Transpo Notes

FEU Institute of Law
Reviewer In Transportation Law

Chapter 1
GENERAL CONSIDERATIONS
or transporting passengers or
goods or both, by land, water, or
air, for compensation, offering their
services to the public. (Art. 1732,
NCC)
A. Overview of Transportation Law

1. NCC Article 1766. In all matters not
regulated by this Code, the rights and
obligations of common carriers shall be
governed by the Code of Commerce and by
special laws.
Article 1755. A common carrier is

bound to carry the passengers safely
as far as human care and foresight can
provide, using the utmost diligence of
very cautious persons, with a due
regard for all the circumstances.
2. Code of Commerce (TITLE VII

COMMERCIAL CONTRACTS FOR
TRANSPORTATION)
b. Carriage of Goods
1) Shipper person who delivers the
goods
to
the
carrier
for
transportation; one who pays the
consideration or on whose behalf
payment is made
3. Special Laws:
a. Carriage of Goods by Sea Act (Public
Act 1521)
b. Salvage Law (Act 2616)
c. Public Service Act (Commonwealth Act
146)
d. Land Transportation and Traffic Code
(R.A. 4136)
e. Civil Aeronautics Act (R.A. 776) and
Civil Aviation Authority Act (R.A. 9497)
f. E.O. 125 and 125-A, Phil. Overseas
Shipping Act (R.A. 7471), Maritime
Industry Decree of 1974 (P.D. 474),
Domestic Shipping Development Act of
2004 (R.A. 9295)
g. Tariff and Customs Code
h. Warsaw Convention
2) Carrier
3) Consignee the person to whom
the goods are to be delivered; may
either be the shipper himself or a
third person who is not actually a
party to the contract; may be
deemed to be bound by the terms
and conditions of the bill of lading
where it was established that he
accepted the same and is trying to
enforce the agreement.
2. Perfection
B. Definition of Contract of Transportation

when a person obligates himself to transport
persons or property from one place to another
for a consideration.
a. Contract
of
Passengers
of
1) Contract to Carry an
agreement to carry the passenger at
some future date; consensual and is
therefore perfected by mere
consent
2) Contract of Carriage or of
Common Carriage itself
considered as real contract for not
until the facilities of the carrier are
actually used can the carrier be said
to have already assumed the
obligation of the carrier.
The contract may involve carriage of

passengers or carriage of goods.
The person who obligates himself to
transport the goods or passengers may
be a common carrier or a private
carrier.
1. Parties
a. Carriage of Passengers
1) Passenger one who travels in a
public conveyance by virtue of
contract, express or implied, with
the carrier as to the payment of fare
or that which is accepted as an
equivalent thereof; even if being
carried gratuitously or under a
reduced fare.
2) Common Carrier - persons,
corporations, firms or associations
engaged in the business of carrying
Rowena B. Gallego
Carriage
b. Contract of Carriage of Goods by

the act of delivery of the goods, that is,
when the goods are unconditionally
placed in the possession and control of
the carrier, and upon their receipt by
the carrier for transportation, the
contract of carriage is perfected.
Atty. Ma. Victoria M. Sarmiento

1) Aircraft : the contract to carry
passengers is perfected even if no
tickets have been issued to said
passengers so long as there was
already a meeting of minds with
respect to the subject matter and
the consideration. The contract to
carriage is perfected if it can be
established that the passenger had
checked in at the departure
counter, passed through customs
and immigration, boarded the
shuttle bus and proceeded to the
ramp of the aircraft to be flown
with the passenger to his
destination.
CA - while the deceased might not have then

as yet boarded the train, a contract of carriage
theretofore had already existed when the
victim entered the place where passengers
were supposed to be after paying the fare and
getting the corresponding token therefor.
SC - The law requires common carriers to
carry passengers safely using the utmost
diligence of very cautious persons with due
regard for all circumstances. Such duty of a
common carrier to 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 its premises and where
they ought to be in pursuance to the contract of
carriage. The statutory provisions render a
common carrier liable for death of or injury to
passengers (a) through the negligence or
wilful acts of its employees or b) on
account of wilful acts or negligence of
other passengers or of strangers if the
common carriers employees through
the exercise of due diligence could have
prevented or stopped the act or
omission. In case of such death or injury, a
carrier is presumed to have been at fault or
been negligent, and by simple proof of injury,
the passenger is relieved of the duty to still
establish the fault or negligence of the carrier
or of its employees and the burden 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,
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.
2) Buses, Jeepneys and Street

Cars : once a public utility bus
stops, it is in effect making
continuous offer to bus riders.
Hence, it is the duty of the drivers
to stop their conveyances for a
reasonable length of time in order
to afford passengers an opportunity
to board and enter, and they are
liable for injuries suffered by
boarding passengers resulting from
the sudden starting up of the
carrier
3) Trains : must purchase a ticket
and present himself at the proper
place and in a proper manner for
transportation. He must have a
bonafide intention to use the
facilities of the carrier, possess
sufficient fare with which to pay for
his passage, and present himself to
the carrier for transportation in the
place and manner provided. If he
does not do so, he will not be
considered a passenger.
LRTA vs. Natividad
(GR No. 145804, Feb. 6, 2003)
Nicanor Natividad, entered the LRT EDSA
station drunk. While on the platform, he was
approached by the guard, Escartin, whom he
had a fist fight after altercation. He fell on the
LRT track and died instantaneously when he
was struck by the moving train driven by
Roman.
Ruling:
Rowena B. Gallego
The foundation of LRTAs liability is the

contract of carriage and its obligation to
indemnify the victim arises from the breach of
that contract by reason of its failure to exercise
the high diligence required of the common
carrier. In the discharge of its commitment to
ensure the safety of passengers, a carrier may
choose to hire its own employees or avail itself
of the services of an outsider or an independent
firm to undertake the task. In either case, the
common carrier is not relieved of its
responsibilities under the contract of carriage.
C. Common Carriers - persons, corporations,
firms or associations engaged in the business of
carrying or transporting passengers or goods or
both, by land, water, or air, for compensation,
offering their services to the public. (Art. 1732)

(Lastimoso vs. Doliente, October 20,

1961);
2. Cannot lawfully decline to accept a
particular class of goods for carriage to
the prejudice of the traffic in these
goods;
3. No monopoly is favored (Batangas
Trans. vs. Orlanes, 52 PHIL 455);
4. Provides public convenience.
One that holds itself out as ready to

engage in the transportation of goods
for hire as a public employment and not
as a casual occupation.
Art. 1732 of the New Civil Code avoids any

distinction between one whose principal
business activity is the carrying of persons
or goods or both and one who does such
carrying only as an ancillary activity
(sideline). It also avoids a distinction
between a person or enterprise offering
transportation service on a regular or
scheduled basis and one offering such
service on an occasional, episodic or
unscheduled basis.
Neither does the law distinguish between a
carrier offering its services to the general
public that is the general community or
population and one who offers services or
solicits business only from a narrow
segment of the general population.
A person or entity is a common carrier even
if he did not secure a Certificate of Public
Convenience (De Guzman vs. CA, 168 SCRA
612).
It makes no distinction as to the means of
transporting, as long as it is by land, water
or air.
It does not provide that the
transportation should be by motor vehicle.
(First Philippine Industrial Corporation vs.
CA)
One is a common carrier even if he has no
fixed and publicly known route, maintains
no terminals, and issues no tickets (Asia
Lighterage Shipping, Inc. vs. CA).
a. Public Service / Public Utilities

Article 1733. Common carriers, from the
nature of their business and for reasons of
public policy, are bound to observe
extraordinary diligence in the vigilance
over the goods and for the safety of the
passengers
transported
by
them,
according to all the circumstances of each
case.
Such extraordinary diligence in the
vigilance over the goods is further
expressed in articles 1734, 1735, and 1745,
Nos. 5, 6, and 7, while the extraordinary
diligence for the safety of the passengers is
further set forth in articles 1755 and 1756.
(New Civil Code)
Section 11. No franchise, certificate, or
any other form of authorization for the
operation of a public utility shall be
granted except to citizens of the Philippines
or to corporations or associations
organized under the laws of the
Philippines, at least sixty per centum of
whose capital is owned by such citizens;
nor shall such franchise, certificate, or
authorization be exclusive in character or
for a longer period than fifty years.
Neither shall any such franchise or right be
granted except under the condition that it
shall be subject to amendment, alteration,
or repeal by the Congress when the
common good so requires. The State shall
encourage equity participation in public
utilities by the general public. The
participation of foreign investors in the
governing body of any public utility
enterprise shall be limited to their
proportionate share in its capital, and all
the executive and managing officers of
such corporation or association must be
citizens of the Philippines. (Art. XII, 1987
Constitution)
Tests to determine:
1. It must be engaged in the business of
carrying goods for others as a public
employment and must hold itself out as
ready to engage in the transportation of
goods generally as a business and not
as a casual occupation;
2. It must undertake to carry goods of the
kind to which its business in confined;
3. It must undertake to carry by the
method by which his business is
conducted and over its established
roads; and
4. The transportation must be for hire.
Characteristics:
1. Undertakes to carry for all people
indifferently and thus is liable for
refusal without sufficient reason
Rowena B. Gallego

Section 13 Public Service Act
(C.A. 146)
(b) The term "public service" includes
every person that now or hereafter may
own, operate, manage, or control in the
Philippines, for hire or compensation, with
general or limited clientele, whether
permanent, occasional or accidental, and
done for general business purposes, any
common carrier, railroad, street railway,
traction railway, sub-way motor vehicle,
either for freight or passenger, or both
with or without fixed route and whether
may be its classification, freight or carrier
service of any class, express service,
steamboat or steamship line, pontines,
ferries, and water craft, engaged in the
transportation of passengers or freight or
both, shipyard, marine railways, marine
repair shop, [warehouse] wharf or dock,
ice plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat
and power water supply and power,
petroleum, sewerage system, wire or
wireless communications system, wire or
wireless broadcasting stations and other
similar public services: Provided, however,
That a person engaged in agriculture, not
otherwise a public service, who owns a
motor vehicle and uses it personally
and/or enters into a special contract
whereby said motor vehicle is offered for
hire or compensation to a third party or
third parties engaged in agriculture, not
itself or themselves a public service, for
operation by the latter for a limited time
and for a specific purpose directly
connected with the cultivation of his or
their farm, the transportation, processing,
and marketing of agricultural products of
such third party or third parties shall not
be considered as operating a public service
for the purposes of this Act.
Ruling:
The SC ruled that PKS Shipping is a common
carrier because it was engaged in the business
of carrying goods for others for a fee.
Factual findings indicate that PKS Shipping
has engaged itself in the business of carrying
goods for others, although for a limited
clientele, undertaking to carry such goods for a
fee. The regularity of its activities in this area
indicates more than just a casual activity on its
part.6 Neither can the concept of a common
carrier change merely because individual
contracts are executed or entered into with
patrons of the carrier. Such restrictive
interpretation would make it easy for a
common carrier to escape liability by the
simple expedient of entering into those distinct
agreements with clients.
c. Means of Transportation
Article 1732. Common carriers are
persons,
corporations,
firms
or
associations engaged in the business of
carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to the
public.
First Phil. Industrial Corp. vs. CA
GR No. 125948, December 29, 1998)
Petitioner is a grantee of a pipeline concession
under Republic Act No. 387. Sometime in
January 1995, petitioner applied for mayors
permit in Batangas. However, the Treasurer
required petitioner to pay a local tax based on
gross receipts amounting to P956,076.04. In
order not to hamper its operations, petitioner
paid the taxes for the first quarter of 1993
amounting to P239,019.01 under protest. On
January 20, 1994, petitioner filed a letterprotest to the City Treasurer, claiming that it is
exempt from local tax since it is engaged in
transportation business. The respondent City
Treasurer denied the protest, thus, petitioner
filed a complaint before the Regional Trial
Court of Batangas for tax refund. Respondents
assert that pipelines are not included in the
term common carrier which refers solely to
ordinary carriers or motor vehicles. The trial
court dismissed the complaint, and such was
affirmed by the Court of Appeals.
b. Clientele although the clientele is

