REVIEWER IN COMMERCIAL LAW Table of Contents

TRANSPORTATION AND PUBLIC UTILITIES LAW

Chapter I. GENERAL Chapter III. OVERLAND 48

CONSIDERATIONS 31 TRANSPORTATION
I. Public Utilities 31 I. Scope of Overland
II. Transportation 33 Transportation 48
II. Nature of Contract 48
Chapter II. COMMON 37 III. Effect of Civil Code 48
CARRIERS 37 IV. Contract of Carriage 48
I. In General 37 A. Bill of Lading 48
A. Concept of Common B. Refusal to Transport 49
Carrier 38 C. Doubtful Declaration of
B. Nature of Business; Power 38 Contents 49
of the State to Regulate 38 D. No Bill of Lading 49

TRANSPORTATION AND
C. Nature and Basis of 39

PUBLIC UTILITIES LAW

V. Responsibility of the 49
Liability 39 Carrier 49
D. Classes of Common A. When It Commences 49
Carriers 39 B. Route 50
E. Laws Applicable 39 C. Care of Goods 50
II. Common Carriage of Goods D. Delivery
A. Liability and Presumption 40 VI. Rights and Obligations of 51
of Negligence Shipper and/or Consignee 52
B. Exemption from Liability 41 VII. Applicability of Provisions
C. Duration of Extraordinary
Responsibility 42 Chapter IV. ADMIRALTY AND
D. Stipulation/Agreement 42 MARITIME COMMERCE 53
Limiting Liability 43 I. Source of Law 53
E. Applicable Law on Foreign II. Concept of Admiralty;
Trade 43 Jurisdiction 53
F. Rules on Passenger 43 III. Vessels 53
Baggage 44 A. Meaning 53
III. Common Carriers of 44 B. Nature and Acquisition 53
Passengers IV. Persons Participating in
A. Nature and Extent of 44 Maritime Commerce 53
Responsibility A. Shipowners and 53
B. Duration of Responsibility 44 Shipagents 56
C. Presumption of Negligence B. Captains and Managers 57
D. Force Majeure 44 C. Other Officers and Crew 59
E. Limitation of Liability; D. Supercargoes
Validity of Stipulations 45 V. Accidents and Damages in 59
F. Responsibility for Acts of Maritime Commerce 59
Employees 45 A. Averages 61
G. Responsibility for Acts of 45 B. Arrival Under Stress 62
Strangers and Co- 45 C. Collisions 62
Passengers 46 D. Shipwreck 62
H. Duty of Passenger; Effect 46 VI. Special Contracts 62
of Contributory Negligence A. Charter Parties
IV. Damages Recoverable from 46 B. Loans on Bottomry and 64
Common Carriers 47 Respondentia 65
A. In General C. Bill of Lading 65
B. Actual or Compensatory D. Passengers on Sea Voyage 66
C. Moral Damages VII. Carriage of Goods by Sea
D. Exemplary Damages Act
E. Nominal, Temperate, and
Liquidated
F. Attorney’s Fees and
Interest

Page 30 of 278
REVIEWER IN COMMERCIAL LAW Table of Contents
Chapter V. WARSAW 68
CONVENTION 68
I. Definition and Applicability 68
II. Liabilities 68
III. Limitation on Liability 68
IV. When Limitations 69
Unavailable 69
V. Conditions on Liability
VI. Venue of Court Actions

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PUBLIC UTILITIES LAW

Page 31 of 278
REVIEWER IN COMMERCIAL LAW Chapter I. General Considerations

Transportation and Public Utilities Law

FACULTY-STUDENT EDITORIAL BOARD AND LECTURES COMMITTEE

Prof. Gwen Grecia-de Vera COMMERCIAL LAW LECTURES

FACULTY EDITOR
Krizelle Poblacion
Edel Cruz
Christina Ortua
ACADEMICS COMMITTEE HEAD
SUBJECT EDITORS

Samantha Poblacion TRANSPORTATION & PUBLIC Jason Mendoza

DIRECTOR FOR ACADEMICS UTILITIES LAW DEPUTY HEAD
EDITOR-IN-CHIEF
Emee Macabales Malds Menzon
Rania Joya LEAD WRITER LOGISTICS, HR
DEPUTY DIRECTOR FOR ACADEMICS
LAYOUT HEAD Awi Mayuga Mario Vincent --------

TRANSPORTATION AND
PUBLIC UTILITIES LAW
Nicole Torres Diaz Leo Zulueta
-------- Mona Lisa Barro Niner Guiao LOGO, COVER AND TEMPLATE DESIGN
Kae Guerrero Marvin Ibarra
PRINTING AND DISTRIBUTION WRITERS

