the written statement by the master of a vessel
or any authorized officer, attested by a proper officer or a
LIMITED LIABILITY RULE (NO VESSEL, NO LIABILITY): notary, to the effect that damages has been suffered by the
- The shipowner’s or agent’s liability is merely ship. (Aquino & Hernando, p.439)
coextensive with his interest in the vessel such that
a total loss thereof results in its extinction. the total Cases where Protest is required:
destruction of the vessel extinguishes maritime 1. When the vessel makes an arrival under stress.
liens because there is no longer any res to which it (Art. 612, Code of Commerce);
can attach (Monarch Insurance vs. CA, GR nos. 2. Where the vessel is shipwrecked (Arts. 612, 624,
92735 &95578, June 8, 2000) and 843, Code of Commerce);
3. Where the vessel has gone through a hurricane or
Rationale of the Limited Liability Rule: the captain believes that the cargo has suffered
- This doctrine is based on the real and hypothecary damages or averages. (Art. 624, Code of
nature of maritime law which has its origin in the Commerce)
prevailing conditions of the maritime trade and sea 4. Maritime collision. (Art. 835, Code of Commerce)
voyages during the medieval ages, attended by
innumerable hazards and perils. To offset against ADMIRALTY JURISDICTION:
these adverse conditions and to encourage - The RTC has jurisdiction “In all actions in admiralty
shipbuilding and maritime commerce, it was and maritime jurisdiction where the demand or
deemed necessary to confine the liability of the claim exceeds P300,000.00 or, in Metro Manila,
owner or agent arising from the operation of a ship where such demand or claim exceeds
to the vessel, equipment, and freight, or insurance, P400.000.00.” (sec. 19(3), BP 129 as amended by
if any. (Monarch Insurance vs. CA, Supra) RA 7691)
- All other cases where the amount of the demand or
COVERAGE OF LIMITED LIABILITY: claim is less than the jurisdictional amount in the
- Arts. 837, 587 and 590 cover only: RTC, the jurisdiction over admiralty and maritime
- liability to third person cases are with the MTC, as the case may be.
- acts of the captain; and
- collision. (Aboitiz Shipping vs. Gen. Two Test to Determine whether a case involving a contract
Accident Fire, GR no. 100446, January 21, comes within the admiralty and jurisdiction of a court:
1993)
LOCATIONAL SUBJECT MATTER TEST
- If the shipowner or agent may in any way be held
TEST
civilly liable at all for injury to or death or
passengers arising from the negligence of the
English Rule American Rule
captain in cases of collisions or shipwrecks, his
liability is merely co-extensive with his interest in Maritime and admiralty Where the criterion whether a
the vessel such that a total loss thereof results in jurisdiction is exercised only contract is maritime depends
its extinction. (Yangco vs. Laserna, Supra) on contracts made upon the on the nature and subject
- If the vessel is co-owned, the limited liability to sea and to be executed matter of the contract, having
third persons shall be satisfied by the co-owners in thereon. reference to maritime service
accordance with Art. 590, Code of Commerce. and transaction.
SHIPOWNER ENTITLED TO LIMITED LIABILITY: Source: Crescent Petroleum vs. M/V Lok Maheshwari, GR
- It is the shipowner who is entitled to the benefit of no. 155014, November 11, 2005
limited liability. The shipowner is the very person
for whom the Limited Liability Rule has been
Note:
conceived to protect. The shipowner is the one
- In the case of International Harvester Company vs.
who is supposed to be supported and encouraged
Aragon (GR no. L-2372, August 26, 1949), the SC
to pursue maritime commerce. (Dela Torre vs. CA, adopted the American Rule and ruled that “whether
GR no. 160088, JULY 13, 2011)
or not a contract is maritime depends not on the
place where the contract is made or executed
EXCEPTIONS TO LIMITED LIABILITY: (location test) but on the subject matter of the
1. Where the injury or death to a passenger is due contract, making the criterion a maritime services
either to the fault of the shipowner. or to the or a maritime transaction.
concurring negligence of the shipowner and the


TRANSPORTATION LAW
Morillo Notes
MARINE INSURANCE: KINDS OF VESSELS:

RISK INSURED
1. Passenger Ship - a ship which carries more than
PERSONS AMOUNT OF 12 passengers;
AGAINST/ NATURE
COVERED COVERAGE OF COMPENSATION 2. Cargo Ship - any ship which is not a passenger
ship;
Passengers P200,000/00 per Death 3. Tanker - a cargo ship constructed or adapted for
passenger the carriage in bulk of liquid cargoes of an
inflammable nature;
Unmanifested P200,000.00 per Death 4. Fishing Vessel - a vessel used for catching fish,
Passengers passenger whales, seals, walrus or other living resources of
the sea;
Survivors P50,000.00 Survivorship 5. Nuclear Ship - a ship provided with a nuclear
Coverage/ power plant;
Monetary 6. New Ship - a ship the keel of which is laid or which
Assistance is at a similar stage of construction on or after the
date of coming into force of the SOLAS 1974;
Surviving P50,000.00 per Monetary 7. Existing Ship - a shp which is not a new ship.
Passengers passenger Assistance (SOLAS 1974; Aquino & Hernando, p.450)
Comment: In MARINA Memorandum Circular Nos. 09-18
CONSTRUCTION, EQUIPMENT AND MANNING:
and 09-21, domestic shipping operators are required to
- Builders of vessels may employ the materials and
secure insurance coverage for maritime accidents. The
follow, with respect to their construction and
requirement covers domestic carriers and operators of
rigging, the systems most suitable to their
passenger ships engaged in domestic shipping who are
interests. Ship owners and seamen shall be subject
carrying passengers. Compulsory coverage is mentioned
to what the laws and regulations of the public
above.
administration on navigation, customs, health,
safety of vessels, and other similar matters. (Art.
Notes:
574, Code of Commerce)
- Marine insurance is governed by Secs. 99 to 166 of
- The construction,equipment and manning of
the Insurance Code.
vessels are subject to the rules issued by the
- Secs. 14-15 of the Domestic Shipping
Maritime Industry Authority (MARINA) and Coast
Development Act requires mandatory insurance
Guard and pertinent conventions like SOLAS 1974,
coverage for passengers to meet the financial
International Convention on Load LINES 1966, as
responsibility of domestic ships operator for breach
well as the Tonnage Convention of 1969.
of contract of carriage
VESSEL AS PERSONA PROPERTY:
POLLUTION INSURANCE:
- Vessels are personal property under Art. 416 of the
- General Rule: Ship owners and operators of ships
Civil Code.
plying domestic trade are to secure insurance to
- Likewise, “For all purposes of law not modified or
insurance coverage for pollution liability. (MARINA
restricted by the provisions of this Code, vessels
MC no.1, Series of 2009)
shall continue to be considered as personal
- Exception:
property. (Art. 585, Code of Commerce)
1. Government Owned ships not engaged in
commerce;
2. Non-motorized wooden hulled ships; PHILIPPINE REFINING COMPANY vs. JARQUE
3. Tacts and pleasure crafts. GR no. L-41506, March 25, 1935
Vessels are considered personal property under the civil law.

(Code of Commerce, article 585.) Similarly under the common
VESSELS law, vessels are personal property although occasionally referred
to as a peculiar kind of personal property. (Reynolds vs. Nielson
[1903], 96 Am. Rep., 1000; Atlantic Maritime Co vs. City of
Gloucester [1917], 117 N. E., 924.) Since the term "personal
DEFINITION OF A VESSEL: property" includes vessels, they are subject to mortgage
- Any barge, lighter, bulk carrier, passenger ship agreeably to the provisions of the Chattel Mortgage Law. (Act
No. 1508, section 2.) Indeed, it has heretofore been accepted
freighter, tanker, container ship, fishing boats, or
without discussion that a mortgage on a vessel is in nature a
other artificial contrivance utilizing and source of chattel mortgage. (McMicking vs. Banco Español-Filipino [1909],
motive power, designed. used or capable of being 13 Phil., 429; Arroyo vs. Yu de Sane [1930], 54 Phil., 511.) The
used as a means of transportation operating either only difference between a chattel mortgage of a vessel and a
as a common carrier, including fishing vessels chattel mortgage of other personalty is that it is not now
covered under PD 43, except (i) those owned necessary for a chattel mortgage of a vessel to be noted n the
nad/or operated by the Armed Forces of the registry of the register of deeds, but it is essential that a record of
Philippines and by foreign governments for military documents affecting the title to a vessel be entered in the record
of the Collector of Customs at the port of entry. (Rubiso and
purposes, and (ii) bancas, sailboats and other
Gelito vs. Rivera [1917], 37 Phil., 72; Arroyo vs. Yu de Sane,
waterborne contrivance of less than three gross supra.) Otherwise a mortgage on a vessel is generally like other
tons capacity and not motorized. (Sec. 3(b), PD chattel mortgages as to its requisites and validity.
474)