limited, the regularity of the activities of a
carrier may indicate that the same carrier is
a common carrier.
PhilAmGen vs PKS Shipping
GR No. 149038, April 9, 2003
PKS Shipping transported 75,000 bags of
cement of Davao Union Marketing in a barge.
The barge of cement sank together with the
barge when the latter was being towed by a
tug boat.
Rowena B. Gallego
Ruling:
Based on the above definitions and
requirements, there is no doubt that petitioner

is a common carrier. It is engaged in the
business of transporting or carrying goods, i.e.
petroleum products, for hire as a public
employment. It undertakes to carry for all
persons indifferently, that is, to all persons
who choose to employ its services, and
transports the goods by land and for
compensation. The fact that petitioner has a
limited clientele does not exclude it from the
definition of a common carrier.
Effect of Charter Party it may transform a

common carrier into a private carrier. However,
it must be a bareboat or demise charter where
the charterer mans the vessel with his own
people and becomes, in effect, the owner for the
voyage or service stipulated.
As correctly pointed out by petitioner, the

definition of "common carriers" in the Civil
Code makes no distinction as to the means of
transporting, as long as it is by land, water or
air. It does not provide that the transportation
of the passengers or goods should be by motor
vehicle. In fact, in the United States, oil pipe
line operators are considered common
carriers. 17
CHARTER PARTY contract by

which an entire ship or some principal
part thereof is let by the owner to
another person for a specified time or
use.
TYPES:
1. Contract of Affreightment
involves the use of shipping space
on vessels leased by the owner in
part or as a whole, to carry goods
for another. Common carrier (CC)
must
exercise
extraordinary
diligence;
in
case
of
loss,
deterioration or destruction of
goods, CCs are presumed to be at
fault or have acted negligently.
Under the Petroleum Act of the Philippines

(Republic Act 387), petitioner is considered a
"common carrier." Thus, Article 86 thereof
provides that:
Art. 86. Pipe line concessionaire as
common carrier. A pipe line shall have
the preferential right to utilize installations
for the transportation of petroleum owned
by him, but is obligated to utilize the
remaining transportation capacity pro
rata for the transportation of such other
petroleum as may be offered by others for
transport, and to charge without
discrimination such rates as may have
been approved by the Secretary of
Agriculture and Natural Resources.
a. Time Charter vessel is

leased to the charterer for a
fixed period of time
b. Voyage Charter ship is
leased for a single voyage
2. Charter by Demise / Bareboat
Charter whole vessel is let to the
charterer with a transfer to him of
his entire command and possession
and consequent control over its
navigation including the master
and the crew who are his servants.
d. Extraordinary diligence

passengers
transported
by
them,
case.

(New Civil Code)
Rowena B. Gallego
Includes both vessel and crew

CC becomes a private carrier
(PC) insofar as that particular
voyage is concerned
If it is already a PC, ordinary
diligence in the carriage of
goods will suffice
PC : undertaking is a single
transaction, not a part of the
general business or occupation,
although involving the carriage
of goods for a fee; NO
presumption of negligence
applies whosoever alleges
damage to or deterioration of
the goods carried has the
burden of proving that the
cause was the negligence of the

carrier.
as in a bareboat or demise that a common

carrier becomes private, at least insofar as the
particular voyage covering the charter-party
is concerned. Indubitably, a shipowner in a
time or voyage charter retains possession and
control of the ship, although her holds may, for
the moment, be the property of the charterer.
Planters Products Inc. vs CA

226 SCRA 476
Planters Products purchased from Mitsubi

shi 9.33K metric tons of Urea
(46%
fertilizer) which the latter shipped in bulk
aboard the cargo vessel M/V Sun Plum
owned by Kyosei Kisen Kabushiki Kaisha
(KKKK)
The Court notes that it was in the month of

July when the vessel arrived at the port and
unloaded her cargo. It rained from time to
time at the harbor area while the cargo was
being discharged according to the supply
officer of PPI, who also testified that it was
windy at the waterfront and along the
shoreline where the dump trucks passed
enroute to the consignee's warehouse.
A time charter-Party on the vessel M/V

Sun
Plum pursuant to the Uniform General
Charter was entered into between
Mitsubishi as shipper/charterer and KKKK
as shipowner.
Before loading the

fertilizer aboard the
vessel,
they were
inspected by the charterers representative
and found fit to take a load of urea in bulk.
After the Urea fertilizer was loaded in bulk

by stevedores hired by and under the
supervision of the shipper, the steel hatches
were closed with heavy iron lids, covered
with 3 layers of tarpaulin, then tied with
steel bonds. The hatches remained closed
and tightly sealed throughout the entire
voyage.
Upon arrival, the port area was windy,

certain portions of the route to the
warehouse were sandy and the weather
was variable, raining occasionally while
the discharge was in progress.
Survey report revealed a shortage in the

cargo of 106.726 M/T and that a portion of
the Urea fertilizer approximating 18 M/T
was contaminated with sand, rust and
dirt.
Planters Products sent a claim letter to

Soriamont
Steamship
Agencies,
the resident agent of the carrier, for
damages
Indeed, we agree with respondent carrier that

bulk shipment of highly soluble goods like
fertilizer carries with it the risk of loss or
damage. More so, with a variable weather
condition prevalent during its unloading as
was the case at bar. This is a risk the shipper
or the owner of the goods has to face. Clearly,
respondent carrier has sufficiently proved the
inherent character of the goods which makes it
highly vulnerable to deterioration; as well as
the inadequacy of its packaging which further
contributed to the loss. On the other hand, no
proof was adduced by the petitioner showing
that the carrier was remise in the exercise of
due diligence in order to minimize the loss or
damage to the goods it carried.
Common Carrier distinguished from
Private Carrier
COMMON
CARRIER
1.
As to availability
Contracts with particular
Holds himself out for all
individuals or groups
people indiscriminately
only
2. As to required diligence
Extraordinary diligence is Ordinary diligence is
required
required
3.
s to regulation
Subject
to
State Not subject to State
regulation
regulation
4. Stipulation limiting liability
Parties may limit the
Parties may not agree on
carriers
liability,
limiting the carriers
provided it is not
liability except when
contrary to law, morals
provided by law
or good customs
5. Exempting circumstance
Prove
extraordinary caso fortuito, Art. 1174
diligence and Art. 1733, NCC
Ruling:
It is therefore imperative that a public carrier
shall remain as such, notwithstanding the
charter of the whole or portion of a vessel by
one or more persons, provided the charter is
limited to the ship only, as in the case of a timecharter or voyage-charter. It is only when the
charter includes both the vessel and its crew,
Rowena B. Gallego
PRIVATE
CARRIER

However, GPS cannot escape from liability.
NCC
6. Presumption of negligence
There is a presumption of No presumption of fault
fault or negligence
or negligence
7. Governing law
Law on obligations and
Law on common carriers
contracts
In culpa contractual, upon which the action of

petitioner rests as being the subrogee of
Concepcion Industries, Inc., the mere proof of
the existence of the contract and the failure of
its compliance justify, prima facie, a
corresponding right of relief. The law,
recognizing the obligatory force of contracts,
will not permit a party to be set free from
liability for any kind of misperformance of the
contractual undertaking or a contravention of
the tenor thereof. A breach upon the contract
confers upon the injured party a valid cause
for recovering that which may have been lost
or suffered. The remedy serves to preserve the
interests of the promisee that may include his
"expectation interest," which is his interest in
having the benefit of his bargain by being put
in as good a position as he would have been in
had the contract been performed, or his
"reliance interest," which is his interest in
being reimbursed for loss caused by reliance
on the contract by being put in as good a
position as he would have been in had the
contract not been made; or his "restitution
interest," which is his interest in having
restored to him any benefit that he has
conferred on the other party. Indeed,
agreements can accomplish little, either for
their makers or for society, unless they are
made the basis for action. The effect of every
infraction is to create a new duty, that is, to
make recompense to the one who has been
injured by the failure of another to observe his
contractual obligation unless he can show
extenuating circumstances, like proof of his
exercise of due diligence (normally that of the
diligence of a good father of a family or,
exceptionally by stipulation or by law such as
in the case of common carriers, that of
extraordinary diligence) or of the attendance
of fortuitous event, to excuse him from his
ensuing liability.
FGU Insurance vs GP Sarmiento

Trucking
GR No. 141910, August 6, 2002
G.P. Sarmiento Trucking Corporation (GPS)
undertook to deliver on June 18, 1994, 30 units
of Condura S.D. white refrigerators aboard its
Isuzu truck driven by Lambert Eroles, to the
Central Luzon Appliances in Dagupan City.
While traversing the North Diversion Road
along McArthur highway in Barangay Anupol,
Bamban, Tarlac, it collided with an
unidentified truck, causing it to fall into a deep
canal, resulting in damage to the cargoes.
FGU, an insurer of the shipment, paid the
value of the covered cargoes (P204,450.00) to
Concepcion Industries, Inc.,. Being subrogee of
CIIs rights & interests, FGU, in turn, sought
reimbursement from GPS. Since GPS failed to
heed the claim, FGU filed a complaint for
damages & breach of contract of carriage
against GPS and Eroles with the RTC. In its
answer, respondents asserted that GPS was
only the exclusive hauler of CII since 1988, and
it was not so engaged in business as a common
carrier. Respondents further claimed that the
cause of damage was purely accidental.
Ruling:
The Court finds the conclusion of the trial court
and the Court of Appeals to be amply justified.
GPS, being an exclusive contractor and hauler
of Concepcion Industries, Inc., rendering or
offering its services to no other individual or
entity, cannot be considered a common carrier.
Common carriers are persons, corporations,
firms or associations engaged in the business
of carrying or transporting passengers or
goods or both, by land, water, or air, for hire
or compensation, offering their services to the
public,8 whether to the public in general or to
a limited clientele in particular, but never on
an exclusive basis.9 The true test of a common
carrier is the carriage of passengers or goods,
providing space for those who opt to avail
themselves of its transportation service for a
fee. Given accepted standards, GPS scarcely
falls within the term "common carrier."
Rowena B. Gallego
Home Insurance Co. vs American