Chapter 1. General public for the common good, to the extent of

the interest he has thus created.
Considerations Albano v. Reyes (1989).
A public utility is a business or service engaged
I. PUBLIC UTILITIES in regularly supplying the public with some
II. TRANSPORTATION commodity or service of public consequence,
such as electricity, gas, water, transportation,
telephone or telegraph services. Apart from
I. Public Utilities statutes which define public utilities that are
(Asked in 92, 93, 95, 98 and 00) within the purview of such statutes, it would be
difficult to construct a definition of a public
What is a Public Utility? utility which would fit every conceivable case.
As its name indicates, however, the term public
It is a business or service engaged in utility implies a public use and service to the
regularly supplying the public with some public.
commodity or service of public
consequence such as electricity, gas, Tatad v Garcia
water, transportation, telephone or While a franchise is needed to operate these
telegraph service. facilities to serve the public, they do not by
themselves constitute a public utility. What
 Two tests for determining public constitutes a public utility is not their
utility: ownership but their use to serve the public.
1. Is it engaged in regularly supplying the In law, there is a clear distinction between the
public with some commodity or "operation" of a public utility and the
ownership of the facilities and equipment used
service? (per definition in Albano v.
to serve the public. The right to operate a
Reyes below) public utility may exist independently and
2. If #1 is uncertain, is it a public service separately from the ownership of the facilities.
as defined in the Public Service Law One can own said facilities without operating
under CA 146 Sec. 13(b)? If it falls them as a public utility, or conversely, one may
under any one of the examples given operate a public utility without owning the
under CA 146 Sec 13(b), then it is a facilities used to serve the public. The devotion
public utility. of property to serve the public may be done by
the owner or by the person in control thereof
Kilusang Mayo Uno v. Garcia (1994) who may not necessarily be the owner thereof.
Public utilities are privately owned and
operated businesses whose services are  What does “regularly supplying
essential to the general public. They are the public…” mean?
enterprises which specially cater to the needs
The utility must hold itself out to the
of the public and conduce to their comfort and
convenience. As such, public utility services
public as a public utility by demand and as
are impressed with public interest and concern. a matter of right, and not by permission.
When, therefore, one devotes his property to a To determine what constitutes regularity,
use in which the public has an interest, he, in look at it from the perspective of the
effect grants to the public an interest in that public, and not the operator.
use, and must submit to the control by the
REVIEWER IN COMMERCIAL LAW Chapter I. General Considerations
It is a service or a readiness to serve an 4. Refusing or neglecting to carry public
indefinite portion of the population subject mail upon request (Secs. 18 and 19, CA
only to the limitations of the service as No. 146).
given by the grant such that [the utility]
incurs a liability as a violation of its duty if What is a Public Service?
it refuses, such that the availment of the
service has become, through time, a A person who owns, operates, manages or
matter of right and not of mere privilege. controls in the Philippines for hire or
(also in US v. Tan Piaco) compensation, with general or limited
clientele, whether permanent, occasional
 To whom does “public” refer to? Is or accidental, and done for general
the word “public” in “public business purposes, any common carrier or
utility” the same in “public public utility, ice plants, power and water
service”? supplies, communication and similar

TRANSPORTATION AND
There are three senses of the word

PUBLIC UTILITIES LAW

public services (Sec. 13b, CA No. 146).
“public” in Transportation Law: a) public
utility; b) public service; and c) definition Kilusang Mayo Uno Labor Center v. Garcia
of a common carrier under Art. 1732 of Jr. (1994)
the Civil Code. In determining public need, the presumption of
need for a service shall be deemed in favor of
To determine a public utility, the two tests the applicant. Public convenience and
necessity exists when the proposed facility or
above & the definition under Albano v.
service meets a reasonable want of the public
Reyes apply. and supply a need which the existing facilities
do not adequately supply. The existence or
 Are all public utilities commodities nonexistence of public convenience and
or service of public consequence? necessity is therefore a question of fact that
Yes. All public utilities have a public must be established by evidence, real and/or
consequence. But not all businesses testimonial; empirical data; statistics and such
bearing public consequence are public other means necessary, in a public hearing
utilities. This is because almost all types of conducted for that purpose. The object and
purpose of such procedure, among other
business have some form of regulation
things, is to look out for, and protect, the
from the State. interests of both the public and the existing
transport operators.
 What service/s on the part of the
public utility is considered  What are the purposes of the
unlawful? Public Service Act (CA No. 146)?
It shall be unlawful for any public 1. To secure adequate, sustained service
service to provide or maintain any service for the public at the least possible
that is unsafe, improper, or inadequate, or cost;
withhold or refuse any service which can 2. To protect the public against
reasonably be demanded and furnished, unreasonable charges and poor,
as founded and determined by the inefficient service;
Commission in a final order which shall be 3. To protect and secure investments in
conclusive and shall effect in accordance public services;
with this Act, upon appeal or otherwise. 4. To prevent ruinous competition.
(Sec. 19 [a], CA No. 146)
 What is the difference between a
 What are some examples of public utility and a public service?
unlawful acts of public utility For all intents and purposes, they are the
companies? same and are used interchangeably.
1. Engaging in public service business
without first securing the proper However, public utility is a broader
certificate; concept that embraces public service. A
2. Providing or maintaining unsafe, public service is necessarily a public
improper or inadequate service as utility, but not all public utilities are public
determined by the proper authority; services.
3. Committing any act of unreasonable
and unjust preferential treatment to any  When is a public utility not a
particular person, corporation or entity as public service?
determined by the proper authority;
REVIEWER IN COMMERCIAL LAW Chapter I. General Considerations
If it is not included in the enumeration in business of carrying good for others for
the Public Service Act (CA 146 Sec. 13(b)) hire
and Albano v. Reyes. 3. Consignee - the party to whom the
carrier is to deliver the things being
transported; to whom the carrier may
lawfully make delivery in accordance
 How do they differ in with its contract of carriage. The
Constitutional restrictions and shipper and the consignee may be the
requirements? same person.
If a business is a public utility, then it is
subject to the limitations and restrictions NOTE:
provided for in the 1987 Constitution (Art. Art. 1766. In all matters not regulated by
12, Secs. 11,17,18,19) Since a public this Code, the rights and obligations of
service is necessarily a public utility, common carriers shall be governed by the