TRANSPORTATION LAW
Morillo Notes
sale in the registry, and by depositing the price at
ACQUISITION: the same time. (Art. 575, Code of Commerce)
- Vessels may be acquired or transferred by any
means recognized by law, therefore, vessels may NATIONALITY OF VESSELS:
be sold, donated and may even be acquired - Vessels that are duly registered in the Philippines
through prescription. (Art. 573, Code of Commerce) are Considered Philippine Flag vessels. These
- Ownership and other real rights over property are ships are deemed to possess Philippine nationality
acquired and transmitted by law, by donation, by with the contemplation UNCLOS.
estate and intestate succession, and in
consequence of certain contracts by, by tradition,
Article 91
by occupation and by means of transportation. (Art. Nationality of ships
712, NCC)
- vessels that are under the jurisdiction of the 1. Every State shall fix the conditions for the grant of its
MARINA can be transferred only with approval of nationality to ships, for the registration of ships in its territory,
said administrative agency. Also, after the approval and for the right to fly its flag. Ships have the nationality of the
of the sale or transfer, it is required that the buyer State whose flag they are entitled to fly. There must exist a
shall within 15 days from approval of the MARINA genuine link between the State and the ship.
secure a new Certificate of Philippine Registry and
2. Every State shall issue to ships to which it has granted the
Certificate of Ownership. (MARINA MC no. 2013-02 right to fly its flag documents to that effect.
dated Jan. 18, 2013)
PRESCRIPTION: Article 92
ARTICLE 573: Merchant vessels constitute property which may Status of ships
be acquired and transferred by any of the means recognized by
law. The acquisition of a vessel must appear in a written 1. Ships shall sail under the flag of one State only and, save in
instrument, which shall not produce any effect with respect to exceptional cases expressly provided for in international treaties
third persons if not inscribed in the registry of vessels. or in this Convention, shall be subject to its exclusive jurisdiction
on the high seas. A ship may not change its flag during a voyage
The ownership of a vessel shall likewise be acquired by or while in a port of call, save in the case of a real transfer of
possession in good faith, continued for 3 years, with a just title ownership or change of registry.
duly recorded.
2. A ship which sails under the flags of two or more States, using
In the absence of any of these requisites, continuous possession them according to convenience, may not claim any of the
for 10 years shall be necessary in order to acquire ownership. nationalities in question with respect to any other State, and may
be assimilated to a ship without nationality.
A captain may not acquire by prescription the vessel of which he
is in command. (Art. 573, Code of Commerce))
RIGHTS UNDER THE TARIFF AND CUSTOMS CODE:
- A certificate of Philippine registry confers upon the
Requisites for a person to Acquire ownership through vessel the right to engage, consistently with law, in
Ordinary Prescription: the Philippine coastwise trade and entities it to the
1. The person who claims ownership must be in protection of the authorities and the flag of the
continuous possession; Philippines in all ports and on the high seas, and at
2. Possession must be for a period of 3 years; and the same time secures to it the same privileges and
3. Possession must be in good faith. (573, Code of subjects it to the same disabilities as, under the
Commerce) laws of the Philippines, pertain to foreign-built
vessels transferred abroad to citizens of the
NOTE: Possession in good faith presupposes possession in the
Philippines. (Sec. 810, Tariff and Customs Code)
concept of the owner. A possessor is in good faith if he is not
aware of the flaw or defect in his title. If the possessor is in bad
faith, the acquisitive prescription is extraordinary and the REGISTRATION OF VESSELS:
prescriptive period is 10 years. - Vessels are now registered through the MARINA.
(MARINA MC no. 2012-02 dated Jan. 18, 2013)
- MARINA MC no. 2013-02 apply to all types of
SALE: ships operating in the Philippine water regardless
- In contract of Sale, the mode of transferring title or of size and utilization, whether with power or
ownership is tradition or delivery. (Art. 712, NCC) without power, including those ships below three
- Ownership of the thing sold shall be transferred to gross tonnage (GT), motorized or non-motorized.
the vendee upon the actual or constructive delivery
thereof. (Art. 1477, NCC). The same applies to EXCEPTION TO REGISTRATION OF VESSELS:
vessels. However, the sale must be registered with 1. Warships and naval ships;
the MARINA to affect third persons. 2. Ships of the Philippine Coast Guard;
- See also Arts. 576 up to579 of the Code of 3. All ships of foreign registry temporarily used in the
Commerce. Philippine waters; and
4. Inflatable boats used for rescue made of either a
CO-OWNER’S RIGHTS: single or more rubber tubbing (Aquino &
- Co-owners of vessels shall have the right of Hernando, p. 462)
repurchase and redemption in sales made to
strangers, but they may exercise the same only SHIP’S MANIFEST:
within the 9 days following the inscription of the


TRANSPORTATION LAW
Morillo Notes
- A manifest is a declaration of the entire cargo. The
object of a manifest is to furnish customs officers
SHIP MORTGAGE
with a list to check against, to inform the revenue
officers what goods are being brought into a port AND MARITIME LIENS
[Governed by PD 1521]
of the country on a vessel. (Macondray and
Company vs. Acting Commission of Customs, 62
SCRA 427
- manifest shall be required for cargo and WHO MAY CONSTITUTE A SHIP MORTGAGE?
passengers transported from one place or port in - Any citizen of the Philippines, or any association or
the Philippines to another only when one or both of corporation organized under the laws of the
such places is a port of entry. (Sec. 906, Tariff and Philippines, at least 60% of the capital is owned by
Customs Code) citizens of the Philippines may, for the purpose of
- The requirement that a vessel must carry a financing the construction, acquisition, purchase of
manifest is not complied with even if a bill of lading vessels or initial operation of vessels, freely
can be presented because a bill of lading is just a constitute a mortgage or any other lien or
declaration of a specific cargo rather than the encumbrance on his or its vessels and its
entire cargo. (Macondray and Company vs. Acting equipment with any bank or other financial
Commission of Customs, Supra) institution, domestic or foreign. (Sec. PD 1521)
Rules on Ship’s Manifest: (MARINA MC no 13)

MEANING OF PREFERRED MORTGAGE:
- It constitutes a lien upon the mortgaged vessel in
1. The total number of passengers on board shall not exceed the amount of the outstanding mortgage
the total number of passengers allowed for each ship. indebtedness secured by such vessel. Upon the
2. All passengers on board the ship shall be duly manifested default of any term or condition of the mortgage
as reflected in the Passenger Manifest. such lien may be enforced by the mortgagee by
3. Manifest or passenger list should be prepared and made suit in remaining admiralty wherein the vessel itself
available before the ship leaves port.
may be made a party defendant and be arrested in
4. Children three (3) years and above shall be counted as
adult passengers and shall be assigned seats. the manner as provided in section 11 thereof. (Sec.
5. Children below three (3) years old shall be carried by an 10, PD 1521)
adult at all times.
REQUIREMENTS FOR PREFERRED MORTGAGE:
1. The mortgage is recorded as provided under Sec.
LOGBOOK: 3 of PD 1521;
- A ship’s logbook is the official record of a ship’s 2. An affidavit is filed with the record of such
voyage which its captain is obliged by law to keep mortgage to the effect that the mortgage is made
wherein he records the decisions he has adopted, in good faith and without any design to hinder,
a summary of the performance of the vessel, and delay, or defraud any existing or future creditor of
other daily events. It is a respectable record that the mortgagor or any lien or of the mortgaged
can be relied upon when presented in evidence. vessel;
(Centennial Transmarine vs. Dela Cruz, GR no. 3. The mortgage does not stipulate that the
180718, august 22, 2008) mortgagee waives the preferred status thereof.
Sec. 4 & 17, PD 1521)
CABOTAGE:
- The right of cabotage is the right of foreign vessels Additional Requirements:
to engage in coastwise shipping, to provide service 1. The mortgage should cover the whole of the
from one place within the Philippines to another vessel; and
place in the Philippines. 2. The vessel must be of domestic ownership.
- The right to cabotage is now under RA 10668 (Aquino & Hernando, p. 487)
which provides that foreign ships carrying imported
cargoes and cargoes are allowed to dock in MARITIME LIEN:
multiple ports in the country subject to compliance - Generally, Maritime liens is a privileged claim on a
with the clearance requirement. vessel for some service rendered to it to facilitate
its use in navigation. (Black’s Law Dictionary)
REPAIR OF VESSELS: - In the Philippines, Maritime lien is akin to a
- ship repairers are liable to the ship owner for any mortgage lien in that in spite of the transfer of
damage that was caused to the vessel while the ownership, the lien is not extinguished. The
same is undergoing repairs. Therefore, the ship maritime lien is inseparable from the vessel and
repair may be held liable for the loss of the vessel until disregarded, it follows the vessel. (Polian
if it was gutted by fire while the vessel is in its Industrial vs. NDC, 467 SCRA 500)
dockyard due to the negligence of the former.
However, both the ship repairer and the shipowner PREFERRED CLAIMS:
will shipowner will shoulder the loss if they are - General Rule: Preferred mortgage lien should have
equally negligent. (Keppel Cebu Shipyard vs. priority over all claims against the vessel. (Sec. 17,
Pioneer Insurance, GR no. 19-88-81, September PD 1521)
18, 2012) - Exception:

TRANSPORTATION LAW
Morillo Notes
1. Expenses and fees allowed and costs MEANING OF SHIPOWNER:
taxed by the court and taxes due to the - The person who is primarily liable for damages
Government; sustained in the operation of a vessel. (Standard Oil
2. Crew’s wages; Company of New York vs. Lopez, GR no. 13695,
3. General average; October 18, 1921)
4. Salvage (including contract of salvage);
5. Maritime liens arising prior in time to the DEFINITION OF SHIP AGENT:
recording of the preferred mortgage; - The person entrusted with provisioning of the
6. Damages arising out of tort; and vessel, or who represents her in the port in which
7. Preferred mortgaged registered prior in she happens to be. (Art. 595, Code of Commerce)
time. (Sec. 17, PD 1521)
LIABILITIES OF SHIPOWNER AND SHIP AGENT:
Executory Contract Doctrine: - They are both civilly liable for the acts of the
- A lien does not attach for breach of an executory captain and for the obligations contracted by the
contract even though the contract is the type which latter to repair, equip, and provision the vessel,
normally gives rise to a lien. (Gilmore and Black, provided the creditor proves that the amount
Law on Admiralty, p. 595) claimed was invested for the benefit of the same.
- Liability arises in admiralty for breach of contract (Art. 586, Code of Commerce)
but if the parties have performed his obligation, his - The ship agent shall also be civilly liable for the
remedy against the other is only for breach in an indemnities in favor of third persons which may
action in personam. (Gilmore and Black, Law on arise from the conduct of the captain in the care of
Admiralty, p. 635) the good which he loaded from the vessel; but he
may exempt himself therefrom by abandoning the
Waiver of lien: vessel with all her equipments and the freight it
- Furnishers of repairs, supplies, towage, use of dry may have earned during the voyage. (Art. 587,
dock or marine railways, or other necessaries, or Code of Commerce)
the mortgagee, are not prevented from waiving
their right to a lien, or in the case of a preferred POWERS AND FUNCTIONS OF SHIP AGENT:
mortgage lien, to the preferred status of such lien, 1. Capacity to Trade;
at any time by agreement or otherwise. (Sec. 24, 2. Discharge duties of the Captain, Subject to Art.
PD 1521) 609, Code of Commerce;
3. contract in the name of the owners with respect to
Prescription and Laches: repairs, details of equipment, armament, provisions
- Enforcement of a maritime lien imposed by special of food and fuel, and freight of the vessel, and all
law prescribes in 10 years. (Poliand Industrial vs. that relate to the requirements of navigation; and
NDC, Supra) 4. Order a new voyage, make a new charter or insure
- Laches may also lie if there was unreasonable the vessel after obtaining authorization from the
delay on the part of the claimant in asserting its shipowner or if granted in certificate of
rights. appointment. (Arts. 595-598, Code of Commerce
Maritime Torts: Duty of Ship Agent to Discharge the Captain and

- As contemplated in Sec.. 17, PD 1521, These are Members of the Crew:
civil wrongs committed in navigable waters (Black’s - If the seamen contract is not for a definite period or
Law Dictionary) voyage, he may discharge them at his discretion
- Any conduct which is tortuous under general law (Art. 603, Code of Commerce)
and which is connected with the ship or its uses - If for a definite period, he may not discharge them
creates a maritime lien. It includes collision claims until after the fulfillment of their contracts, except
and personal injury. (Gilmore and Black, p. 629) on the following grounds:
1. Insubordination in serious matters;
Subrogation: 2. Robbery;
- A third person who satisfies the obligation to an 3. Theft;
original maritime lienor may claim from the debtor 4. Habitual drunkenness; and
because the third person is subrogated to the 5. Damage caused to the vessel or to its
rights of the maritime lienor over the vessel. (PNB cargo through malice or manifest or
vs. CA, GR no. 128661, august 8, 2000) proven negligence. (Art. 605, Code of
Commerce)
CAPTAINS AND MASTERS OF VESSELS:

PERSONS WHO TAKE PART
- The name of captain or master is given, according
IN MARITIME COMMERCE
to the kind of vessel, to the person in charge of it.
The first denomination is applied to those who
govern vessels that navigate the high seas or ships
of large dimensions and importance, although they
SHIP OWNERS AND SHIP AGENTS are engaged in the coastwise trade. Masters are
those who command smaller ships engaged in the
coastwide trade. (Yu Con vs. Ipil, GR no. L-10195,
December 29, 1919)


TRANSPORTATION LAW
Morillo Notes
and without the formalities prescribed in this Code, shall be liable
Qualifications: for the principle, interest, and costs, and shall indemnify for the
1. Filipino Citizen; damages he may cause.
2. Must have legal capacity to contract; and
3. Must have passed the required physical and The captain who commits fraud in his accounts shall reimburse
mental examinations required for licensing him as the amount defrauded, and shall be subject to the provisions
such. (Art. 609, Code of Commerce) contained in the Penal Code. (Art. 621, Code of Commerce)
Powers and Functions: When the Captain is not liable:

1. General agent of the shipowner; 1. For damages caused to the vessel or to the cargo
2. Technical director of the vessel; and by force majeure;
3. Representative of the government of the country 2. For obligations he may have contracted for the
under whose flag he navigates. (Inter-Orient repair, equipment, and provisioning of the vessel,
Maritime Enterprises vs. NLRC, GR no. 115286, unless he expressly bound himself. (Art. 620, Code
August 11, 1994) of Commerce)
NOTE: See also Arts. 610 and 612, Code of Commerce. OTHER OFFICERS AND CREW OF VESSELS:
1. Sailing Mate/Chief Mate - Second chief of the
vessel who takes the place of the captain in case of
LIABILITY OF CAPTAINS AND MASTERS: absence, sickness, or death and shall assume all of
- Liability to the ship agent, and third persons: his duties, powers and responsibilities. (Art. 627,
ARTICLE 618: The captain shall be civilly liable to the agent, and Code of Commerce)
the latter to the third persons who may have made contracts with 2. Second Mate - Third in command; Takes
the former; command of the vessel in case of the inability or
1. For all the damages suffered by the vessel and his disqualification of the captain and the sailing mate,
cargo by reason of want of skill or negligence on his assuming in such case their powers and
part. If a misdemeanor or crime has been committed
responsibilities. (ART 633, Code of Commerce)
he shall be liable in accordance with the Penal Code.
2. For all the thefts committed by the crew, reserving his
3. Marine Engineers - Officers of the vessel who
right of action against the guilty parties. have no authority except in matters referring to the
3. For the losses, fines, and confiscations imposed an motor apparatus. When two or more are hired, one
account of violation of the laws and regulations of of them shall be the chief engineer. (Art. 632, Code
customs, police, health, and navigation. of Commerce)
4. For the losses and damages caused by mutinies on 4. Crew - Hired by the ship agent, where he is
board the vessel, or by reason of faults committed by present, and in his absence, the captain hires
the crew in the service and defense of the same, if he
them, preferring Filipinos, and in their absences, he
does not prove that he made full use of his authority to
prevent or avoid them. may take in foreigners, but not exceeding ⅕ of the
5. For those arising by reason of an undue use of powers crew. (Art. 634, Code of Commerce)
and non-fulfillment of the obligations which are his in 5. Supercargoes - persons who discharge
accordance with Articles 610 and 612. administrative duties assigned to them by ship
6. For those arising by reason of his going out of his agent or shippers, keeping an account and record
course or taking a course which he should not have of transactions as required in the accounting book
taken without sufficient cause, in the opinion of the of the captain. (Art. 649, Code of Commerce)
officers of the vessel, at a meeting with the shippers or
supercargoes who may be on board.
6. Purser - A purser handles the funds of the vessel
and is the custodian of all the passenger tickets
No exception whatsoever shall exempt him from this obligation. and bill of lading. It is his responsibility, among
7. For those arising by reason of his voluntarily entering a other things, to issue passage tickets and to
port other than his destination, with the exception of receive payments from the customers, as well as to
the cases or without the formalities referred to in issue the corresponding official receipts. He is also
Article 612. tasked to disburse the salaries of the crewmen of
8. For those arising by reason of the non-observance of
the vessel. (Etcuban vs. Sulpicio lines, GR no.
the provisions contained in the regulations for lights
and evolutions for the purpose of preventing collisions.
148410, January 17, 2005)
ARRASTRE OPERATOR
- Liability for the cargo:
ARTICLE 619: The captain shall be liable for the cargo from the FIREMAN’S FUND INSURANCE
time it is turned over to him at the dock, or afloat alongside the vs. METRO PORT
ship, at the port of loading until he delivers it on the shores or on GR no. 83613, February 21, 1990
the discharging wharf, of the port of unloading unless the
contrary has been expressly agreed upon. (Art. 619, Code of The legal relationship between the consignee and the arrastre
Commerce) operator is akin to that of a depositor and warehouseman (Lua
Kian v. Manila Railroad Co., 19 SCRA 5 [1967]). The relationship
between the consignee and the common carrier is similar to that
- Liability due to money claims and fraud:
of the consignee and the arrastre operator (Northern Motors, Inc.
ARTICLE 621: A captain who borrows money on bottomry, or v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the duty of
who pledges or sells merchandise or provisions in other cases the ARRASTRE to take good care of the goods that are in its