Steamship Agencies, Inc.
GR No. L-25599, April 4, 1968
Consorcio Pesquero del Peru of South
America shipped freight pre-paid at Peru, jute
bags of Peruvian fish meal through SS
Crowborough, covered by clean bills of lading.
The cargo, consigned to San Miguel Brewery,
Inc., now San Miguel Corporation, and insured
by Home Insurance Company arrived in
Manila and was discharged into the lighters of
Luzon Stevedoring Company. When the cargo

was delivered to consignee San Miguel
Brewery Inc., there were shortages causing the
latter to lay claims against Luzon Stevedoring
Corporation, Home Insurance Company and
the American Steamship Agencies (shipowner),
owner and operator of SS Crowborough.
And furthermore, in a charter of the entire

vessel, the bill of lading issued by the master to
the charterer, as shipper, is in fact and legal
contemplation merely a receipt and a
document of title not a contract, for the
contract is the charter party.10 The consignee
may not claim ignorance of said charter party
because the bills of lading expressly referred to
the same. Accordingly, the consignees under
the bills of lading must likewise abide by the
terms of the charter party. And as stated,
recovery cannot be had thereunder, for loss or
damage to the cargo, against the shipowners,
unless the same is due to personal acts or
negligence of said owner or its manager, as
distinguished from its other agents or
employees. In this case, no such personal act or
negligence has been proved.
Because the others denied liability, Home

Insurance Company paid SMBI the insurance
value of the loss, as full settlement of the claim.
Having been refused reimbursement by both
the Luzon Stevedoring Corporation and
American
Steamship
Agencies,
Home
Insurance Company, as subrogee to the
consignee, filed against them before the CFI of
Manila a complaint for recovery of the
payment paid with legal interest, plus
attorneys fees.
In answer, Luzon Stevedoring Corporation
alleged that it delivered with due diligence the
goods in the same quantity and quality that it
had received the same from the carrier.
WHEREFORE, the judgment appealed from

is hereby reversed and appellant is absolved
from liability to plaintiff. No costs. So ordered.
The CFI, after trial, absolved Luzon

Stevedoring Corporation, having found the
latter to have merely delivered what it received
from the carrier in the same condition and
quality, and ordered American Steamship
Agencies to pay Home Insurance Company the
amount demanded with legal interest plus
attorneys fees.
Common Carrier distinguished from

other Contracts:
TOWAGE one vessel is hired to bring
another vessel to another place
Example: a tugboat may be hired by a
common carrier to bring a barge to a port,
thus, it cannot be considered as CC.
Disagreeing with such judgment, American

Steamship Agencies appealed directly to Us.
ARRASTRE refers to hauling of cargo,

comprehends the handling of cargo on the
wharf or between the establishment of the
consignee or shipper and he ships tackle. The
responsibility of the arrastre operator lasts until
the delivery of the cargo to the consignee, such
service is usually performed by longshoremen.
Ruling:
The provisions of our Civil Code on common
carriers were taken from Anglo-American
law.7 Under American jurisprudence, a
common carrier undertaking to carry a special
cargo or chartered to a special person only,
becomes a private carrier.8 As a private
carrier, a stipulation exempting the owner
from liability for the negligence of its agent is
not against public policy,9 and is deemed valid.
Functions of Arrastre Operator:

1. To receive, handle, care for, and deliver
all
merchandise
imported
and
exported, upon or passing over
Government-owned wharves and piers
in the port;
2. To record or check all merchandise
which may be delivered to said port at
shipside, and in general; and
3. To furnish light, and water services and
other incidental services in order to
undertake its arrastre service
Such doctrine We find reasonable. The Civil

Code provisions on common carriers should
not be applied where the carrier is not acting
as such but as a private carrier. The stipulation
in the charter party absolving the owner from
liability for loss due to the negligence of its
agent would be void only if the strict public
policy governing common carriers is applied.
Such policy has no force where the public at
large is not involved, as in the case of a ship
totally chartered for the use of a single party.
Rowena B. Gallego
Its function have nothing to do with the

trade and business of navigation, nor to
the use or operation of vessels

No different from those of a depositary

or warehouseman
Is responsibility for the merchandise
and goods begins from the time they
are placed upon the wharves or piers or
delivered along sides of ships
of loss or damage, either apparent or

concealed, is not given as provided for in
this section, that fact shall not affect or
prejudice the right of the shipper to bring
suit within one year after the delivery of
the goods or the date when the goods
should have been delivered.
Insurance Co. of North America

vs Phil. Ports Authority
GR No. L-6420, July 18, 1955
Ruling:
It is evident, however, that the defendant
Philippine Ports Terminals, Inc., is not a
carrier. Section 1 (a) and (d) of "Carriage of
Goods by Sea Act" defines the terms "carrier"
and "ship" as follows:
The Insurance Company of North America

filed a complaint against the Philippine Ports
Terminals, Inc., alleging, among other things,
that: the defendant Philippine Ports Terminals,
Inc., was the contractor and operator of the
arrastre service in the Port of Manila, and as
such, was charged with the custody and care of
all cargoes discharged at the government piers
at Manila with the duty to deliver same to their
respective owners upon presentation by the
latter of release papers from the agents or
owners of vessels and the Bureau of Custom;
that the plaintiff had been informed and
therefore alleged that in the month of
September, 1949, the steamship "PRESIDENT
VAN BUREN" discharged into the custody of
the Philippine Ports Terminals, Inc., one case
of machine knives consigned to the Central
Saw Mill, valued at least P3,796.00 but said
merchandise was never delivered by the
defendant to said consignee; that the
defendant admits the non-delivery of the said
merchandise to the consignee, Central Saw
Mills, Inc., and offered to pay P500.00 for said
merchandise instead of its value P3,796.00
which offer was refused; that the plaintiff
Insurance Company of North America was
subrogated to the rights of the Central Saw
Mill, Inc., by virtue of a receipt dated October
21, 1949; and that the defendant corporation
refused to pay said sum of P3,796.00. There is
a claim by the plaintiff of P1,000.00 as
attorney's fees.
The defendant-appellee filed a motion for
dismissal on the ground that the complaint
was filed after one year from the time that the
cause of action accrued. The court below
dismissed the complaint pursuant to the
provisions on Carriage of Goods by Sea Act,
which provides that:
The term "carrier" includes the owner or

the charterer who enters into a contract of
carriage with a shipper.
The term "ship" means any vessel used for
the carriage of goods by sea.
The defendant-appellee, Philippine Ports
Terminals, Inc., is neither a charterer nor a
ship. Consequently the "Carriage of Goods by
Sea Act" does not apply to it. However, the
ordinary period of four years fixed by the Code
of Civil Procedure will apply. The action in this
case has been brought within that time.
In view of the foregoing, the order of the lower
court dismissing the complaint is hereby
reversed and the case is remanded to the court
of origin for further proceedings, with costs
against the appellee. It is so ordered.
STEVEDORING handling of the cargo in
the holds of the vessel or between the ships
tackle and the holds of the vessel; involves the
loading and unloading of coastwise vessels
calling at the port.
In any event the carrier and the ship shall

be discharged from all liability in respect
of loss or damage unless suit is brought
within one year after delivery of the goods
or the date when the goods should have
been delivered: Provided, That if a notice
Rowena B. Gallego
The diligence required of a stevedore is

the diligence of a good father of a
family, because it mainly provides labor
in loading and stowing of cargoes for its
clients
It is not a common carrier for it does

not transport goods or passengers; it is
not akin to a warehouseman for it does
not store goods for profit

Mindanao Terminal and Brokerage
Service Inc. vs. Phoenix
Assurance/McGee and Co. (G.R. No.
162467, May 8, 2009)
Del Monte Philippines, Inc. (Del Monte)
contracted petitioner Mindanao Terminal and
Brokerage Service, Inc. (Mindanao Terminal),
a stevedoring company, to load and stow a
shipment of 146,288 cartons of fresh green
Philippine bananas and 15,202 cartons of fresh
pineapples belonging to Del Monte Fresh
Produce International, Inc. (Del Monte
Produce) into the cargo hold of the vessel M/V
Mistrau. The vessel was docked at the port of
Davao City and the goods were to be
transported by it to the port of Inchon, Korea
in favor of consignee Taegu Industries, Inc. Del
Monte Produce insured the shipment under an
"open cargo policy" with private respondent
Phoenix Assurance Company of New York
(Phoenix), a non-life insurance company, and
private respondent McGee & Co. Inc. (McGee),
the underwriting manager/agent of Phoenix.
Mindanao Terminal loaded and stowed the
cargoes aboard the M/V Mistrau. The vessel
set sail from the port of Davao City and
arrived at the port of Inchon, Korea. It was
then discovered upon discharge that some of
the cargo was in bad condition. The Marine
Cargo Damage Surveyor of Incok Loss and
Average Adjuster of Korea, through its
representative Byeong Yong Ahn (Byeong),
surveyed the extent of the damage of the
shipment. In a survey report, it was stated that
16,069 cartons of the banana shipment and
2,185 cartons of the pineapple shipment were
so damaged that they no longer had
commercial value.
Ruling:
There is a distinction between an arrastre and
a stevedore. Arrastre, a Spanish word which
refers to hauling of cargo, comprehends the
handling of cargo on the wharf or between the
establishment of the consignee or shipper and
the ship's tackle. The responsibility of the
arrastre operator lasts until the delivery of the
cargo to the consignee. The service is usually
performed by longshoremen. On the other
hand, stevedoring refers to the handling of
the cargo in the holds of the vessel or between
the ship's tackle and the holds of the vessel. The
responsibility of the stevedore ends upon the
loading and stowing of the cargo in the vessel.
Rowena B. Gallego
10
It is not disputed that Mindanao Terminal was

performing purely stevedoring function while
the private respondent in the Summa case was
performing arrastre function. In the present
case, Mindanao Terminal, as a stevedore, was
only charged with the loading and stowing of
the cargoes from the pier to the ships cargo
hold; it was never the custodian of the
shipment of Del Monte Produce. A stevedore is
not a common carrier for it does not transport
goods or passengers; it is not akin to a
warehouseman for it does not store goods for
profit. The loading and stowing of cargoes
would not have a far reaching public
ramification as that of a common carrier and a
warehouseman; the public is adequately
protected by our laws on contract and on
quasi-delict. The public policy considerations
in legally imposing upon a common carrier or
a warehouseman a higher degree of diligence
is not present in a stevedoring outfit which
mainly provides labor in loading and stowing
of cargoes for its clients.
WHEREFORE, the petition is GRANTED. The
decision of the Court of Appeals in CA-G.R. CV
No. 66121 is SET ASIDE and the decision of the
Regional Trial Court of Davao City, Branch 12
in Civil Case No. 25,311.97 is hereby
REINSTATED MINUS the awards of
P100,000.00 as attorneys fees and P83,945.80
as actual damages.
TRAVEL AGENCY NOT a common carrier;
the purchase of ticket through travel agency is
only the agencys service of arranging and
facilitating the booking, ticketing and
accommodation in a package tour.
The
diligence
required
is
not
extraordinary diligence but that of a
good father of a family
TRAMP SERVICE as the operation of a

contract carrier which has no regular and fixed
routes and schedules but accepts cargo
wherever and whenever the shipper desires, is
hired on a contractual basis, or chartered by any
one or few shippers under mutually agreed
terms and usually carries bulk or break bulk
cargoes.
Referred to as contract carrier, thus,

may be considered common carrier
depending on the circumstances
Tramps offer their capacity for the

carriage of bulk cargoes as desired by

the shipper, who ordinarily engages the
whole of the ship; each voyage is thus a
matter
of
special
arrangements
between the shipowner and shipper
It seeks and usually gets a full cargo

loaded by a single shipper and such
cargoes are most often in bulk or in
standard packages and typically consist
of raw materials, fuels and unprocessed
foods so vital to the world economy
LINE SERVICE the operation of a common

carrier which publicly offers services without
discrimination to any user, has regular ports of
call/destination, fixed sailing schedules and
frequencies and published freight rates and
attendant charges usually carries multiple
consignments.
Carry general cargoes, meaning

whatever is offered is accepted for
shipment.
5. Air Transportation
1. Civil Code - primary
2. Code of Commerce
6. International Carriage Convention for
the Unification of Certain Rules Relating to
the International Carriage by Air or
Warsaw
Convention
with
its
amendments
Nature of Business: Common carriers are
public utilities; they are enterprises that
specially cater to the needs of the public and
conduce to their comfort and convenience.
As such, common carriers are

impressed with public interest and
concern
Subject to regulation by the State
FC Fisher vs. Yangco Steamship