TRANSPORTATION AND
therefore public services are subject to the Code of Commerce and by special laws.

PUBLIC UTILITIES LAW

same Constitutional limitations and
restrictions. Public Nature
If a public utility is not a public service, it
is still subject to the same Constitutional  What is a Certificate of Public
limitations and restrictions. Convenience (CPC)?
A CPC is any authorization to operate a
Therefore, Public Utility = Constitution public service issued by the pertinent
Public Service = Constitution + government agency (DOTC, NTC LTFRB,
Public Service etc) for the operation of public services for
Act which no franchise, either municipal or
legislative, is required by law) e.g. motor
vehicles.
II. Transportation
It constitutes neither a franchise nor a
Definition contract; it does not confer property
rights, it is a mere license or privilege
The movement of goods or persons from (Pantranco v. PSC). Such privilege is
one place to another, by a carrier (Black’s forfeited when the grantee fails to comply
Law Dictionary). with his commitments to serve the public
and public necessity. However, these
 What is a contract of certificates represent property rights to
transportation? the extent that if the rights which any
It is a contract whereby a person, natural public utility is exercising pursuant to the
or juridical, obligates themselves to lawful orders of the PSC (now DOTC) has
transport persons, things, news, from one been invaded by another public utility, in
place to another, by land, air or water, for appropriate cases, actions may be
a fixed price or compensation. It is the maintained by the complainant public
removal of goods or persons from one utility.
place to another.
It is a “property” and has a considerable
It is a relationship which is imbued with value and can be the subject of sale or
the public interest. attachment (Cogeo-Cubao Operators and
Drivers Assn. vs. CA, Raymundo vs. Luneta
 Who are the parties to the Motor Co.).
contract of transportation?:
1. Shipper - one who gives rise to the The revocation of this certificate deprives
contract of transportation by agreeing the grantee of no vested right. New and
to deliver the things or news to be additional burdens, alteration of the
transported, or to present his own certificate, or even revocation or
person or those of other or others in annulment thereof is reserved to the State
the case of transportation of (Luque vs. Villegas, 30 SCRA 408).
passengers.
2. Carrier or conductor - one who binds  What is a Certificate of Public
himself to transport person, things, or Convenience & Necessity (CPCN)?
news, as the case may be, or one It is a certificate issued by the pertinent
employed in or engaged in the government agency to a public service to
REVIEWER IN COMMERCIAL LAW Chapter I. General Considerations
which any political subdivision has granted No. The approval of the sale of CPCs,
a franchise under RA 667 after the CPCNs or other properties does not affect
pertinent government agency has the validity (perfection) of the sale
approved the same under Sec. 16(b). It is between the parties as long as all the
an authorization issued by the pertinent elements of a contract are met. This only
government agency for the operation of affects the relation of the parties to the
public services for which a franchise is DOTC or to 3rd parties. If there is no
required by law (e.g. electric, telephone). approval, then the sale does not bind the
DOTC or 3rd parties. The controlling factor
 What is the difference between a therefore is the registration.
CPC & a CPCN?
Unlike a CPC, a CPCN requires a franchise  If a stockholder of a public utility
from Congress. The public utility cannot transfers his stock to the 3rd
be issued a CPCN and cannot operate, person, is there a need to obtain

TRANSPORTATION AND
therefore, without a franchise from the approval of the DOTC?