TRANSPORTATION LAW
Morillo Notes
vessel or to life or property due to his negligence or
custody and to deliver them in good condition to the consignee,
such responsibility also devolves upon the CARRIER. Both the fault.
ARRASTRE and the CARRIER are therefore charged with and - Exceptions:
obligated to deliver the goods in good condition to the 1. Accidents caused by force majeure or
consignee. natural calamity provided that the pilot
exercised prudence and extra diligence to
In general, the nature of the work of an arrastre operator covers prevent or minimize damages; and
the handling of cargoes at piers and wharves (Visayan Cebu 2. Countermand or overrule by the master of
Terminal Co., Inc. v. Commissioner of Internal Revenue, 13
the vessel in which case the registered
SCRA 357 [1965]).
owner of the vessel is liable (PP, Admin
Order 03-5, Sec. 11, Art. III)
ICTSI vs. PRUDENTIAL
GR no. 134514, October 8, 1999
- Since the colliding vessel is prima facie
responsible, the master must show that the pilot
The legal relationship between an arrastre operator and a was at fault in order to be exempted from liability.
consignee is akin to that between a warehouseman and a (Far Eastern Shipping vs. CA, Supra)
depositor. As to both the nature of the functions and the place of - The fact that the law compelled the master to take
their performance, an arrastre operator's services are clearly not the pilot does not exonerate the vessel from
maritime in character. liability/ The owners of the vessel are responsible
for the acts of the pilot, and they must be left to
In a claim for loss filed by a consignee, the burden of proof to
show compliance with the obligation to deliver the goods to the
recover the amount against him. (Far Estern
appropriate party devolves upon the arrastre operator. Since the Shipping vs. CA, Supra)
safekeeping of the goods rests within its knowledge, it must
prove that the losses were not due to its negligence or that of its
employees
CHARTER PARTIES
We agree with the petitioner. In order to hold the arrastre
operator liable for lost or damaged goods, the claimant should
file with the operator a claim for the value of said goods "within
fifteen (15) days from the date of discharge of the last package DEFINITION OF CHARTER PARTY:
from the carrying vessel . . . ." The filing of the claim for loss - It is a contract whereby an entire ship, or some
within the 15-day period is in the nature of a prescriptive period principal part of the said ship, is let by the owner
for bringing an action and is a condition precedent to holding the thereof to a merchant or other person for a
arrastre operator liable. This requirement is a defense made specified time or use for the conveyance of goods,
available to the arrastre operator, who may use or waive it as a in consideration of the payment of freight. (Caltex
matter of personal discretion. The said requirement is not an
(Phil.), Inc. vs. Sulpicio Lines, GR no. 131166,
empty formality. It gives the arrastre contractor a reasonable
opportunity to check the validity of the claim, while the facts are September 30, 1999)
still fresh in the minds of the persons who took part in the
transaction, and while the pertinent documents are still available. KINDS OF CHARTER PARTIES:
Such period is sufficient for the consignee to file a provisional 1. Bareboat Charter:
claim after the discharge of the goods from the vessel.For this - The shipowner leases to the charterer the whole
reason, we believe that the 15-day limit is reasonable. vessel, transferring to the latter the entire
command, possession and consequent control
over the vessel’s navigation, including the master
PILOTAGE and the crew, who thereby become the charterer’s
“servants”. (Coastwise Lighterage vs. CA, GR no.
114167, July 12, 1995)
PILOT:
- The charterer takes over the ship, lock, stock, and
- A person duly qualified, and licensed, to conduct a
barrel.
vessel into or out of ports, or in certain waters. (Far
Eastern Shipping vs. CA, GR no. 130068, October
1, 1998) 2. Contract of Affreightment:
- In broad sense, the term “pilot” includes: - The charterer hires the vessel only, either for a
1. Those whose duty is to guide vessels into determinate period of time or for a single or
consecutive voyage, with the shipowner providing
or out of ports, or in particular waters; and
2. Those entrusted with the navigation of for the provisions of the ship, the wages of the
vessels on the high seas. (Far Eastern master and the crew, and the expenses for the
Shipping vs. CA, Supra) maintenance of the vessel. (Planter’s Products, Inc.
vs. CA, GR no. 101503, September 15, 1993)
COMPULSORY PILOTAGE:
- States possessing harbors have enacted laws or LITONJUA SHIPPING vs.
promulgated rules requiring vessels approaching NATIONAL SEAMEN BOARD
their ports to take on board pilots licenses under GR no. 51910, August 10, 1989
the local law. (70 Am. Jur. 2d 526)
In modern maritime law and usage, there are three (3)
distinguishable types of charter parties: (a) the "bareboat" or
LIABILITY OF PILOT: "demise" charter; (b) the "time" charter; and (c) the "voyage" or
- General Rule: On compulsory pilotage grounds, "trip" charter. A bareboat or demise charter is a demise of a
the Harbor Pilot is responsible for damage to a


TRANSPORTATION LAW
Morillo Notes
vessel, much as a lease of an unfurnished house is a demise of case is different; the shipowner is not then a carrier. But where
real property. The shipowner turns over possession of his vessel her services only are let, the same grounds for imposing a strict
to the charterer, who then undertakes to provide a crew and responsibility exist, whether he is employed by one or many. The
victuals and supplies and fuel for her during the term of the master and the crew are in each case his servants, the freighter
charter. The shipowner is not normally required by the terms of a in each case is usually without any representative on board the
demise charter to provide a crew, and so the charterer gets the ship; the same opportunities for fraud or collusion occur; and the
"bare boat", i.e., without a crew. Sometimes, of course, the same difficulty in discovering the truth as to what has taken
demise charter might provide that the shipowner is to furnish a place arises . .
master and crew to man the vessel under the charterer’s
direction, such that the master and crew provided by the
shipowner become the agents and servants or employees of the PERSONS WHO MAY MAKE CHARTER:
charterer, and the charterer (and not the owner) through the 1. Shipowner/s - he who have legal control and
agency of the master, has possession and control of the vessel possession of the vessel, may validly enter into
during the charter period. A time charter, upon the other hand, charter parties with a charterer. *Planters Products
like a demise charter, is a contract for the use of a vessel for a vs. CA, Supra)
specified period of time or for the duration of one or more
specified voyages. In this case, however, the owner of a time-
2. Charterer - By himself, may sub-charter the entire
chartered vessel (unlike the owner of a vessel under a demise or vessel to a third person but only in the event that
bareboat charter), retains possession and control through the there is no prohibition in the original charter
master and crew who remain his employees. What the time regarding any sub-charter.
charterer acquires is the right to utilize the carrying capacity and 3. Part Owners - He or they are not precluded from
facilities of the vessel and to designate her destinations during chartering the same for their own commercial
the term of the charter. A voyage charter, or trip charter, is purposes. In fact, part owners enjoy preference in
simply a contract of affreightment, that is, a contract for the
the charter of the vessel over other persons who
carriage of goods, from one or more ports of loading to one or
more ports of unloading, on one or on a series of voyages. In a
offer equal conditions and freight (Art. 593, Code of
voyage charter, master and crew remain in the employ of the commerce)
owner of the vessel. 4. Ship Agent - In the code of commerce, the ship
agent is not allowed to make contracts for a new
It is well settled that in a demise or bare boat charter, the charter unless he is properly or duly authorized by
charterer is treated as owner pro hac vice of the vessel, the the owner, or by virtue of an authority given by a
charterer assuming in large measure the customary rights and resolution of the majority of the co-owners.
liabilities of the shipowner in relation to third persons who have
However, he may make such charter if the same
dealt with him or with the vessel. In such case, the Master of the
vessel is the agent of the charterer and not of the shipowner. The has been extended to him in his certificate of
charterer or owner pro hac vice, and not the general owner of the appointment. (Art. 598, Code of Commerce)
vessel, is held liable for the expenses of the voyage including the 5. Captain or Master - It is one of the inherent
wages of the seamen. powers of the captain or master of the vessel to
enter into valid and binding charter parties, but only
in the event of absence of the ship agent or
EFFECT OF CHARTER ON CHARACTER OD CARRIER:
consignee, and only if the said captain or master
- Caltex (Phils), Inc. lease, via a voyage charter, of
acts in accordance with the instructions of the
the vessel “MT Vector” owned by Sulpicio Lines,
agent or owner and protects the latter’s interests.
the SC characterized the said specie of charter
party as one which does not affect at all the nature
of the business of Sulpicio lines as a common
REQUISITES OF A VALID CHARTER PARTY:
carrier. Consequently, the rights and
1. Consent of the contracting parties;
responsibilities of ownership still rested on the
2. An existing vessel which should be placed at the
owner, and the charterer was thereby freed from
disposition of the shipper;
any liability to third persons in respect of the
3. Freight; and
vessel. (Caltex (Phils.), Inc. vs. Sulpicio Lines,
4. Compliance with the formal requirements
Supra)
prescribed under Art. 652, Code of Commerce,
which include the requirement that the charter
PLANTERS PRODUCTS vs. CA party must be (q) In writing; (2) drawn in duplicate;
226 SCRA 476 (1993) and (3) signed by the parties. (Aquino & Hernando,
p.566)
It is therefore imperative that a public carrier shall remain as
such, notwithstanding the charter of the whole or portion of a
Formal Requirements under Art. 652, Code of
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. Commerce:
It is only when the charter includes both the vessel and its crew, A charter party must be drawn in duplicate and signed by the
as in a bareboat or demise that a common carrier becomes contracting parties, and when either does not know how or can
private, at least insofar as the particular voyage covering the not do so, by two witnesses at their request.
charter-party is concerned. Indubitably, a shipowner in a time or The charter party shall include, besides the conditions
voyage charter retains possession and control of the ship, unrestrictedly stipulated, the following statements:
although her holds may, for the moment, be the property of the
charterer. 1. The kind, name, and tonnage of the vessel
2. Her flag and port of registry.
As a matter of principle, it is difficult to find a valid distinction 3. The name, surname, and domicile of the captain.
between cases in which a ship is used to convey the goods of 4. The name, surname, and domicile of the agent, if the
one and of several persons. Where the ship herself is let to a latter should make the charter party.
charterer, so that he takes over the charge and control of her, the 5. The name, surname, and domicile of the charterer, and