Company
G.R. No. L-8095
March 31, 1915
Considered as a common carrier
Governing laws:
Article 1766. In all matters not regulated
by this Code, the rights and obligations of
common carriers shall be governed by the
Code of Commerce and by special laws.
Article 1753. The law of the country to
which the goods are to be transported shall
govern the liability of the common carrier
for their loss, destruction or deterioration.
1. Coastwise Shipping:
1. Civil Code (Arts. 1732-1766) - primary
2. Code of Commerce (Arts. 349, 379, 573734, 580, 806-845) suppletory in the
absence of Civil Code provisions
2. Carriage from Foreign Ports to
Philippine Ports:
1. Civil Code - primary
2. Code of Commerce all matters not
regulated by the Civil Code
3. Carriage of Goods by Sea Act
suppletory
3. Carriage from Philippine Ports to
Foreign Ports
1. The laws of the country to which the
goods are to be transported
Rowena B. Gallego
4. Overland Transportation
1. Civil Code primary
2. Code of Commerce suppletory
11
The real question involved in these proceedings

is whether the refusal of the owners and
officers of a steam vessel, duly licensed to
engage in the coastwise trade of the Philippine
Islands and engaged in that trade as a
common carrier, to accept for carriage
"dynamite, powder or other explosives" from
any and all shippers who may offer such
explosives for carriage can be held to be a
lawful act without regard to any question as to
the conditions under which such explosives are
offered to carriage, or as to the suitableness of
the vessel for the transportation of such
explosives, or as to the possibility that the
refusal to accept such articles of commerce in a
particular case may have the effect of
subjecting any person or locality or the traffic
in such explosives to an undue, unreasonable
or unnecessary prejudice or discrimination.
The nature of the business of a common carrier
as a public employment is such that it is clearly
within the power of the state to impose such
just and reasonable regulations thereon in the
interest of the public as the legislator may
deem proper. Of course such regulations must
not have the effect of depriving an owner of his
property without due process of law, nor of
confiscating or appropriating private property

without just compensation, nor of limiting or
prescribing irrevocably vested rights or
privileges lawfully acquired under a charter or
franchise. But aside from such constitutional
limitations, the determination of the nature
and extent of the regulations which should be
prescribed rests in the hands of the legislator.
Common carriers exercise a sort of public
office, and have duties to perform in which the
public is interested. Their business is, therefore,
affected with a public interest, and is subject of
public regulation. (New Jersey Steam Nav.
Co. vs. Merchants Bank, 6 How., 344, 382;
Munn vs. Illinois, 94 U.S., 113, 130.) Indeed,
this right of regulation is so far beyond
question that it is well settled that the power of
the state to exercise legislative control over
railroad companies and other carriers "in all
respects necessary to protect the public against
danger, injustice and oppression" may be
exercised through boards of commissioners.
(New York etc. R. Co. vs. Bristol, 151 U.S., 556,
571; Connecticut etc. R. Co. vs. Woodruff, 153
U.S., 689.)
exercise of prudence and discretion on the part

of the shipowner.
Regulations limiting of passengers the number

of passengers that may be carried in a
particular vehicle or steam vessel, or
forbidding the loading of a vessel beyond a
certain point, or prescribing the number and
qualifications of the personnel in the employ of
a common carrier, or forbidding unjust
discrimination as to rates, all tend to limit and
restrict his liberty and to control to some
degree the free exercise of his discretion in the
conduct of his business.
Gaudioso Erezo, Et Al., plaintiffappellee, vs. Aguedo Jepte, defendantappellant. (GR No. L-9605, Sept. 30,
1957)
The traffic in dynamite, gunpowder and other

explosives is vitally essential to the material
and general welfare of the people of these
Islands. If dynamite, gunpowder and other
explosives are to continue in general use
throughout the Philippines, they must be
transported by water from port to port in the
various islands which make up the
Archipelago. We are satisfied therefore that the
refusal by a particular vessel, engaged as a
common carrier of merchandise in the
coastwise trade of the Philippine Islands, to
accept any or all of these explosives for
carriage would constitute a violation of the
prohibitions against discriminations penalized
under the statute, unless it can be shown by
affirmative evidence that there is so real and
substantial a danger of disaster necessarily
involved in the carriage of any or all of these
articles of merchandise as to render such
refusal a due or a necessary or a reasonable
Rowena B. Gallego
12
Registered
System
Owner
Rule
and
Kabit
A. Registration Laws: registration of motor

vehicles is governed by R.A. 4136, otherwise
known as The Land Transportation and
Traffic Code. The law on registration is
now being administered by the Land
Transportation Office.
B. Registered Owner Rule: the person who
is the registered owner of a vehicle is liable
for any damage caused by the negligent
operation of the vehicle although the same
was already sold or conveyed to another
person at the time of the accident.
The registered owner is liable to the

injured party subject to his right of
recourse against the transferee or the
buyer.
Defendant-appellant is the registered owner of

a six by six truck bearing plate No. TC-1253.
On August, 9, 1949, while the same was being
driven by Rodolfo Espino y Garcia, it collided
with a taxicab at the intersection of San Andres
and Dakota Streets, Manila. As the truck went
off the street, it hit Ernesto Erezo and another,
and the former suffered injuries, as a result of
which he died. The driver was prosecuted for
homicide through reckless negligence in
criminal case No. 10663 of the Court of First
Instance of Manila. The accused pleaded guilty
and was sentenced to suffer imprisonment and
to pay the heirs of Ernesto Erezo the sum of
P3,000. As the amount of the judgment could
not be enforced against him, plaintiff brought
this action against the registered owner of the
truck, the defendant-appellant.
Registration is required not to make said
registration the operative act by which
ownership in vehicles is transferred, as in land
registration cases, because the administrative
proceeding of registration does not bear any
essential relation to the contract of sale
between the parties (Chinchilla vs. Rafael and
Verdaguer, 39 Phil. 888), but to permit the use
and operation of the vehicle upon any public

highway (section 5 [a], Act No. 3992, as
amended).The main aim of motor vehicle
registration is to identify the owner so that if
any accident happens, or that any damage or
injury is caused by the vehicles on the public
highways, responsibility therefore can be fixed
on a definite individual, the registered owner.
Instances are numerous where vehicles
running on public highways caused accidents
or injuries to pedestrians or other vehicles
without positive identification of the owner or
drivers, or with very scant means of
identification. It is to forestall those
circumstances, so inconvenient or prejudicial
to the public, that the motor vehicle
registration is primarily ordained, in the
interest of the determination of persons
responsible for damages or injuries caused on
public highways.
One of the principal purposes of motor
vehicles legislation is identification of the
vehicle and of the operator, in case of
accident; and another is that the
knowledge that means of detection are
always available may act as a deterrent
from lax observance of the law and of the
rules of conservative and safe operation.
Whatever purpose there may be in these
statutes, it is subordinate at the last to the
primary purpose of rendering it certain
that the violator of the law or of the rules
of safety shall not escape because of lack of
means to discover him." The purpose of the
statute is thwarted, and the displayed
number becomes a "snare and delusion," if
courts will entertain such defenses as that
put forward by appellee in this case. No
responsible person or corporation could be
held liable for the most outrageous acts of
negligence, if they should be allowed to
place a "middleman" between them and the
public, and escape liability by the manner
in which they recompense their servants.
(King vs. Brenham Automobile Co., 145 S.
W. 278,279.)
With the above policy in mind, the question
that defendant-appellant poses is: should not
be registered owner be allowed at the trial to
prove who the actual and real owner is, and in
accordance with such proof escape or evade
responsibility and lay the same on the person
actually owning the vehicle? We hold with the
trial court that the laws does not allow him to
do so; the law, with its aim and policy in mind,
does not relieve him directly of the
responsibility that the law fixes and places
Rowena B. Gallego
13
upon him as an incident or consequence of

registration. Were a registered owner allowed
to evade responsibility by proving who the
supposed transferee or owner is, it would be
easy for him, by collusion with others or
otherwise, to escape said responsibility and
transfer the same to an indefinite person, or to
one who possesses no property with which to
respond financially for the damage or injury
done. A victim of recklessness on the public
highways is usually without means to discover
or identify the person actually causing the
injury or damage. He has no means other than
by a recourse to the registration in the Motor
Vehicles Office to determine who is the owner.
The protection that the law aims to extend to
him would become illusory were the registered
owner given the opportunity to escape liability
by disproving his ownership. If the policy of
the law is to be enforced and carried out, the
registered owner should be allowed to prove
the contrary to the prejudice of the person
injured that is, to prove that a third person or
another has become the owner, so that he may
thereby be relieved of the responsibility to the
injured person.
The above policy and application of the law
may appear quite harsh and would seem to
conflict with truth and justice. We do not think
it is so. A registered owner who has already
sold or transferred a vehicle has the recourse
to a third-party complaint, in the same action
brought against him to recover for the damage
or injury done, against the vendee or
transferee of the vehicle. The inconvenience of
the suit is no justification for relieving him of
liability; said inconvenience is the price he
pays for failure to comply with the registration
that the law demands and requires.
In synthesis, we hold that the registered owner,
the defendant-appellant herein, is primarily
responsible for the damage caused to the
vehicle of the plaintiff-appellee, but he
(defendant-appellant) has a right to be
indemnified by the real or actual owner of the
amount that he may be required to pay as
damage for the injury caused to the plaintiffappellant.
C. Kabit System: an arrangement whereby a
person who has been granted a certificate of
public convenience allows other persons
who own motor vehicles to operate them
under his license, sometimes for a fee or
percentage of the earnings.