PUBLIC UTILITIES LAW

Congress It depends. If the transfer results in the
transferee owning more than 40% of the
 What is a franchise? stock of the public utility, then the
It is a legislative grant from Congress or a approval of the DOTC is needed.
local legislative body. If it is of nationwide
application (e.g. Philippine Air Lines), then  When must the approval of the
it must take the form of a Republic Act. DOTC be secured?
Before or after the execution of the
 How does one get a franchise? contract.
It is the same procedure for any law (file a
bill, 3 readings in Congress, etc) The  What if the transferee is an alien?
applicant must a)prove that he or she is a The transfer is VOID. An alien cannot own
Filipino citizen; b) demonstrate financial more than 40% of the stock of a public
capacity, and c) must show that he or she utility.
is applying for a business of public
convenience, that the public shall benefit  Which public utilities are
from the grant of the franchise. exempted from getting a CPC?
Under the Public Service Law, Sec. 14, the
 Is a franchise enough in order to following are exempted from getting a
operate? CPC:
No. All public utilities require either a CPC (a) Warehouses;
or CPCN to operate. Those public utilities (b) Vehicles drawn by animals and bancas
for which franchises have been granted moved by oar or sail, and tugboats and
still require a CPCN in order to operate. lighters;
Those public utilities that did not require a (c) Airships within the Philippines except
franchise for there creation still require a as regards the fixing of their maximum
CPC in order to operate. rates on freight and passengers;
(d) Radio companies except with respect
 What are the grounds for the to the fixing of rates;
suspension and revocation of CPCs (e) Public services owned or operated by
& CPCNs issued? any instrumentality of the National
1. The facts and circumstances on the Government or by any government-
strength of which said certificate was owned or controlled corporation,
issued have been misrepresented or except with respect to the fixing of
materially changed; rates. (As amended by Com. Act 454,
2. The holder has violated or willfully RA No. 2031 and RA No. 2677)
refused to comply with any order, rule
or regulation of the commission; Raymundo v. Luneta Motor Corporation
3. The common carrier repeatedly fails to (1933)
comply with his or its duty to observe CPCs secured by public service operators are
extraordinary diligence. liable to execution, and the Public Service
Commission is authorized to approve the
transfer of the certificates of public
 Does the sale of a CPC, CPCN or convenience to the execution creditor.
other properties of the public
utility have to be approved before  What is the Prior Operator Rule?
it is sold to a third person?
REVIEWER IN COMMERCIAL LAW Chapter I. General Considerations
The prior operator rule works to protect 4. The Commission cannot grant a CPC or
the prior operator if it maintains an CPCN that comprises a larger territory
adequate service and is able to meet the than that applied for;
demands of the public. His or her 5. Where public interest would be better
investment is protected by not allowing a served by the new operator;
subsequent operator to be granted a 6. When the application of the rule would
license for the same route. The policy is be conducive to monopoly.
not to issue a certificate to a second
operator to cover the same field and in  How do you know whether there is
competition with a first operator who is ruinous competition enough for
rendering sufficient, adequate and the prior operator rule to take
satisfactory service. The prior operator effect?
must first be given an opportunity to Ruinous competition means that there is
improve its service, if inadequate or actual ruin of the business of the operator;

TRANSPORTATION AND
deficient. Where the operator either fails that the existing operator will not gain

PUBLIC UTILITIES LAW

or neglects to make the improvement or enough profits if another person is allowed
effect the increase in services, especially to enter the business; that which will
when given the opportunity, new result in the deprivation of sufficient gain
operators should be given the chance to in respect of reasonable return of
give the services needed by the public. investment, therefore the oppositor,
alleging this, must show that he will be
The rationale for this rule is for the deprived of a reasonable return on his
preservation of public convenience and to investment.
prevent ruinous competition in order that
the interests of the public would be The mere possibility of reduction in the
conserved and preserved. earnings of the business or the
deterioration in the income of his business
 What is the Prior Applicant Rule? is not sufficient to prove ruinous
The rule presupposes a situation where competition. It must be shown that the
two interested persons apply for a business would not have sufficient gains
certificate to operate a public utility in the to pay a fair rate of interest on his capital
same community over which no person investments.
has as yet granted any certificate. If it
turns out, after the hearing, that the  Does the prior operator rule
circumstances between the two applicants create a monopoly?
are more or less equal, then the applicant Legally speaking, there cannot be a
who applied ahead of the other, will be monopoly when a property is operated as
granted the certificate. a public utility. The prior operator rule
does not encourage a monopoly because
This rule is subordinated under the Prior the theory is that one operator keeps the
Operator Rule. prices low.