TRANSPORTATION LAW
Morillo Notes
if he states that he is acting by commission, that of the 3. Private Instrument.
person for whose account he makes the contract.
6. The port of loading and unloading.
7. The capacity, number of tons or weight, or measure Source: Arts. 719-720,728, Code of Commerce)
which they respectively bind themselves to load and
transport, or whether it is the total cargo. DIFFERENCE BETWEEN LOAN OF BOTTOMRY,
8. The freightage to be paid, stating whether it is to be a RESPONDENTIA & SIMPLE LOAN:
fixed amount for the voyage or so much per month, or
for the space to be occupied, or for the weight or BOTTOMRY & SIMPLE
measure of the goods of which the cargo consists, or RESPONDENTIA LOAN
in any other manner whatsoever agreed upon.
9. The amount of primage to be paid to the captain. As to Marine Risk
10. The days agreed upon for loading and unloading.
11. The lay days and extra lay days to be allowed and the
rate of demurrage. (Art. 652, Code of Commerce)
Duly established existence of a Marine risk is not necessary
marine risk is necessary
As to Form
LOAN ON RESPONDENTIA
AND BOTTOMRY Must be executed in Formal requisites if an ordinary
accordance with the form and contract will suffice.
manner prescribed by the
code of commerce.
BOTTOMRY:
- A contract whereby the owner of a ship borrows As to Registration
for the use, equipment or repair of the vessel, for a
definite term, and pledges the ship s security, with
the stipulation that if the ship is lost during the Must be recorded in the No such registration is
voyage or during the limited time on account of the registry if vessels to be binding required.
sail perils, the lender shall lose his money. (Black’s to third persons
Laws Dictionary)
As to Preference
RESPONDENTIA:
- A loan secured by the owner of the cargo payable
upon safe arrival of cargo at destination. The ship Preference is extended to the Preference is extended to the
owner, agent or captain cannot secure the loan last lender first lender.
(Sundiang & Aquino, reviewer on Commercial Law, Source: Aquino & Hernando, pp. 595-596)
p. 489)
When Loan on Bottomry or Respondentia is regarded as
LOAN ON LOAN ON Simple Loan:
BOTTOMRY RESPONDENTIA 1. Lender loaned an amount larger than the value of
the object due to fraudulent means employed by
As to Definition the borrower. (Art. 726, Code of Commerce)
2. Full amount of the loan is nt used for the cargo or
Loan made by shipowner or Loan taken on security of the given on the goods if all of them could not have
ship agent guaranteed by cargo laden on a vessel, and been unloaded, the balance will be considered a
vessel itself and repayable repayable upon safe arrival of simple loan. (Art. 727, Code of Commerce); or
upon arrival of vessel at cargo at destination. 3. If the effects on which the mooney is taken is not
destination. subjected to any risk. (Art. 729, Code of
Commerce)
As to Who May Contact
Shipowner or ship agent. Only the owner of the cargo. MARINE LOAN ON BOTTOMRY &
Outside of the residence of the INSURANCE RESPONDENTIA
owners - the captain
As to Indemnity
Common Elements
1. Exposure of security to marine peril; and Indemnity is paid after the loss Indemnity is paid in advance
2. Obligation of the debtor conditioned only upon safe arrival has occurred by way of a loan
off the security at the point of destination.
As to Effects of Loss of Vessel
Forms
In case of loss of the vessel In case of loss of the vessel

1. Public Instrument; due to a risk insured against, due to marine peril, the
2. Policy signed by the contracting parties and the broker the obligation of the insurer obligation of the borrower to
taking part therein; and becomes absolute. pay is extinguished.


TRANSPORTATION LAW
Morillo Notes
Source: Aquino & Hernando, pp. 594-595)
As to Liability
HYPOTHECARY NATURE OF BOTTOMRY OR

RESPONDENTIA: The owner of the goods which All the persons having an
- General Rule: The obligation of the borrower to gave rise to the expense or interest in the vessel and the
pay the loans extinguished if the goods given as suffered the damage shall bear cargo therein at the time of the
security are absolutely lost by reason of an this average. occurrence of the average
accident of the sea during the voyage designated, shall contribute to satisfy this
and if it is proven that the goods were on board. average. The insurers and
lenders on bottomry and
respondentia shall likewise
- Exceptions: contribute.
1. Loss due to inherent defect;
2. Loss due to the barratry on the part of the As to Number of Interests Involved
captain;
3. Loss due to the fault or malice of the
borrower; Only 1 interest involved Several interests involved
4. The vessel was engaged in contraband;
and As to Share in the Damage or Expense
5. The cargo loaded on the vessel is different
from that agreed upon. (Art. 731, Code of
Commerce) 100% Share In proportion to the value of
the owner’s property saved.
CONCURRENCE OF MARINE INSURANCE AND LOAN
ON BOTTOMRY/RESPONDENTIA: As to Right to Recover
1. The insurable interest of the owner of a ship
hypothecated by bottomry is only the excess of the
No Reimbursement There may be reimbursement
value of the ship over the amount secured by
bottomry. (Sec. 103, Insurance Code)
As to Kinds (Not Exclusive)
2. The value of what may be saved in case of
shipwreck shall be divided between the lender and
the insurer in proportion to the interest of each one. See Art. 809, Code of See Art. 811, Code of
(Art. 735, Code of Commerce) Commerce Commerce
Source: Arts. 809-859, Code of Commerce
AVERAGES SIMPLE OR PARTICULAR AVERAGE:

- Damage or expenses caused to the vessel or cargo
that did not inure to common benefit, and borne by
AVERAGE: It includes: respective owners. (Art. 809, Code of Commerce)
1. All extraordinary or accidental expenses which may - The owner of the goods which gave rise to the
be incurred during the voyage in order to preserve expense or suffered the damage shall bear this
he vessel, the cargo, or both;; and average. (Art. 810. Code of Commerce))
2. Any damages or deteriorations which the vessel - res perit domino applies
may suffer from the time it puts to sea from the - if the vessel or goods are hypothecated by loan on
port of departure until it casts anchor in the port of bottomry and respondentia, the lender shall bear
destination, and those suffered by the merchandise the loss in proportion to his interest
from the time they are loaded in the port of
shipment until they are unloaded in the port of their REQUISITES GENERAL OR GROSS AVERAGE:
consignment. (Art. 806, Code of Commerce) 1. Common Danger:
- That both the ship and the cargo, after it has been
CLASSIFICATION OF AVERAGE: loaded, are subject to the same danger, whether
1. Simple or Particular Average; or during the voyage, or in the port of loading or
2. General or Gross Average. (Art. 808, Code of unloading. (Magsaysay, Inc. vs. Aganm GR no. L-
Commerce) 6393, january 31, 1955)
2. Deliberate Sacrifice:
SIMPLE AVERAGE GENERAL AVERAGE - General Rule: Sacrifice is made through the
jettison of the cargo or part of the ship is thrown
As to Definition overboard during the voyage.
- Exception:
a. Where the sinking of a vessel is necessary
Damages or expenses caused Damages or expenses
to extinguish a fire in a port, roadsteads,
to the vessel or cargo that did deliberately caused in order to
not insure to the common save the vessel, its cargo or
creek or bay. (Art. 818, Code of
benefit, and borne by both from real and known risk. Commerce)
respective owners. b. Where cargo is transferred to lighten the
ship on account of a storm to facilitate