Although the parties to such an

arrangement
are
not
outrightly
penalized by law, the kabit system is
invariably recognized as being contrary
to public policy and therefore void and
inexistent under Art. 1409 of the Civil
Code.
Lita Enterprises Inc. vs IAC

G.R. No. L-64693, April 27, 1984
Sometime in 1966, the spouses Nicasio M.
Ocampo and Francisca Garcia, herein private
respondents, purchased in installment from the
Delta Motor Sales Corporation five (5) Toyota
Corona Standard cars to be used as taxicabs.
Since they had no franchise to operate
taxicabs, they contracted with petitioner Lita
Enterprises, Inc., through its representative,
Manuel Concordia, for the use of the latter's
certificate
of
public
convenience
in
consideration of an initial payment of
P1,000.00 and a monthly rental of P200.00
per taxicab unit. To effectuate Id agreement,
the aforesaid cars were registered in the name
of petitioner Lita Enterprises, Inc, Possession,
however, remained with tile spouses Ocampo
who operated and maintained the same under
the name Acme Taxi, petitioner's trade name.
About a year later, on March 18, 1967, one of
said taxicabs driven by their employee,
Emeterio Martin, collided with a motorcycle
whose driver, one Florante Galvez, died from
the head injuries sustained therefrom. A
criminal case was eventually filed against the
driver Emeterio Martin, while a civil case for
damages was instituted by Rosita Sebastian
Vda. de Galvez, heir of the victim, against Lita
Enterprises, Inc., as registered owner of the
taxicab in the latter case, Civil Case No. 72067
of the Court of First Instance of Manila,
petitioner Lita Enterprises, Inc. was adjudged
liable for damages in the amount of
P25,000.00 and P7,000.00 for attorney's fees.
Unquestionably, the parties herein operated
under an arrangement, commonly known as
the "kabit system", whereby a person who has
been granted a certificate of convenience
allows another person who owns motors
vehicles to operate under such franchise for a
fee. A certificate of public convenience is a
special privilege conferred by the government.
Abuse of this privilege by the grantees thereof
cannot be countenanced. The "kabit system"
has been Identified as one of the root causes of
the prevalence of graft and corruption in the
Rowena B. Gallego
14
government transportation offices. In the

words of Chief Justice Makalintal, "this is a
pernicious system that cannot be too severely
condemned. It constitutes an imposition upon
the goo faith of the government.
Although not outrightly penalized as a
criminal offense, the "kabit system" is
invariably recognized as being contrary to
public policy and, therefore, void and
inexistent under Article 1409 of the Civil Code,
It is a fundamental principle that the court will
not aid either party to enforce an illegal
contract, but will leave them both where it
finds them. Upon this premise, it was flagrant
error on the part of both the trial and appellate
courts to have accorded the parties relief from
their predicament. Article 1412 of the Civil
Code denies them such aid. It provides:
ART. 1412. if the act in which the unlawful
or forbidden cause consists does not
constitute a criminal offense, the following
rules shall be observed;
1. When the fault, is on the part of both
contracting parties, neither may recover
what he has given by virtue of the contract,
or demand the performance of the other's
undertaking.
The defect of inexistence of a contract is
permanent and incurable, and cannot be cured
by ratification or by prescription. As this Court
said in Eugenio v. Perdido, 2 "the mere lapse of
time cannot give efficacy to contracts that are
null void."
The principle of in pari delicto is well known
not only in this jurisdiction but also in the
United States where common law prevails.
Under American jurisdiction, the doctrine is
stated thus: "The proposition is universal that
no action arises, in equity or at law, from an
illegal contract; no suit can be maintained for
its specific performance, or to recover the
property agreed to be sold or delivered, or
damages for its property agreed to be sold or
delivered, or damages for its violation. The
rule has sometimes been laid down as though it
was equally universal, that where the parties
are in pari delicto, no affirmative relief of any
kind will be given to one against the
other." 3 Although certain exceptions to the rule
are provided by law, We see no cogent reason
why the full force of the rule should not be
applied in the instant case.

D. Pari Delicto Rule: persons who are
parties to the kabit system cannot invoke
the same as against each other either to
enforce their illegal agreement or to invoke
the same to escape liability.
is duty bound to accept passengers or cargo

without any discrimination.
The present law forbid failures or

refusals to receive persons or property
for carriage which have the effect of
giving an unreasonable or unnecessary
preference or advantage to any person,
locality or particular kind of traffic to
any undue or unreasonable prejudice or
discrimination
With respect to passengers, it has been

explained that a vessel generally
engaged as a common carrier of
passengers is bound to receive for
carriage, without discrimination all
proper persons who desire it and
properly offer to become passengers
unless some sufficient excuse exists for
refusing them.
Ex pacto illicito non oritur action no

action arises out an illicit bargain.
Having entered into an illegal contract,
neither can seek relief from the courts,
and each must bear the consequences
of his acts.
E. Aircrafts and Vessel: the prohibition on

the kabit system may also be applied to
vessels and aircrafts that are covered by
certificates of public convenience and
necessity.
No person can operate a common

carrier without securing a certificate of
public convenience and necessity
Persons who do not have such certifcate

cannot circumvent the law by using the
certificate of another
No permits or certificates can be

transferred without the permission of
the government agency concerned
Civil Aviation Authority Act of 2008

provides that the certificate of
registration is conclusive evidence of
ownership except when ownership
itself is at issue.
Boundary System: the carrier cannot

exempt himself on the ground he is a lessor
because to tolerate such position would not only
abet flagrant violations of the Public Service
Law but also to place the riding public at the
mercy of reckless and irresponsible drivers
reckless because the measure of their earnings
depends largely upon the number of trips they
make and, hence, the speed at which they drive;
and irresponsible because most if not all of
them are in no position to pay the damages they
might cause.
Chapter 2
OBLIGATIONS OF THE PARTIES
A. Obligations of the Carrier
1. Duty to Accept: a common carrier that is
granted a certificate of public convenience
Rowena B. Gallego
15
2. Valid Grounds for Non-Acceptance

(a) When the goods sought to be
transported are dangerous objects,
substances including dynamites and
other explosives
(b) The goods are unfit for transportation
(c) Acceptance would result in overloading
(d) The goods are considered contrabands
or illegal goods
(e) Goods are injurious to health
(f) Goods will be exposed to untoward
danger like flood, capture by enemies
and the like
(g) Goods like livestock will be exposed to
diseases
(h) Strike
(i) Failure to tender goods on time
ARTICLE 356.
Carriers may refuse
packages which appear unfit for
transportation; and if the carriage is to be
made by railway, and the shipment is
insisted upon, the company shall transport
them, being exempt from all responsibility
if its objections, is made to appear in the
bill of lading.
ARTICLE 357. If by reason of wellfounded suspicion of falsity in the
declaration as to the contents of a package
the carrier should decide to examine it, he
shall proceed with his investigation in the
presence of witnesses, with the shipper or
consignee in attendance.

If the shipper or consignee who has to be
cited does not attend, the examination shall
be made before a notary, who shall
prepare a memorandum of the result of the
investigation, for such purpose as may be
proper.
If the declaration of the shipper should be
true, the expense occasioned by the
examination and that of carefully
repacking the packages shall be for the
account of the carrier and in a contrary
case for the account of the shipper.
3. Duty to Deliver the Goods
a. Agreement as to Time: the goods must
be delivered within the stipulated time.
Where a carrier has made an express
contract to transport and deliver
property within a specified time, he is
bound to fulfil the contract and is liable
for any delay, no matter from what
cause it may have arisen
ARTICLE 358. If there is no period
fixed for the delivery of the goods the
carrier shall be bound to forward them
in the first shipment of the same or
similar goods which he may make
point where he must deliver them; and
should he not do so, the damages
caused by the delay should be for his
account.
b. Reasonable Time: in the absence of any
agreement, goods must be delivered at
its destination within a reasonable time
(depending
on
the
attending
circumstances, nature of the goods;
expected date of arrival in the B/L may
be considered
In the absence of a special contract,

a carrier is NOT an insurer against
delay in transportation of goods.
4. Consequences of Delay:
New Civil Code provisions on delay:
Article 1740. If the common carrier
negligently incurs in delay in transporting
the goods, a natural disaster shall not free
such carrier from responsibility.
Article 1747. If the common carrier,
without
just
cause,
delays
the
transportation of the goods or changes the
Rowena B. Gallego
16
stipulated or usual route, the contract

limiting the common carrier's liability
cannot be availed of in case of the loss,
destruction, or deterioration of the goods.
Code of Commerce provisions on
delay:
ARTICLE 370. If a period has been
fixed for the delivery of the goods, it must
be made within such time, and, for failure
to do so, the carrier shall pay the
indemnity stipulated in the bill of lading,
neither the shipper nor the consignee being
entitled
to
anything
else.
If no indemnity has been stipulated and the
delay exceeds the time fixed in the bill of
lading, the carrier shall be liable for the
damages which the delay may have
caused.
ARTICLE 371. In case of delay through
the fault of the carrier, referred to in the
preceding articles, the consignee may leave
the goods transported in the hands of the
former, advising him thereof in writing
before their arrival at the point of
destination.
When this abandonment takes place, the
carrier shall pay the full value of the goods
as if they had been lost or mislaid.
If the abandonment is not made, the
indemnification for losses and damages by
reason of the delay cannot exceed the
current price which the goods transported
would have had on the day and at the place
in which they should have been delivered;
this same rule is to be observed in all other
cases in which this indemnity may be due.
ARTICLE 372. The value of the goods
which the carrier must pay in cases if loss
or misplacement shall be determined in
accordance with that declared in the bill of
lading, the shipper not being allowed to
present proof that among the goods
declared therein there were articles of
greater value and money.
Horses, vehicles, vessels, equipment and all
other principal and accessory means of
transportation shall be especially bound in
favor of the shipper, although with respect
to railroads said liability shall be
subordinated to the provisions of the laws
of concession with respect to the property,
and to what this Code established as to the

manner and form of effecting seizures and
attachments against said companies.
expenses during the stay shall be for his

own account.
ARTICLE 373. The carrier who makes

the delivery of the merchandise to the
consignee
by virtue
of
combined
agreements or services with other carriers
shall assume the obligations of those who
preceded him in the conveyance, reserving
his right to proceed against the latter if he
was not the party directly responsible for
the fault which gave rise to the claim of the
shipper or consignee.
The carrier who makes the delivery shall
likewise acquire all the actions and rights
of those who preceded him in the
conveyance.
The shipper and the
consignee shall have an immediate right of
action against the carrier who executed the
transportation contract, or against the
other carriers who may have received the
goods transported without reservation.
However, the reservation made by the
latter shall not relieve them from the
responsibilities which they may have
incurred by their own acts.
6. Place of Delivery: the goods should be

delivered to the consignee in the place
agreed upon by the parties, even if it is not
the usual place of delivery in the place of
destination.
ARTICLE 374. The consignees to whom

the shipment was made may not defer the
payment
of
the
expenses
and
transportation charges of the goods they
receive after the lapse of twenty-four hours
following their delivery; and in case of
delay in this payment, the carrier may
demand the judicial sale of the goods
transported in an amount necessary to
cover the cost of transportation and the
expenses incurred.
5. Rights of Passengers in Case of Delay:
the Civil Code is silent. However, the Code
of Commerce provides:
Article 698. In case a voyage already
begun should be interrupted, the
passengers shall be obliged to pay the fare
in proportion to the distance covered,
without right to recover for losses and
damages if the interruption is due to
fortuitous event or force majeure, with a
right to indemnify if the interruption
should have been caused by the captain
exclusively. If the interruption should be
caused by the disability of the vessel and a
passenger should agree to await the
repairs, he may not be required to pay any
increased price of passage, but his living
Rowena B. Gallego
17
ARTICLE 360. The shipper, without