 What is the Protection of Batangas Transportation Co. v. Cayetano

Investment Rule? Orlanes (1928)
It means that one of the purposes of the So long as the 1st licensee keeps and performs
Public Service Act is to protect and the terms and conditions of its license and
complies with the reasonable rules and
conserve investments which have already
regulations of the Commission and meets the
been made for that purpose by public demands of the public, it should have more or
service operators. less of a bested and preferential right over a
person who seeks to acquire another and a
 What are some of the instances later license over same route. Otherwise, the
where the prior operator rule does first licensee would not have protection on his
NOT apply? investment and would be subject to ruinous
1. When the CPC or CPCN granted to the competition and this defeat the very purpose
applicant is a maiden franchise that and intent for the PSC was created.
covers a new route, even if it overlaps
with the route of the prior operator;  What is the Kabit System?
2. Where the corporate existence of the (Asked in 90 and 05)
prior operator has expired; A system whereby a person who has been
3. Regular operators are preferred over granted a certificate of public convenience
irregular operators. allows other persons who own motor
REVIEWER IN COMMERCIAL LAW Chapter I. General Considerations
vehicles to operate under such license, for transportation absent a
a fee or percentage of such earnings. transportation contract?

Although not penalized outright as a Lara v. Valencia (1958)

criminal offense, the "kabit system" is The owner and driver of a vehicle owes to
invariably recognized as being contrary to accommodation passengers or invited guests
public policy and, therefore, void and merely the duty to exercise reasonable care so
that they may be transported safely to their
inexistent under Art 1409 of the Civil
destination. Thus, “The rule is established by
Code. "Kabit System" has been identified the weight of authority that the owner or
as one of the root causes of graft and operator of an automobile owes the duty to an
corruption in the government invited guest to exercise reasonable care in its
transportation offices. It is a "pernicious operation, and not unreasonably to expose him
system" that cannot be too severely to danger and injury by increasing the hazard
condemned. It constitutes an imposition of travel. Valencia therefore is only required to

TRANSPORTATION AND
upon the good faith of the government. It observe ordinary care, and is not in duty bound

PUBLIC UTILITIES LAW

is an abuse of a certificate of public to exercise extraordinary diligence as required
of a common carrier by our law (Art. 1755 &
convenience, which is a special privilege
1756, new CC).
granted by the government (Teja
Marketing v. IAC).

 What is an example of the “kabit

system”?
A, a grantee of a CPC from the LTFRB, is
given the authority to operate 10 units of
taxis. B, a non-grantee, wishes to operate
as a common carried and “kabits” with the
CPC of A who will obtain approval from the
LTFRB to operate another taxi. The taxi
will be registered in the name of A, who
will be paid by B.

Assume that A executed a deed of sale in

favor of B in case B decides not to go on
with the arrangement, in order to
safeguard the rights of B. However, in
case of injury to a passenger of the taxi
actually operated by B (and previously
sold to B as well) it is still A who will be
liable. The illegal contract of sale between
A & B cannot be put up as a defense.

A does not have a cause of action against

B either. They are in pari delicto.

Teja Marketing v. IAC (1987)

Parties operated under an arrangement,
commonly known as the "kabit system"
whereby a person who has been granted a
certificate of public convenience allows another
person who owns motor vehicles to operate
under such franchise for a fee. A certificate of
public convenience is a special privilege
conferred by 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 in existent under Article 1409 of the Civil
Code.

 What are the rights and

obligations of parties arising from
transactions relating to
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers

Chapter II. Common Carriers 4. It holds out to the public as ready to

engage in the transportation of goods
I. IN GENERAL of the kind to which his business is
A. CONCEPT OF COMMON CARRIER confined (cf. First Phil. Industrial v. CA)
B. NATURE OF BUSINESS; POWER OF THE
STATE TO REGULATE  Why is there a need to determine
C. NATURE AND BASIS OF LIABILITY whether it is a common carrier or
D. CLASSES OF COMMON CARRIERS not?
E. LAWS APPLICABLE Common carriers are subject to the
II. COMMON CARRIAGE OF GOODS
A. LIABILITY AND PRESUMPTION OF
presumption of negligence. In order to
NEGLIGENCE rebut this presumption, they must show
B. EXEMPTION FROM LIABILITY that they employed extraordinary
C. DURATION OF EXTRAORDINARY diligence.
RESPONSIBILITY