TRANSPORTATION LAW
Morillo Notes
entry into a port. (Arts. 816-818, Code of
REASON: in domestic shipping, voyages are usually
Commerce) short and the seas are generally not rough. In overseas
shipping, the vessel is exposed for many days to perils
3. Successful Sacrifice: of the sea.
- Purpose: To be able to demand general
contribution. (Aquino & Hernando, p. 614) 2. If deck cargo is loaded with the consent of the shipper
on overseas trade, it must always contribute to general
4. Proper formalities and Legal steps: average, but should the same be jettisoned, it would
not be entitled to reimbursement because there is
a. Procedure for recovery; violation of the York-Antwerp Rules; and
b. Assembly and deliberation;
c. Resolution of the captain; 3. If deck cargo is loaded with the consent of the shipper
d. Entry of the resolution in the logbook; on coastwise shipping, it must always contribute to
e. Detailed minutes; general average, and if jettisoned would be entitled to
f. Delivery of the minutes to the maritime judicial reimbursement. (Aquino & Hernando, p. 619-620)
authority of the first port, within 24 hours from
arrival; and
DOMESTIC AND INTERNATIONAL SHIPPING:
g. Ratification by captain under oath. (Arts. 813-
814, Code of Commerce) DOMESTIC INTERNATIONAL
SHIPPING SHIPPING
Expenses incurred to refloat a vessel, which accidentally ran
aground, in order to continue its voyage, do not constitute As to Deck Cargo
general average. There is no proof that the vessel had to be
put afloat to save it from imminent danger. the vessel had to
be salvaged in order to enable it “to proceed to its port of Deck Cargo is allowed Deck Cargo is Not allowed
destination.” It is the safety of the property, and not the
voyage, which constitutes the true foundation of general As to Effect of loss of Deck Cargo if loaded with shipper’s
average. (Magsaysay vs. Agan, Supra) consent
In order to satisfy the amount of the general average, all Shipper is liable for general Particular or Simple Average
average
persons having an interest in the vessel and cargo at the
time of the occurrence of the average shall contribute. (Art.
As to Effect of loss of Deck Cargo if loaded without shipper’s
81, Code of Commerce) consent
Goods not covered by General Average even if Captain is liable Captain is liable
sacrificed:
1. Goods carried on deck (Art. 855, Code of Source: Art. 855, Code of Commerce)
Commerce) [NOTE: The rule is no longer absolute
that the sacrifice of deck cargo is not considered
general average, Aquino & Hernando, p. 619] COLLISIONS
2. Goods which are on board and are not included in
the bills of lading or inventories (Art. 855(2), Code
of Commerce); and
3. Fuel for the vessel if there is more than sufficient COLLISION
fuel for the voyage. - An impact or sudden contact of a moving body
with an obstruction in its line of motion, whether
JETTISON: both bodies are in motion or one stationary and the
- The act of throwing overboard from a vessel part of other, no matter which, in motion. (Black’s Law
the cargo, in case of extreme danger, to lighten the Dictionary)
ship. (Balck’s Law Dictionary)
- In order that the jettisoned goods may be included Allison - If one vessel is moving while the other is
in the gross or general average, the existence of stationary.
the cargo on board should be proven by means of
the bill of lading. (Art. 816, Code of Commerce) ZONES IN COLLISION:
1. First Zone covers all the time up to the moment
Order of goods to be cast overboard: when the risk of collision may be said to have
- Those which are on the deck, preferring the begun. Within this zone no rule is applicable
heaviest one with the least utility and value. because none is necessary.
- Those which are below the upper deck, beginning 2. Second Zone covers the time between the
with the one with greatest weight and smallest moment when the risk of collision begins and the
value. (Art. 815, Code of Commerce) moment when it has become a practical certainty.
3. Third Zone covers the time of actual contact.
(Urrutia & Co. vs. Baco River Plantation, GR no.
YORK-ANTWERP RULES ON DETERMINING LIABILITY FOR
AVERAGES WITH REGARD TO DECK CARGO: 7675, March 25, 1913)
1. Deck cargo is allowed only in
domestic/coastwise/inter-island shipping, and is Error in Extremis - The sudden movement made by a
prohibited in international/overseas/ foreign shipping. faultiess vessel during the third zone of collision with
another vessel which is at fault during the second zone.


TRANSPORTATION LAW
Morillo Notes
Even if such sudden movement is wrong, no responsibility responsible for the losses and damages suffered
will fall on said faultless vessel. (Urrutia & Co vs. Baco River by their cargoes. (Art. 827, Code of Commerce)
Plantation, Supra) 3. Vessel at fault not known - Each vessel must
bear its own loss, but the shippers of both vessels
NAUTICAL RULES TO DETERMINE NEGLIGENCE: may go against the ship owners who will be
1. When 2 vessels are about to enter a port, the solidarily liable. (Art. 828, Code of Commerce)
farther one must allow the nearer to enter first; if 4. Third vessel at fault - If a vessel should be forced
they collide, the fault is presumed to be imputable to collide with another one by a third vessel, the
to the one who arrived later, unless it can be owner of the third vessel shall indemnify for the
proved that there was no fault on its part; losses and damages caused, the captain thereof
2. When 2 vessels meet, the smaller should give the being civilly liable to said owner. (Art. 831, Code of
right of way to the larger one; Commerce)
3. A vessel leaving port should the way clear for 5. Fortuitous Event/Force Majeure - No liability, In
another which may be entering the same port; case of fortuitous event for the carrier to exercise
4. The vessel which leaves later is presumed to have due diligence before, during and thereafter and
collided against one which has left earlier; provided that there is no delay.
5. There is a presumption against the vessel which
set sail in the night; DOCTRINE OF INSCRUTABLE FAULT:
6. There is a presumption against the vessel with - Where fault is established but it cannot be
spread sails which collides with another which is at determined which of the two vessels were at fault,
anchor and cannot move, even when the crew of both shall be deemed to have been at fault.
the latter has received word to lift anchor, when
there was no sufficient time to do so or there was
fear of a greater damage or other legitimate reason;
7. There is a presumption against an improperly ARRIVAL UNDER
moored vessel; STRESS AND SHIPWRECKS
8. There is a presumption against a vessel which has
no buoys to indicate the location of its anchors to
prevent damage to vessels which may approach it; ARRIVAL UNDER STRESS:
and - It is the arrival of a vessel at the nearest and most
9. Vessels must have “Proper look-outs” or persons convenient port which was decided upon after
trained as such and who have no other duty aside determining that there is a well-founded fear of
therefrom. (Smith Bell vs. CA, GR no. L-56294, may seizure, privateers, or pirates or by reason of any
20, 1991 accident of the sea disabling it to navigate. (Art.
819, Code of Commerce)
NAUTICAL RULES AS TO SAILING VESSEL AND
STEAMSHIP: DETERMINATION OF PROPRIETY:
1. Where a steamship and sailing vessel are 1. The captain should determine during the voyage if
approaching each other from opposite directions, there is well-founded fear of seizure, privateers and
or on intersecting lines, the steamship, from the other valid grounds;
moment the sailing vessel is seen, shall watch with 2. The captain shall then assemble the officers;
the highest diligence her course and movements 3. The captain shall summon the persons interested
so as to be able to adopt such timely means of in the cargo who may be present and who may
precaution as will necessarily prevent the two attend but without right to vote;
boats from coming in contract, 4. The officers shall determine and agree if there is
2. The sailing vessel is required to keep her course well founded reason after examining the
unless the circumstances require otherwise. (Smith circumstances. The captain shall have the deciding
Bell vs. CA, Supra) vote;
5. The agreement shall be drafted and the proper
Port and Starboard - These are nautical terms which refer minutes shall be signed and entered in the log
to the left and right sides, respectively, of a ship as book;
perceived by a person on board facing the bow (front). At 6. Objections and protests shall likewise be entered in
night, the port side of a vessel is indicated with a red the minutes. (Art. 819, Code of Commerce)
navigation light and the starboard side with a green one.
WHEN ARRIVAL UNDER STRESS IS IMPROPER:
Cases covered by Collision and Allision: 1. If the lack of provisions should arise from the failure
1. One vessel at fault - If a vessel should collide with to take the necessary provisions for the voyage,
another through the fault, negligence, or lack of according to usage and custom, or if they should
skill of the captain, sailing mate, or any other have been rendered useless or lost through bad
member of the complement, the owner of the stowage or negligence in their care.
vessel at fault shall indemnify the losses and 2. If the risk of enemies, privateers, or pirates should
damages suffered, after an expert appraisal. (Art. not have been well known, manifest, and based on
826, Code of Commerce) positive and justifiable facts.
2. Both vessels at fault - If both vessels may be 3. If the injury to the vessel should have been caused
blamed for the collision, each one shall be liable for by reason of her not being repaired, rigged,
his own damages, and both shall be jointly equipped, and arranged in a convenient manner for