changing the place where the delivery is to
be made, may change the consignment of
the goods which he delivered to the carrier,
provided that at the time of ordering the
change of consignee the bill of lading
signed by the carrier, if one has been
issued, be returned to him, in exchange for
another wherein the novation of the
contract appears.
The expenses which this change of
consignment occasions shall be for the
account of the shipper.
7. To Whom Delivered: Delivery must
generally be made to the owner or
consignee or to someone lawfully
authorized by him to receive the goods for
his account.
By issuing a bill of lading, by stipulating

delivery to order, the ship becomes
bound to deliver only to one who has
the order of the shipper; and it is no
excuse for delivery to the wrong person
that the endorsee of the bill is unknown
or that he delayed presenting the bill
when such delivery is not instrumental
in causing the wrong delivery or
misleading the ship.
ARTICLE 368. The carrier must deliver

to the consignee, without any delay or
obstruction, the goods which he may have
received, by the mere fact of being named
in the bill of lading to receive them; and if
he does not do so, he shall be liable for the
damages which may be caused thereby.
ARTICLE 369. If the consignee cannot
be found at the residence indicated in the
bill of lading, or if he refuses to pay the
transportation charges and expenses, or if
he refuses to receive the goods, the
municipal judge, where there is none of the
first instance, shall provide for their
deposit at the disposal of the shipper, this
deposit producing all the effects of delivery

without prejudice to third parties with a
better right.
8. Delay to Transport passenger: the
carrier must commence its trip within a
reasonable time.
A carrier is duty bound to transport the

passenger with reasonable dispatch
The carrier shall be made liable when

the vessel or vehicle is unreasonable
delayed.
B. Duty
to
Exercise
Extraordinary
Diligence: A common carrier is required to
faithfully comply with his obligation to deliver
the goods and to ferry the passenger to the
point of destination
Compliance with its obligation must be with

the element of integrity in the sense that the
goods should be delivered in the same
condition that they were received and to
transport passengers without encountering
any harm or loss
In the exercise of this obligation, the
common carrier is obligated to exercise
extraordinary diligence.
passengers
transported
by
them,
case.
Article 1755. A common carrier is bound
to carry the passengers safely as far as
human care and foresight can provide,
using the utmost diligence of very cautious
persons, with a due regard for all the
circumstances.
1. Code of Commerce
ARTICLE 363. Outside of the cases
mentioned in the second paragraph of
Rowena B. Gallego
18
Article 361, the carrier shall be obliged to

deliver the goods shipped in the same
condition in which, according to the bill of
lading, they were found at the time they
were received, without any damage or
impairment, and failing to do so, to pay
the value which those not delivered may
have at the point and at the time at which
their delivery should have been made.
If those not delivered form part of the
goods transported, the consignee may
refuse to receive the latter, when he proves
that he cannot make use of them
independently of the others.
ARTICLE 364.
If the effect of the
damage referred to in Article 361 is merely
a diminution in the value of the goods, the
obligation of the carrier shall be reduced to
the payment of the amount which, in the
judgment of experts, constitutes such
difference in value.
ARTICLE 365. If, in consequence of the
damage, the goods are rendered useless for
sale and consumption for the purposes for
which they are properly destined, the
consignee shall not be bound to receive
them, and he may have them in the hands
of the carrier, demanding of the latter their
value at the current price on that day.
If among the damaged goods there should
be some pieces in good condition and
without any defect, the foregoing provision
shall be applicable with respect to those
damaged and the consignee shall receive
those which are sound, this segregation to
be made by distinct and separate pieces
and without dividing a single object, unless
the consignee proves the impossibility of
conveniently making use of them in this
form.
The same rule shall be applied to
merchandise in bales or packages,
separating those parcels which appear
sound.
2. Presumption of Negligence
Article 1735. In all cases other than those
mentioned in Nos. 1, 2, 3, 4, and 5 of the
preceding article, if the goods are lost,
destroyed or deteriorated, common
carriers are presumed to have been at fault
or to have acted negligently, unless they

prove that they observed extraordinary
diligence as required in article 1733.
3. Duration of Duty in Carriage of
Goods
Article
1736.
The
extraordinary
responsibility of the common carrier lasts
from
the
time
the
goods
are
unconditionally placed in the possession of,
and received by the carrier for
transportation until the same are
delivered, actually or constructively, by the
carrier to the consignee, or to the person
who has a right to receive them, without
prejudice to the provisions of article 1738.
Article 1737. The common carrier's duty
to observe extraordinary diligence over the
goods remains in full force and effect even
when they are temporarily unloaded or
stored in transit, unless the shipper or
owner has made use of the right of
stoppage in transitu.
Article 1738. The extraordinary liability
of the common carrier continues to be
operative even during the time the goods
are stored in a warehouse of the carrier at
the place of destination, until the consignee
has been advised of the arrival of the goods
and has had reasonable opportunity
thereafter to remove them or otherwise
dispose of them.
4. Commencement of Duty in Carriage
of Passenger:
a. Trains
the
extraordinary
responsibility of common carriers
commences the moment the person
who purchases the ticket (or token or
card) from the carrier presents
himself at the proper place and in a
proper manner to be transported with a
bona fide intent to ride the coach.
b. Carriage by Sea as soon as a person
with bona fide intention of taking
passage places himself in the care of the
carrier or its employees and is accepted
as passenger
c. Land Transportation duty bound
to stop their conveyances for a
reasonable length of time in order to
afford the passengers an opportunity to
board and enter, and they are liable for
Rowena B. Gallego
19
injuries
suffered
by
boarding
passengers resulting from the sudden
starting up or jerking of their
conveyances while they do so.
Once a public utility bus or

jeepney stops, it is making a
continuous offer to bus riders.
C. Defences of Common Carrier

Article 1740. If the common carrier
negligently incurs in delay in transporting the
goods, a natural disaster shall not free such
carrier from responsibility.
1. Proximate Causation: The carrier is not
an insurer of the passengers safety. His
liability rests upon negligence, his failure to
exercise the utmost degree of diligence
that the law requires
In case of passengers death or

injury, the carrier bears the burden
of satisfying the court that he has
duly discharged the duty of
prudence required.
a. Absence of Causation as a
Defense: the common carrier may
prove by way of defense that the loss or
damage cannot be traced to any act of
the said carrier but the proximate and
only cause of the loss is any of the
circumstances mentioned in Article
1734 of the New Civil Code
The carrier can also prove that the

proximate cause of the loss is not
any act or omission of the said
carrier because he exercised
extraordinary diligence
b. Doctrine of the Last Clear

Chance: when both parties involved in
the accident were both negligent, the
negligence of the party will not be
considered the proximate cause if the
other party has the last clear chance of
avoiding the injury
Will not be applicable if the case

between a passenger and the
carrier
and
the
concurrent
negligence of the carrier and a third
party are the proximate cause of the
injury

2. New Civil Code provisions (Arts.
1734, 1739, NCC)
Article 1734. Common carriers are
responsible for the loss, destruction, or
deterioration of the goods, unless the same
is due to any of the following causes only:
nor resisted, such as floods, torrents,

shipwrecks,
conflagrations,
lightning,
compulsion, insurrections, destructions,
destruction of buildings by unforeseen
accidents and other occurrences of a similar
nature."
Requisites:
(1) Flood,
storm,
earthquake,
lightning, or other natural disaster
or calamity;
(2) Act of the public enemy in war,
whether international or civil;
(3) Act or omission of the shipper or
owner of the goods;
(4) The character of the goods or
defects in the packing or in the
containers;
(5) Order or act of competent public
authority.
Article 1739. In order that the common
carrier
may
be
exempted
from
responsibility, the natural disaster must
have been the proximate and only cause of
the loss. However, the common carrier
must exercise due diligence to prevent or
minimize loss before, during and after the
occurrence of flood, storm or other natural
disaster in order that the common carrier
may be exempted from liability for the loss,
destruction, or deterioration of the goods.
The same duty is incumbent upon the
common carrier in case of an act of the
public enemy referred to in article 1734,
No. 2.
3. Defenses in Carriage of Goods
(Exclusive, no other defense may be
raised by the common carrier in the
carriage of goods.)
(1) Flood, storm, earthquake, lightning, or
other natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner
of the goods;
(4) The character of the goods or defects in
the packing or in the containers;
(5) Order or act of competent public
authority.
(6) Exercise of extraordinary diligence
4. Fortuitous Event (Art. 1739, NCC)
Caso Fortuito - "an unexpected event or
act of God which could either be foreseen
Rowena B. Gallego
20
(1) The cause of the unforeseen and

unexpected occurrence, or of the failure
of the debtor to comply with his
obligation, must be independent of the
human will.
(2) It must be impossible to foresee the
event which constitutes the caso
fortuito, or if it can be foreseen, it must
be impossible to avoid.
(3) The occurrence must be such as to
render it impossible for the debtor to
fulfill his obligation in a normal
manner. And
(4) The obligor (debtor) must be free from
any participation in the aggravation of
the injury resulting to the creditor.
Force Majeure - Generally applies to
natural accident (fire caused by lightning,
earthquake, tempest or a public enemy)
Storm if the proximate and only

cause of the loss was unforeseeable
strong winds and enormous waves
(PhilAmGen vs PKS)
Hijacking the common carrier is

presumed to be at fault or to have acted
negligently unless there is a proof of
extraordinary diligence on its part
Mechanical Defects not caused by

fortuitous event; a carrier is liable to its
passengers for damages caused by
mechanical defects of the conveyance,
EXCEPT if adequate inspection or
periodic tests is made, caso fortuito
may be considered.
Tire blow-outs not considered as

fortuitous event, EXCEPT if it is
proven that the accident was due to
adverse road condition.
Explosion damage to cargo from

explosion of another cargo is not
ordinarily attributable to peril of the
sea or accidents of navigation
particularly where it occurs after the

vessel has ended its voyage and is
finally moored to unload.
Worms and Rats when it caused

damaged to cargoes whether directly or
by water let in through holes gnawed by
rats in the ship or her fixtures.
Water Damage when the water

gains entrance through a port which
had been left open or insufficiently
fastened on sailing
Barratry an act committed by the

master or crew of the ship for some
unlawful or fraudulent purpose,
contrary to their duty to the owner
Intentional fraud or breach of

trust or wilful violation of law is
necessary to constitute barratry
It includes theft by the purser

of a specie shipped on board
and fraudulently running the
ship ashore
5. Public Enemy presupposes the

existence of an actual state of war, and
refers to the government of a foreign nation
at was with the country to which the carrier
belongs, though not necessarily with that to
which the owner of the goods owes
allegiance.
Thieves,
rioters,
robbers,
and
insurrectionists, though at war with
social order, are NOT in a legal sense
classed as public enemies, but are
merely private depredators for whose
acts a carrier is answerable, whether
they occur on land or on water, and
though the force by which the carrier is
opposed is overwhelming, as if an
irresistible multitude of people should
rob him.
6. Improper Packing (Art. 1742, NCC)