TRANSPORTATION AND
D. STIPULATION/AGREEMENT LIMITING  Do you need a CPC or CPCN in

PUBLIC UTILITIES LAW

LIABILITY order to become a common
E. APPLICABLE LAW ON FOREIGN TRADE carrier?
F. RULES ON PASSENGER BAGGAGE No. It is the conduct that makes you a
III. COMMON CARRIERS OF PASSENGERS
common carrier. (De Guzman v. CA) The
A. NATURE AND EXTENT OF
RESPONSIBILITY liability arises from the Civil Code.
B. DURATION OF RESPONSIBILITY
C. PRESUMPTION OF NEGLIGENCE FGU v. Sarmiento Trucking
D. FORCE MAJEURE The true test of a common carrier is the
E. LIMITATION OF LIABILITY; VALIDITY OF carriage of passengers or goods, providing
STIPULATIONS space for those who opt to avail themselves of
F. RESPONSIBILITY FOR ACTS OF its transportation services for a fee.
EMPLOYEES
G. RESPONSIBILITY FOR ACTS OF US v. Tan Piaco
STRANGERS AND CO-PASSENGERS These trucks, so far as indicated by the
H. DUTY OF PASSENGER; EFFECT OF evidence and as far as the appellant is
CONTRIBUTORY NEGLIGENCE concerned, furnished service under special
IV. DAMAGES RECOVERABLE FROM agreements to carry particular persons and
COMMON CARRIERS property. . . . So long as the individual or co-
A. IN GENERAL partnership, etc., etc., is engaged in a purely
B. ACTUAL OR COMPENSATORY private enterprise, without attempting to
C. MORAL DAMAGES render service to all who may apply, he can in
D. EXEMPLARY DAMAGES no sense be considered a public utility, for
E. NOMINAL, TEMPERATE, AND public use. "Public use" means the same as
LIQUIDATED "use by the public”; it is not confined to
F. ATTORNEY’S FEES AND INTEREST privileged individuals, but is open to the
indefinite public. If the use is merely optional
I. In General with the owners, or the public benefit is merely
incidental, it is not a public use, authorizing the
exercise of the jurisdiction of the public utility
A. Concept of Common Carrier commission. Public use is not synonymous with
(Asked in 91, 92, 96, 00 and 02) public interest. The true criterion by which to
judge of the character of the use is whether the
Art. 1732 Civil Code public may enjoy it by right or only by
Common carriers are persons, corporations, permission.
firms or associations engaged in the business
of carrying or transporting passengers or goods De Guzman v. CA
or both, by land, water, or air, for Art 1732 of the Civil Code (definition of
compensation, offering their services to the common carriers) makes no distinction
public. between one whose principal business activity
is the carrying of persons or goods or both, and
 What are the elements of a one who does such carrying only as an
common carrier? ancillary activity (in local idiom, as "a
1. It is engaged in the business of sideline"). It also avoids making any distinction
carrying or transporting goods for between a person or enterprise offering
transportation service on a regular or
others as a public employment
scheduled basis and one offering such service
2. It is for compensation or for hire on an occasional, episodic or unscheduled
3. It is operated generally as a business basis. Neither does it distinguish between a
and not as a casual occupation carrier offering its services to the "general
public," i.e., the general community or
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
population, and one who offers services or carry him safely and provide safe means of
solicits business only from a narrow segment of entering and leaving its trains. That duty, being
the general population. contractual, was direct and immediate, and its
Note: De Guzman v. CA effectively non-performance could not be excused by
broadens the scope of what is considered proof that the fault was morally imputable to
a common carrier. Manila Railroad’s servants. There was no
contributory negligence on the part of Cangco.
First Phil. Industrial Corp v. CA
The test for determining whether a party is a  What laws govern over common
common carrier of goods is: (1). He must be carriers?
engaged in the business of carrying goods for The Civil Code primarily governs over
others as a public employment, and must hold common carriers. The Code of Commerce
himself out as ready to engage in the and special laws have suppletory effect.
transportation of goods for person generally as
a business and not as a casual occupation; (2)  What are the limitations on the

TRANSPORTATION AND
He must undertake to carry goods of the kind

PUBLIC UTILITIES LAW

power to regulate common
to which his business is confined; (3). He must
undertake to carry by the method by which his carriers?
business is conducted and over his established The same rules on due process apply to
roads; and (4)The transportation must be for the regulation of common carriers.
hire.
D. Classes of Common Carriers
B. Nature of Business and Power
of the State to Regulate COMMON PRIVATE
Nature Holds itself Agreement
out to public with private
Under Art 1765 of the Civil Code, the Land as ready to individual to
Transportation Franchising and Regulatory carry for hire carry for hire
Board (LTFRB) may on its own motion or Basis for Bound to Not bound to
on petition cancel after due hearing the Consideratio carry all for carry unless
CPC of a common carrier that repeatedly n compensatio there is
fails to observe the extraordinary diligence n special
required. agreement
Regulation Subject to Not subject to
Pantranco v. PSC regulation same
When one devotes his property to a use in regulation as
which the public has an interest, he, in effect, common
grants to the public an interest in that use, and carriers
must submit to be controlled by the public for Diligence Extraordinary Of a good
the common good, to the extent of the interest father
he has thus created. He may withdraw his Stipulation Cannot May stipulate
grant by discounting the use, but so long as he on Liability stipulate exemption
maintains the use he must submit to control. exemption from liability
This right of the state to regulate public utilities from liability or future
is founded upon the police power. A certificate negligence
of public convenience constitutes neither a
franchise nor a contract, confers no property  What are the classes of carriers?
right, and is a mere license or privilege. Common or private
As to the object: goods or persons
C. Nature and Basis of Liability
 What is the difference between a
NATURE: bound to observe extraordinary common carrier and a private
diligence carrier?