TRANSPORTATION LAW
Morillo Notes
the voyage, or by reason of some erroneous order shall be for the account of the owners of the
of the captain. merchandise, for whose benefit the act took place.
4. Whenever malice, negligence, want of foresight, or - If the unloading should take place for both reasons,
lack of skill on the part of the captain is the reason the expenses shall be defrayed in proportion to the
for the act causing the damage. (Art. 820, Code of value of the vessel and that of the cargo. (Art. 822,
Commerce) Code of Commerce)
EXPENSES: CUSTODY OF CARGO:

- If the arrival under stress is proper → the - The care and preservation of the cargo which has
shipowner and the ship agent will only be liable for been unloaded shall be in charge of the captain,
the expenses for the same arrival. who shall be responsible for the same, except in
- If the arrival under stress is improper → the cases of force majeure. (Art. 823, Code of
shipowner and the ship agent will be liable for the Commerce)
same expenses AND they shall be solidarily liable - If the entire cargo or part thereof should appear to
for damages caused to the cargos by such arrival be damaged, or there should be imminent danger
under stress. of its being damaged, the captain may request of
the judge or court of competent jurisdiction or the
MARITIME PROTEST: consul, in a proper case, the sale of all or of part of
- A written statement made under oath by the the former, and the person taking cognizance of
captain of a vessel after the occurrence of an the matter shall authorize it after an examination
accident or disaster in which the vessel or cargo is and declaration of experts, advertisements, and
lost or damaged, with respect to the circumstances other formalities required by the case and an entry
attending such occurrence, for the purpose of in the book, in accordance with the provisions of
recovering losses and damages. (Art. 835, Code of Article 624.
Commerce) - The captain shall, in a proper case, justify the
legality of the procedure, under the penalty of
Made by whom - Captain answering to the shipper for the price the
When made? Within 24 hours from the time the collision merchandise would have brought if it should have
took place. (art. 835, Code of Commerce) arrived at the port of its destination in good
Before whom made - Competent authority at the point of condition. (Art. 824, Code of Commerce)
collision or at the first port of arrival, if in the Philippines,
and to the Philippine Consul if the collision took place LIABILITY OF CAPTAIN:
abroad. (Art. 835, Code of Commerce) - The captain shall answer for the damages caused
by his delay, if the reason for the arrival under
Excuses for Not filing Protest: stress having ceased, he should not continue the
1. Where the interested person is not on board the voyage.
vessel; and - If the reason for said arrival should have been the
2. With respect to damages caused to person or fear of enemies, privateers, or pirates, before
cargo, the absence of a protest may not prejudice sailing, a discussion and resolution of a meeting of
the persons interested who were not in a condition the officers of the vessel and persons interested in
to make known their wish (Art. 836, Code of the cargo who may be present shall take place, in
Commerce) accordance with the provisions contained in Article
819. (Art. 825, Code of Commerce)
Cases wherein Maritime Protest is Applicable:
1. Collision; Shipwreck - Demolition or shattering of a vessel caused by
2. Arrival under stress; her driving ashore or on rocks and shoals in the midseas, or
3. Shipwrecks; and by violence of winds and waves in tempests. (Aquino &
4. Where the vessel has gone through a hurricane or Hernando, p. 665).
when the captain believes that the cargo has [NOTE: Other related Code of Commission; Arts. 840-845]
suffered damages or averages. (Art. 614, Code of
Commerce) CHARTER PARTY:
- Neither shall merchandise which was lost by
UNLOADING OF CARGOES TO MAKE REPAIRS reason of shipwreck or stranding pay freight, nor
- If in order to make repairs to the vessel or because that seized by pirates or enemies.
there should be danger of the cargo suffering
damage it should be necessary to unload, the If the freight should have been paid in advance, it
captain must request authorization of the judge or shall be returned, unless there was an agreement
court of competent jurisdiction to lighten the to the contrary. (Art. 661, Code of Commerce)
vessel, and do so with the knowledge of the person
interested or representative of the cargo, should LOANS:
there be one. - In case of shipwreck the amount liable for the
- In a foreign port, it shall be the duty of the return of the loan shall be reduced to the proceeds
Philippine consul, where there is one, to give the of the goods saved, after the costs of the salvage
authorization. have been deducted.
- In the first case, the expenses shall be defrayed by
the ship agent or owner, and in the second, they If the loan were on the vessel or any of her parts,
the freightage earned during the voyage for which


TRANSPORTATION LAW
Morillo Notes
said loan was contracted shall also be liable for its 3. There must be success in whole or in part or that
payment, as far as it is available. (Art. 734, Code of the service rendered contributed to such success;
Commerce) and
- If the same vessel or cargo should be the object of 4. The vessel shipwrecked beyond the control of the
a loan on bottomry or respondentia and marine crew or shall have been abandoned. (Barrios vs.
insurance, the value of what may be saved shall be Go Thong & Company, GR no. L-17192, March 30,
divided, in case of shipwreck, between the lender 1963)
and the underwriter, in proportion to the legitimate
interest of each one, taking into consideration, for
BARRIOS vs. GO THONG & COMPANY
this purpose only, the principal with relation to the GR no. L-17192, March 30, 1963
loan, and without prejudice to the right of
preference of other creditors in accordance with The SC found that no marine peril attended the claim for salvage,
Article 580. (Art. 735, Code of Commerce) and what transpired was a quasi-contract of “towage” because
in consenting to plaintiff’s offer to tow the vessel, defendant
thereby impliedly entered into a juridical relation of “towage” with
the owner of the towing vessel, captained by plaintiff.
SALVAGE LAW THEREFORE, “the circumstances that although the defendant’s
[Act no. 2616] vessel was in a helpless condition due to engine failure, it did not
drift too far from the place where it was, that the weather was
fair, clear and good, that there were only ripples on the sea
which was quite smooth, that there was moonlight, that
DEFINITION OF SALVAGE: although said vessel was drifting towards the open sea, there
- a service which one person renders to the owner of was no danger of its floundering or being stranded as it was far
a ship or goods, by his own labor, preserving the from any island or rocks, and its anchor could be released to
gods or the ship which the owner or those prevent such occurrence, al show that there was no marine peril,
and the vessel was not a quasi-derelict, as to warrant a valid
entrusted with the care of them have either
salvage claim for the towing of the vessel.”
abandoned in distress at sea, or are unable to
protect and secure. (Erlanger & Galinger vs.
Swedish East Asiatic, 34 Phil. 178) Persons Who are Not Entitled to Salvage Compensation:
1. The crew of the vessel shipwrecked or which was
Rationale of Salvage Law: in danger of shipwreck;
- Salvage is founded on the equity of remunerating 2. He who shall have commenced the salvage in
private and individual services performed in saving, spite of opposition of the captain or of his
in whole or in part, a ship or its cargo from representatives; and
impending peril, or recovering them after actual 3. He who shall have failed to comply with the
loss. It is a compensation for actual services provisions of the Sec. 3, of the salvage Law. (Sec.
rendered to the property charged with it, and is 8, Salvage Law)
allowed for meritorious conduct of the salvor, and
in consideration of a benefit conferred upon the DERELICT:
person whose property he has saved. (Erlanger & - A ship or her cargo which is abandoned and
Galinger vs. Swedish East Asiatic, Supra) deserted at sea by those who were in charge of it,
without any hope of recovering it (Sine spe
KINDS OF SALVAGE SERVICES: recuperandi), or without any intention of returning
1. Voluntary - wherein the compensation is to it (Sine animo revertendi). (Erlanger & Galinger
dependent upon success; vs. Swediesh East Asiatic, Supra)
2. Per Diem - wherein it is rendered under a contract
for a per diem or per horam wage, payable at all DERELICT REQUIRED:
events; or - Whether the property is to be adjudged derelict is
3. Compensation - wherein it is under a contract for determined by ascertaining what was the intention
a compensation payable only in case of success. and expectation of those in charge of it when they
(Erlanger & Galinger vs. Swedish East Asiatic, quitted it. If those in charge left with the intention
Supra) of returning, or of procuring assistance, the
property is not derelict, but if they quitted the
CLAIM FOR VALID SALVAGE: property with the intention of finally leaving it, it is
- When in case of the crew, or shall have been derelict, and a change of their intention and an
abandoned by them, and picked up and conveyed attempt to return will not change its nature.
to a safe place by other other persons, the latter (Erlanger & Galinger vs. Swedish East Asiatic,
shall be entitled to a reward for the salvage. Other Supra)
persons who assist in saving the vessel or its cargo
from shipwreck shall be entitled to a similar reward. DIFFERENCE BETWEEN SALVAGE AND TOWAGE:
(Aquino & Hernando, p.673)
SALVAGE TOWAGE
Requisites for Claim for Valid Salvage (Compensation):
As to Governing Law
1. There must be a Marine Peril;
2. The service is Voluntary rendered and is not
required as an existing duty or from a special Act No. 2616 Civil Code provisions on
contract; Contract of Lease