Article 1742. Even if the loss, destruction,
or deterioration of the goods should be
caused by the character of the goods, or the
faulty nature of the packing or of the
containers, the common carrier must
exercise due diligence to forestall or lessen
the loss.
Rowena B. Gallego
21
The carrier shall not be liable for:

1. Wastage in bulk or weight or any
other loss or damage arising from
inherent defect, quality or vice of
goods
2. Insufficiency of packing
3. Insufficiency or inadequacy of the
marks; or
4. Latent defects not discoverable by
due diligence
7. Order of Public Authority only if the
public authority who issued the order is
duly authorized to issue the order as
provided for in the proviso in Article 1743.
Article 1743. If through the order of
public authority the goods are seized or
destroyed, the common carrier is not
responsible, provided said public authority
had power to issue the order.
Defense is not available if:
1. The public authority has no
authority to issue the subject order;
or
2. If the public authority exceeded his
authority
8. Defenses in Carriage of Passenger:
the primary defense of the carrier in
transporting passengers is exercise of
extraordinary diligence.
Even if there is a fortuitous event, the

carrier must also present proof of
exercise of extraordinary diligence
9. Acts of Employees carrier is liable for

the acts of its employees. It cannot escape
liability by claiming that it exercised due
diligence in supervision and selection of its
employees (unlike in quasi-delict)
Article 1759. Common carriers are liable
for the death of or injuries to passengers
through the negligence or wilful acts of the
former's
employees,
although
such
employees may have acted beyond the
scope of their authority or in violation of
the orders of the common carriers.
This liability of the common carriers does
not cease upon proof that they exercised all
the diligence of a good father of a family in

the selection and supervision of their
employees.
10. Acts of other Passengers and Third
Persons the availability of such defense
is also subject to the exercise of a carrier of
due diligence to prevent or stop the act or
omission
This defense is not available if the

carriers driver even allowed another
person who is not an employee or a
regular driver to take over the task of
driving the vehicle.
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 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.
D. Passengers Baggages
Article 1754. The provisions of articles 1733
to 1753 shall apply to the passenger's baggage
which is not in his personal custody or in that
of his employee. As to other baggage, the rules
in articles 1998 and 2000 to 2003 concerning
the responsibility of hotelkeepers shall be
applicable.
Article 1998. The deposit of effects made by
travellers in hotels or inns shall also be
regarded as necessary. The keepers of hotels or
inns shall be responsible for them as
depositaries, provided that notice was given to
them, or to their employees, of the effects
brought by the guests and that, on the part of
the latter, they take the precautions which said
hotel-keepers or their substitutes advised
relative to the care and vigilance of their
effects. (1783)
Article 2000. The responsibility referred to
in the two preceding articles shall include the
loss of, or injury to the personal property of the
guests caused by the servants or employees of
the keepers of hotels or inns as well as
strangers; but not that which may proceed
from any force majeure. The fact that
travellers are constrained to rely on the
vigilance of the keeper of the hotels or inns
shall be considered in determining the degree
of care required of him. (1784a)
Rowena B. Gallego
22
Article 2001. The act of a thief or robber, who

has entered the hotel is not deemed force
majeure, unless it is done with the use of arms
or through an irresistible force. (n)
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 visitors, or if
the loss arises from the character of the things
brought into the hotel. (n)
Article 2003. The hotel-keeper cannot free
himself from responsibility by posting notices
to the effect that he is not liable for the articles
brought by the guest. Any stipulation between
the hotel-keeper and the guest whereby the
responsibility of the former as set forth in
articles 1998 to 2001 is suppressed or
diminished shall be void. (n)
Baggage whatever articles a passenger
usually takes with him for his own personal use,
comfort, and convenience according to the
habits or wants of the particular class to which
he belongs, either with reference to his
immediate necessities or the ultimate purpose
of his journey.
1. Check-in Baggage baggages that are
check-in or delivered to the carrier; requires
exercise of extraordinary diligence
2. Hand-Carried Luggage Articles 1998,
2000 to 2003 of the Civil Code apply.
Rules on Passengers Baggage
IN THE CUSTODY OF
THE PASSENGERS
(HAND-CARRIED)
IN THE CUSTODY
OF THE COMMON
CARRIER
(CHECKED-IN)
Legal nature of the baggage
Necessary deposit
Considered as goods
Required diligence by the common carrier
Diligence of a depositary Extraordinary diligence
(ordinary diligence)
Applicable rules
Arts. 1998 and 2000- Arts. 1733-1753
2003
E. Obligation of Shipper, Consignee and
Passenger
1. Negligence of Shipper or Passenger
the shipper is obliged to exercise due

diligence in avoiding damage to the goods
that are being shipped or injury to his
person
a. Contributory Negligence of Shipper
not a defense, but will only mitigate
such liability
Article 1741. If the shipper or owner
merely contributed to the loss,
destruction or deterioration of the
goods, the proximate cause thereof
being the negligence of the common
carrier, the latter shall be liable in
damages, which however, shall be
equitably reduced.
b. Contributory Negligence of Passengers
passengers are likewise bound to
observe due diligence to avoid injury
Article 1761. The passenger must
observe the diligence of a good father
of a family to avoid injury to himself.
Article 1762. The contributory
negligence of the passenger does not
bar recovery of damages for his death
or injuries, if the proximate cause
thereof is the negligence of the common
carrier, but the amount of damages
shall be equitably reduced.
c. Causation the negligence of the
shipper or passenger may be the
proximate and only cause of the loss, in
which case, the carrier should not be
made liable.
The carrier may be able to prove that
the only cause of the loss of the goods is
any of the following acts of the shipper:
1.
failure of the shipper to disclose the

nature of the goods
2. improper marking or direction s to
destination; or
3. improper loading when he assumes
such responsibility
d. Avoidable Consequences even if the
carrier is responsible for the loss or
injury, the passenger is also required to
lessen the damage or injury under what
is known as doctrine of avoidable
consequences.
Rowena B. Gallego
23
Article 2203. The party suffering loss

or injury must exercise the diligence of
a good father of a family to minimize
the damages resulting from the act or
omission in question.
e. Last Clear Chance a negligent
defendant is held liable to a negligent
plaintiff, or even to a plaintiff who has
been grossly negligent in placing
himself in peril, if he, aware o the
plaintiffs peril, or according to some
authorities, should have been aware of
it in the reasonable exercise of due care,
had in fact an opportunity later than
that of the plaintiff to avoid an accident.
f.
Assumption of Risk carriers are not

insurers of the lives of their passengers
Adverse weather conditions or

extreme climatic changes are some
of the perils involved in air travel,
the consequences of which the
passenger must assume or expect
There is no assumption of risk in

case the passenger voluntarily
boarded a carrier that was filled to
capacity
There is also no assumption of risk

by the mere fact that the carrier
posted notices against such liability
2. Payment of Freight the regulation of

rates is founded upon the valid exercise of
the Police Power of the State in order to
protect the public from arbitrary and
excessive rates while maintaining the
efficiency and quality of services rendered.
The fixing of just and reasonable rates
involves a balancing of investor and the
consumer interest.
Although the consideration that should be
paid to the carrier is still subject to the
agreement between parties, what can be
agreed upon should not be beyond the
maximum amount fixed by appropriate
government agency.
a. Who will pay the freight although
either of the shipper or the consignor
may pay the freight before or at time
the goods are delivered to the carrier
for shipment, nonetheless, it is the

consignor who is primarily liable for the
payment of freight whether or not he is
the owner of the goods. The obligation
to pay is implied form the mere fact
that the consignor has placed the goods
with the carrier for the purpose of
transportation.
b. Time to pay the freight Code of
Commerce provides that in the absence
of any agreement, the consignee who is
supposed to pay must do so within 24hours from the time of delivery.
ARTICLE 374. The consignees to
whom the shipment was made may not
defer the payment of the expenses and
transportation charges of the goods
they receive after the lapse of twentyfour hours following their delivery;
and in case of delay in this payment,
the carrier may demand the judicial
sale of the goods transported in an
amount necessary to cover the cost of
transportation and the expenses
incurred.
c. Carriage of Passenger by Sea tickets
are purchased in advance from ticket
outlets or booking offices that are
required to be set up in every ports of
call of the vessel.
No Ticket, No Boarding Policy
If the vessel is not able to depart on

time and the delay is unreasonable,
the passenger may opt to have the
ticket refunded without any refund
service fee
Delayed Voyage late departure of

the vessel from its port of origin
and/or late arrival of the vessel to
its port of destination
Unreasonable Delay period of

time that has lapsed without just
cause and is solely attributable to
the carrier which has prejudiced
the transportation of passengers
and/or cargoes to their port of
destination
A passenger, who no longer wants

to use the carrier or has actually
failed to board the vessel, can
Rowena B. Gallego
24
refund or revalidate the ticket

subject to assessment of surcharges
Revalidation the accreditation of

the ticket that is not used and
intended to be used for another
voyage.
d. Carriers Lien if the consignor or

consignee
failed
to
pay
the
consideration for the transportation of
the goods, the carrier may exercise his
lien in accordance with Article 375 of
the Code of Commerce.
ARTICLE 375. The goods transported
shall be especially bound to answer for
the cost of transportation and for the
expenses and fees incurred for them
during their conveyance and until the
moment of their delivery.
This special right shall prescribe eight
days after the delivery has been made,
and once prescribed, the carrier shall
have no other action than that
corresponding to him as an ordinary
creditor.
3. Payment of Demurrage
Demurrage is the compensation
provided for in the
contract of
affreightment for the detention of the vessel
beyond the time agreed on for loading and
unloading.
The claim for damages for failure to

accept delivery
Every improper detention of a
vessel may be considered as a
demurrage
Exists
only
when
expressly
stipulated in the contract
Recoverable for a breach of the

implied obligation to load or
unload the cargo with reasonable
dispatch, BUT only by the party to
whom the duty is owed and only
against one who is a party to the
shipping contract.