BASIS OF LIABILITY: nature of their COMMON - It holds itself out as ready to

business and public policy (Art 1733) engage in the transportation of goods or
persons for hire as a public employment
Cangco v. MRR and not as a casual occupation whether:
The liability of the carrier is contractual in 1. regular or scheduled
nature. It arises from the contract of carriage. 2. occasional, episodic or unscheduled
The liability is direct and immediate, and differs 3. offered to the general public or merely
from presumptive responsibility for the a narrow segment of the general
negligence of [Manila Railroad’s] servants. population (De Guzman v. CA)
The contract of Manila Railroad Company to
transport Cangco carried with it the duty to
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
PRIVATE - Carriers who transport or  What are the requisites for
undertake to transport goods or persons in exemption due to natural
a particular instance for hire or for reward disaster?
E. Laws Applicable 1. The natural disaster must have been
the proximate and only cause (Art
PRIMARILY: Civil Code 1739)
2. The common carrier must exercise due
SUPPLEMENTARILY: Code of Commerce diligence to prevent or minimize the
and other special laws (Art 1766) loss before, during and after the
occurrence of the flood, storm or
Liability for loss, destruction or natural disaster (Art 1739)
deterioration of goods: laws of country 3. The common carrier must not have
to where the goods are to be transported been guilty of delay (Art 1740)
(Art 1753) 4. The shipment was at shipper’s risk (Art

TRANSPORTATION AND
361, Code of Commerce)

PUBLIC UTILITIES LAW

II. Common Carriage of Goods Martini v. Macondray (1919)
The master is responsible for the safe & proper
stowage of the cargo, & there is no doubt that
A. Liability and Presumption of by the general maritime law he is bound to
Negligence secure the cargo safely under deck. If the
(Asked in 90, 91 and 97) master carries goods on deck w/o the consent
of the shipper, he does it at his own risk. If they
GENERAL RULE: Common carriers are are damaged or lost in consequence of their
responsible for the loss, destruction, or being thus exposed, he cannot protect himself
from responsibility by showing that they were
deterioration of the goods
damaged or lost by the dangers of the seas.
When the shipper consents to his goods
EXCEPTION: if due to any of the following being carried on deck, he takes the risks
causes only of any damage or loss sustained as a
(1) Flood, storm, earthquake, lightning, or consequence of their being so carried.
other natural disaster or calamity;
(2) Act of the public enemy in war, Eastern Shipping Lines v. IAC (1987)
whether international or civil; Fire may not be considered a natural
(3) Act of omission of the shipper or owner disaster/calamity. This must be so as it arises
of the goods; almost invariably from some act of man or by
(4) The character of the goods or defects human means. It does not fall within the
in the packing or in the containers; category of an act of God unless caused by
lightning or boy other natural
(5) Order or act of competent public
disaster/calamity. It may even be caused by
authority. the actual fault or privity of the carrier.
NOTE: The presumption of negligence
does not apply in these cases. 2. Act of Public Enemy
Common carrier’s REMEDY to overcome  What are the requisites for
the presumption of negligence: prove that exemption due to the act of a
they observed extraordinary diligence public enemy?
1. The act of the public enemy must have
Ynchausti vs. Dexter (1920)
been the proximate and only cause
The mere proof of delivery of goods in good
order to a carrier, and of their arrival at the (Art 1739)
place of destination in bad order, makes out a 2. The common carrier must exercise due
prima facie case against the carrier, so that if diligence to prevent or minimize the
no explanation is given as to how the injury loss before, during and after the act of
occurred, the carrier must be held responsible. the public enemy causing the loss,
It is incumbent upon the carrier to prove that destruction or deterioration of the
the loss was due to accident or some other goods. (Art 1739)
circumstance inconsistent with its liability.
3. Act or Omission of Shipper
B. Exemption from Liability
 What are the requisites for
1. Natural Disaster exemption due to the act or
omission of the shipper?
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
1. The act or omission of the shipper overpower the will of petitioner’s employees.
must have been the proximate and The mere difficulty in the fulfillment of the
only cause (Art 1741) obligation is not force majeure.
2. If the shipper owner merely Melencio-Herrera, dissent: Through the
“order or act” of “competent public authority,”
contributed to the loss, destruction or
the performance of the contractual obligation
deterioration of the goods, the was rendered impossible. Apparently, the
proximate cause being the negligence seizure and destruction of the goods was done
of the common carrier, then the under legal process or authority so that
common carrier shall be liable for the petitioner should be freed from responsibility.
damages, which shall, however, be C. Duration of Extraordinary
equitably reduced. (Art 1741) Responsibility
4. Character of Goods GENERAL RULE: extraordinary diligence
 What are the requisites for over goods even when the goods are