TRANSPORTATION LAW
Morillo Notes
5. Issue to the shipper a bill of lading. (Sec. 3,
As to Requisite of Success
COGSA)
Requires success, otherwise Success is not required AMOUNT OF CARRIER’S LIABILITY:

no payment - The liability limit is set at $500 per package or
customary freight unit unless the nature and value
As to Consent of such goods is declared by the shipper. (Sec.
4(5), COGSA). this is deemed incorporated in the
bill of lading even if not mentioned in it.
Must be done with the consent Success is not required - The package/container contemplated by the law to
of the captain/ crewmen limit the liability of the carrier should be sensibly
related to the unit in which the shipper packed the
As to Involvement of the Vessel in the Accident goods and described therein. Such “container”
must be given the same meaning and classification
as a “package” and “customary freight unit”.
Vessel must be involved in an Vessel need not be involved in (Aboitiz Shipping Corp., vs. General Accident Fire
accident. an accident.
and Life Assurance, Supra)
As to Fees
NOTICE OF DAMAGE:
1. In case of patent damage → the shipper should
Fees distributed among Fees belong to the tugboat file a claim with the carrier immediately upon
crewman owner. delivery.
2. In case of latent damage → the shipper should file
a claim with the carrier within 3 days from delivery.
Jetsam - are goods that were thrown off a ship which was (Sec. 3(6), COGSA)
in danger. (Thannapan, p. 197)
PRESCRIPTIVE PERIOD:
Flotsam - are goods that are floated off the ship while the - Action for loss or damage should be brought within
ship is in danger or when it sank. (Thannapan, p. 197) 1 year after: (a) Delivery of the goods (delivered but
damaged goods), or (b) The date when the goods
Ligan - are goods left at sea on the wreck or tied to a buoy should have been delivered (non-delivery. (Sec.
so that they can be recovered later. (Thannapan, p. 197)/ 3(6), COGSA)
Loss or Damage - contemplates a situation where no

CARRIAGE OF GOODS BY SEA ACT (COGSA) delivery at all wby the shipper of the goods because the
[Commonwealth Act No. 65] same had perished, gone out of commerce of men, or
disappeared in such a way that their existence is unknown
or they cannot be recovered. It DOES NOT INCLUDE a
situation:
APPLICABILITY TO INTERNATIONAL SHIPPING TO THE 1. Where there was indeed a delivery but delivery
PHILIPPINES: goes to the wrong person or a misdelivery. (Ang vs.
- The New Civil Code is the primary law on goods American Steamship Agency, GR no. L-22491,
that are being transported from a foreign port to January 27, 1967)
the Philippines. However, COGSA remains to be 2. Where there has been damages arising from delay
suppletory law for such type of transportation - or late delivery (Mitsui OSK Lines vs. CA, GR no.
international shipping. 119571, March 11, 1998)
GOODS - includes goods, wares, merchandise, and articles NOTE: In such cases, the Civil Code rules on prescription
of every kind whatsoever, except live animals and cargo shall apply. (Ang vs. American Steamship, Supra)
which by the contract of carriage is stated as being carried
on deck and is so carried. (Sec.1(c), COGSA) The 1-Year Prescriptive Period is Suspended by:
1. The express agreement of the parties (Universal
PARTIES: Shipping lines vs. IAC, GR no. 74125, July 31,
1. Carrier - includes the owner or the charterer who 1990); AND
enters into a contract of carriage with the shipper. 2. The filing of an action in court until it is dismissed
(Sec. 1(a), COGSA); AND (Stevens & Co. vs. Norddeutscher Lloyd, GR no. L-
2. Shipper 17730, september 29, 1962)
DUTIES OF A CARRIER: NOTE: The 1-Year period shall run from delivery of the last
1. Make the ship Seaworthy; package and is not suspended by extrajudicial demand.
2. Properly man, equip, and supply the ship; (Sec. 3(6), COGSA)
3. Make the holds, refrigerating and cooling
chambers; The insurer filing a claim against the carrier, in the exercise
4. Properly and carefully load, handle, stow, carry, of its right of subrogation, is bound by the 1-year
keep, care for and discharge the goods carried; prescriptive period. However, it does not apply to the claim
and of the shipper against the insurer for the insurance
proceeds because the claim against the insurer is based on


TRANSPORTATION LAW
Morillo Notes
contract, it expires in 10 years. (Mayer Steel Pipe Corp. vs.
CA, GR no. 124050, June 19, 1997)
Defenses and immunities

- provided for by Section 4 of COGSA
- Section 49(1) of COGSA – carrier shall not be
liable for loss or damages arising from
unseaworthiness
- New Civil Code – carrier will not be liable only if
it can present proof that the unseaworthiness
was caused exclusively by any of the
circumstances specified in Art. 1734 of the NCC
Waiver
- The shipowner and the ship agent may waive the
benefit of any of the defenses in its favor
provided not only under COGSA but also under
other laws
Limiting provision
- COGSA contains a provision that allows the
shipper to recover only US$500 per package
unless there is a special declaration unless there
the real value of the goods is declare
- 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 the
goods

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What are the primary and suppletory laws governing coastwise shipping?

What are the primary and suppletory laws governing coastwise shipping?

What are the duties of a carrier under COGSA?

What are the duties of a carrier under COGSA?

TRANSPORTATION LAW

TRANSPORTATION LAW NOTES 1

Mandate of the Department of Transportation:

TRANSPORTATION LAW NOTES 3

DEFINITION OF CONTRACT OF TRANSPORTATION 3. Consignee:

party to the contract. (Aquino & Hernano (2016),

The following are NOT considered as PASSENGERS, PERFECTION OF CONTRACT OF TRANSPORTATION

TRANSPORTATION LAW NOTES 5

PEDRO DE GUZMAN vs. CA Respondent PKS Shipping transported 75,000 bags of

Asia Lighterage and Shipping was involved in the

TRANSPORTATION LAW NOTES 7

Types of Charter Parties: Diligence Required:

TRANSPORTATION LAW NOTES 9

Ocampo and Garcia decided to register their

TRANSPORTATION LAW NOTES 11

The legislators having enacted a regulation prohibiting common Lessening Loss:

TRANSPORTATION LAW NOTES 13

DUTY TO EXERCISE EXTRAORDINARY DILIGENCE A. PRESUMPTION OF NEGLIGENCE:

Preliminary Note: A. PRESUMPTION OF NEGLIGENCE OVER CARRIAGE

Article 1735. In all cases other than those mentioned in Nos. 1,

Rationale behind the “Duty to Exercise Extraordinary

TRANSPORTATION LAW NOTES 15

Delivery to Customs Authorities: ABOITIZ SHIPPING CORP. vs. CA

TRANSPORTATION LAW NOTES 17

TRANSPORTATION LAW NOTES 19

Under the circumstances of this case, the explosion of the

TRANSPORTATION LAW NOTES 21

Article 1763. A common carrier is responsible for injuries

LTFRB Rules: OBLIGATION OF THE SHIPPER, CONSIGNEE AND

TRANSPORTATION LAW NOTES 23

Demurrage: A. As to the Goods:

TRANSPORTATION LAW NOTES 25

Article 1758. When a passenger is carried gratuitously, a

TRANSPORTATION LAW NOTES 27

TRANSPORTATION LAW NOTES 29

In this particular case before Us, it must be considered that while

AIRWORTHINESS: BILL OF LADING AND

KOREAN AIRLINES vs. CA DEFINITION OF A BILL OF LADING:

TRANSPORTATION LAW NOTES 31

BILL OF LADING AS CONTRACT BILL OF LADING AS EVIDENCE:

TRANSPORTATION LAW NOTES 33

EFFECT OF NEGOTIATION: Negotiation of the document

TRANSPORTATION LAW NOTES 35

As to Source of Obligation SOLIDARY LIABILITY:

In What Capacity Liable ELEMENTS OF CAUSE OF ACTION AGAINST THE

NOTICE OF CLAIM AND PRESCRIPTIVE PERIOD NOTICE OF CLAIM IN INTERNATIONAL CARRIAGE OF

TRANSPORTATION LAW NOTES 37

PRESCRIPTION IN OVERLAND TRANSPORTATION AND RECOVERABLE DAMAGES:

Applied to Common Carrier - The carrier in good faith is

TRANSPORTATION LAW NOTES 39

Petitioner sacrificed the comfort of its first class passengers

The parents of the female seduced, abducted, raped, or abused,

TRANSPORTATION LAW NOTES 41

Article 2235. A stipulation whereby exemplary damages are

Article 2224. Temperate or moderate damages, which are more