CONCURRING
CAUSES
OF
ACTION
ARISING FROM THE NEGLIGENT ACT OF
THE COMMON CARRIER
1. Culpa contractual (breach of contract) Only the carrier is primarily liable and not
the driver, because there is no privity
between the driver and the passenger.
Basis: Art.1759, NCC.
No defense of due diligence in the
selection and supervision of employees.
2. Culpa aquiliana (quasi-delict) - The
carrier and driver are solidarily liable as
joint tortfeasors.
Basis: Art. 2180, NCC.
Defense of due diligence in the
selection and supervision of employees
is available. Exception: maritime tort
resulting in collision. (See notes on
Collision)
3. Culpa criminal (criminal negligence) The driver is primarily liable. The carrier is
subsidiarily liable only if the driver is
convicted and declared insolvent.
Basis: Art. 100, RPC.
In case of injury to a passenger due to the

negligence of the driver of the bus on which
he is riding and of the driver of another
vehicle, the drivers as well as the owners of
the two vehicles are jointly and severally
liable for damages. It makes no difference
that the liability of the bus driver and owner
springs from contract while that of the
owner and driver of the other vehicle arises
from quasi-delict
Liability OF A COMMON CARRIER for

DEATH OR INJURIES TO PASSENGERS
DUE TO ACTS OF ITS EMPLOYEES AND
OTHER PASSENGERS OR STRANGERS
FOR ACTS OF ITS

EMPLOYEES
FOR ACTS OF OTHER

PASSENGERS OR
STRANGERS
Required diligence and defense

Extraordinary diligence
Ordinary diligence
Nature of liability
Tort; however,
Not absolute; limited by
The employee must be on Art. 1763
duty at the time of the act.
(Maranan v. Perez)
Rowena B. Gallego
25
The carrier is liable when its personnel

allowed a passenger to drive the vehicle
causing it to collide with another vehicle
resulting to the injuries suffered by the
other passengers. (MRR vs. Ballesteros, 16
SCRA 641)
CARRIAGE OF GOODS
CARRIAGE OF
PASSENGERS
Parties
Common carrier
1. Common carrier
Shipper
2. Passenger
Consignee
Cause of liability
Delay in delivery, loss,
Death or injury to the
destruction, or
passengers
deterioration of the goods
Duration of liability
The duty of a common
From the time the goods carrier to provide safety to
are unconditionally placed its passengers so obligates
in the possession of, and it not only during the
received by the carrier for course of the trip, but for so
transportation until the long as the passengers are
same
are
delivered within its premises and
actually or constructively where they ought to be in
by the carrier to the pursuance to the contract
consignee or to the person of carriage. (LRTA v.
who has the right to Navidad, [2003])
receive them. (Art. 1736)
All persons who remain
on the premises within a
o It remains in full force
reasonable time after
and effect even when
leaving the conveyance
they are temporarily
are to be deemed
unloaded or stored in
passengers, and what is
transit
unless
the
a reasonable time or a
shipper or owner has
reasonable delay within
made use of the right
this rule is to be
of stoppage in transitu.
determined from all the
(Art. 1737)
circumstances,
and
o It continues to be
includes a reasonable
operative even during
time to see after his
the time the goods are
baggage and prepare for
stored in a warehouse
his
departure.
(La
of the carrier at the
Mallorca v. CA, 17 SCRA
place of destination
739 ; Abiotiz Shipping
until the consignee has
Corporation v. CA, 179
bee advised of the
SCRA 95)
arrival of the goods
and has had reasonable It is the duty of common
carriers of passengers to
opportunity thereafter
stop their conveyances a
to remove them or
reasonable length of
otherwise dispose of
time in order to afford
them. (Art. 1738)
passengers
an
Delivery of goods to
opportunity to enter,
the custom authorities
and they are liable for
is not delivery to the
injuries suffered from
consignee. (Lu Do v.
the sudden starting up
Binamira, 101 Phil 120)
or jerking of their
conveyances while doing
so. The duty which the
1.
2.
3.

carrier of passengers
owes to its patrons
extends
to
persons
boarding the cars as well
as to those alighting
therefrom
Presumption of negligence
Art.1735 Civil Code
Reason: As to when and
how goods were damaged
in transit is a matter
peculiarly
within
the
knowledge of the carrier
and
its
employees.
(Mirasol v. Dollar, 53
PHIL 124)
Mere proof of delivery of
goods to a carrier in good
order and the subsequent
arrival of the same goods
at the place of destination
in bad order makes for a
prima facie case against
the carrier. (Coastwise
Lighterage Corp. v. CA,
245 SCRA 796)
Art.1755 Civil Code

Reason:
The
contract
between the passenger and
the carrier imposes on the
latter the duty to transport
the passenger safely; hence
the burden of explaining
should fall on the carrier.
Defenses
1. Ordinary
circumstance: Exercise
of extraordinary
diligence (Art. 1735)
2. Special circumstances:
a. Flood, storm,
earthquake,
lighting, or
other natural
disaster or
calamity (plus
force majeure)
b. Act of the public
enemy in war,
1. Exercise of
whether
extraordinary diligence
international or
(Art. 1756)
civil
c. Act or omission
2. Caso fortuito
of the shipper or
the owner of
goods
d. The character of
the goods or
defects in the
packing or in the
containers
e. Order or act of
competent
public authority
(Art. 1734)
Rowena B. Gallego
26
Valid stipulations
1. Reduction of degree of
diligence to ordinary
diligence, provided it
be:
a) In writing, signed
by the shipper or
owner;
b) Supported by a
valuable
consideration
other than the
service rendered
by the carriers;
and
c) Reasonable, just
and not contrary
to public policy.
(Art. 1744)
2. Fixed
amount
of
liability: A contract
fixing the sum to be
recovered by the owner
or shipper for the loss,
destruction
or
deterioration of the
Stipulation limiting liability
goods,
if
it
is
when a passenger is carried
reasonable and just
gratuitously, but not for
under
the
wilful
acts
or
gross
circumstances and has
negligence. (Art. 1758)
been fairly and freely
agreed upon. (Art.
1750)
3. Limited liability for
delay: An agreement
limiting the common
carriers liability for
delay on account of
strikes or riots (Art.
1748)
4. Stipulation
limiting
liability to the value of
the goods appearing in
the bill of lading,
unless the shipper or
owner
declares
a
greater value. (Art.
1749)
The diligence required
in the carriage of the
goods may be reduced
by only one degree,
from extraordinary to
ordinary diligence or
diligence of a good
father of a family. (Art.
1744, Art. 1745, no. 4)
Void stipulations
1. That the goods are
transported at the risk Dispensing with or
of the owner or lessening the extraordinary
shipper;
responsibility of a common

2. That carrier will not be
liable for any loss,
destruction
or
goods;
3. That the carrier need
not
observe
any
diligence in the custody
of the goods;
4. That the carrier shall
exercise a degree of
diligence less than that
of a good father of a
family
over
the
movable transported;
5. That the carrier shall
not be responsible for
the acts or omissions of
his or its employees;
6. That
the
carriers
liability
for
acts
committed by thieves
or robbers who do not
act with grave or
irresistible
threat,
violence or force is
dispensed
with
or
diminished;
7. That the carrier is not
responsible for the
loss, destruction or
goods on account of
the defective condition
of the car, vehicle, ship
or other equipment
used in the contract of
carriage. (Art. 1745)
carrier for the safety of

passengers imposed by law
by stipulation, by posting of
notices, by statements on
tickets or otherwise. (Art.
1757)
The common carrier is not the insurer of the lives

and properties of the passenger and shipper.
Nevertheless, the highest degree of care is required.
A. Rationale: A common carrier is bound to
carry the passengers safely as far a human care
and foresight provide, using the utmost
diligence of very cautious persons, with due
regard for all circumstances.
Extraordinary Diligence : calculated to
protect the passengers from the tragic
mishaps that frequently occur in connection
with rapid modern transportation.
B. Duty of Carrier and Duty to Third

Persons
Rowena B. Gallego
Diligence of a good father of a

family is not enough. The carrier
must
exercise
extraordinary
diligence in the performance of his
contractual obligation.
2. Duty to Third Persons the law

requires a common carrier to exercise
extraordinary diligence in carrying and
transporting their passenger safely as far
as human care and foresight can prove,
using the utmost diligence of very cautious
persons with due regard to all
circumstances
Chapter 3
EXTRAORDINARY DILIGENCE
REQUIRED OF COMMON CARRIERS
1. How duty is complied with: it is

sufficient to reiterate that the source of a
common carriers legal liability is the
contract of carriage, and by entering into
said contract, it binds itself to carry the
passengers safely as far as human care and
foresight can provide, using the utmost
diligence of a very cautious person, with
due regard for all the circumstances.
27
The law compels them to curb the

recklessness of their drivers
If common carriers carefully

observed the statutory standard of
extraordinary diligence in respect
of their own passengers, they
cannot help but simultaneously
benefit pedestrians and the owners
and passengers of other vehicles
who are equally entitled to the safe
and convenient use of our roads
and highways.
C. Effect of Stipulation on Extraordinary

Diligence
1. Goods: the parties cannot stipulate that
the carrier will not exercise any diligence in
the custody of goods. However, the law
allows a stipulation whereby the carrier will
exercise a degree of diligence which is less
than extraordinary with respect to goods.
Article 1744. A stipulation between the
common carrier and the shipper or owner
limiting the liability of the former for the
loss, destruction, or deterioration of the
goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or
owner;

(2) Supported by a valuable consideration
other than the service rendered by the
common carrier; and
(3) Reasonable, just and not contrary to
public policy.
2. Passengers: there can be no stipulation
lessening the utmost diligence that is owed
to passengers
Article 1757. The responsibility of a
common carrier for the safety of
passengers as required in articles 1733 and
1755 cannot be dispensed with or lessened
by stipulation, by the posting of notices, by
statements on tickets, or otherwise.
Gratuitous
Passenger
extraordinary diligence is also required

even if the passenger is carried
gratuitously
Article 1758. When a passenger is

carried gratuitously, a stipulation limiting
the common carrier's liability for
negligence is valid, but not for wilful acts
or gross negligence.
The reduction of fare does not justify any
limitation of the common carrier's liability.
D. Extraordinary Diligence in Carriage by
Sea
1. Seaworthiness
Rowena B. Gallego
28

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FEU Institute of Law

Reviewer In Transportation Law

A. Overview of Transportation Law

Article 1755. A common carrier is

2. Code of Commerce (TITLE VII

B. Definition of Contract of Transportation

The contract may involve carriage of

b. Contract of Carriage of Goods by

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

CA - while the deceased might not have then

2) Buses, Jeepneys and Street

The foundation of LRTAs liability is the

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

(Lastimoso vs. Doliente, October 20,

One that holds itself out as ready to

Art. 1732 of the New Civil Code avoids any

a. Public Service / Public Utilities

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

b. Clientele although the clientele is

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

Effect of Charter Party it may transform a

As correctly pointed out by petitioner, the

CHARTER PARTY contract by

Under the Petroleum Act of the Philippines

a. Time Charter vessel is

Article 1733. Common carriers, from the

Such extraordinary diligence in the

Includes both vessel and crew

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

as in a bareboat or demise that a common

Planters Products Inc. vs CA

Planters Products purchased from Mitsubi

The Court notes that it was in the month of

A time charter-Party on the vessel M/V

Before loading the

After the Urea fertilizer was loaded in bulk

Upon arrival, the port area was windy,

Survey report revealed a shortage in the

Planters Products sent a claim letter to

Indeed, we agree with respondent carrier that

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

In culpa contractual, upon which the action of

FGU Insurance vs GP Sarmiento

Home Insurance Co. vs American

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law

And furthermore, in a charter of the entire

Because the others denied liability, Home

WHEREFORE, the judgment appealed from

The CFI, after trial, absolved Luzon

Common Carrier distinguished from

Disagreeing with such judgment, American

ARRASTRE refers to hauling of cargo,

Functions of Arrastre Operator:

Such doctrine We find reasonable. The Civil

Its function have nothing to do with the

Atty. Ma. Victoria M. Sarmiento

FEU Institute of Law