TRANSPORTATION AND
PUBLIC UTILITIES LAW
exemption due to character of temporarily unloaded or stored in transit
goods?
1. the character of the goods or defects EXCEPTION: shipper or owner made use
in packing or containers (Art 1739) of the right of stoppage in transitu
2. The common carrier must exercise due
diligence to forestall or lessen the (Art  When does extraordinary diligence
1739) for goods start?
Extraordinary diligence starts from the
DAMAGE WHEN TO CLAIM time the goods are loaded into the
Ascertainable from Claim for damages must vessels.
package be made upon receipt
Only upon opening Claim for damages may  When does extraordinary diligence
the package be made within 24 hours for goods stop?
upon receipt
Extraordinary diligence ends when the
After such periods OR transportation goods are discharged and delivered to the
charges have been paid, no more claims consignee.
for damages will be entertained.
(Art 366, Code of Commerce)  What does “unconditionally
placed” mean?
Southern Lines v. CA (1962) It means that the shipper cannot get the
If the fact of improper packing is known to the goods back from the common carrier at
carrier or its servants or apparent upon
will.
ordinary observation, but [the carrier] accepts
the goods notwithstanding such condition, it is
not relieved of liability for loss or injury  When is the contract of
resulting therefrom. transportation perfected?
A contract of transportation is consensual
5. Order of Competent Authority in nature; therefore it is perfected at the
meeting of the minds of the parties.
 What are the requisites for
exemption due to an order of  What if the goods are only for
competent authority? safekeeping?
1. There must be an order or act of If the common carrier received the goods
competent authority (Art 1743) not for transportation but only for
2. The said public authority must have safekeeping, where the goods have
had the power to issue the order. If the already been purchased by the shipper
officer acts without legal process, then and ready for transportation, then the
the common carrier will be held liable duty of extraordinary diligence has not yet
(Art 1743) started.
Ganzon v. CA (1988)
The intervention of the municipal officials was  Who are these persons or entities
not of a character that would render impossible who have “a right to receive” the
the fulfillment by the carrier of the obligation. goods?
The petitioner was not duty bound to obey the These persons include agents, brokers,
illegal order to dump into the sea the scrap and the like.
iron. There is absence of sufficient proof that
the issuance of the order was attended with
 What is stoppage in transitu?
such force or intimidation as to completely
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
This is the act by which the unpaid vendor other than the service rendered by the
of goods stops their progress and resumes common carrier; and
possession of them constructively while (3) Reasonable, just and not contrary to public
they are in the court of transit from him to policy.
the purchaser, and not yet actually
delivered to the latter. The duty of the Art. 1745 Civil Code
Any of the following or similar stipulations shall
common carrier to exercise extraordinary
be considered unreasonable, unjust and
diligence ends in the middle of the journey contrary to public policy:
or transit. (1) That the goods are transported at the risk
of the owner or shipper;
When the buyer of the goods becomes (2) That the common carrier will not be liable
insolvent, the unpaid seller who has for any loss, destruction, or deterioration of
parted with the possession of the goods at the goods;
any time while they are in transit, may (3) That the common carrier need not observe
any diligence in the custody of the goods;

TRANSPORTATION AND
resume the possession of the goods as he

PUBLIC UTILITIES LAW

(4) That the common carrier shall exercise a
would have had if he had never parted
degree of diligence less than that of a good
with the possession. father of a family, or of a man of ordinary
prudence in the vigilance over the
Compania Maritima v. Insurance Company movables transported;
of North America (1964) (5) That the common carrier shall not be
The liability of the carrier as common carrier responsible for the acts or omission of his
begins with the actual delivery of the goods for or its employees;
transportation, and not merely with the formal (6) That the common carrier's liability for acts
execution of a receipt or bill of lading; the committed by thieves, or of robbers who do
issuance of a bill of lading is not necessary to not act with grave or irresistible threat,
complete delivery and acceptance. Even where violence or force, is dispensed with or
it is provided by statute that liability diminished;
commences with the issuance of the bill of (7) That the common carrier is not responsible
lading, actual delivery and acceptance are for the loss, destruction, or deterioration of
sufficient to bind the carrier. goods on account of the defective
condition of the car, vehicle, ship, airplane
Lu Do v. Binamira (1957) or other equipment used in the contract of
While delivery of the cargo to the customs carriage.
authorities is not delivery to the consignee, or
“to the person who has a right to receive Art. 1751 Civil Code
them”, contemplated in Article 1736, because The fact that the common carrier has no
in such case the goods are still in the hands of competitor along the line or route, or a part
the Government and the owner cannot thereof, to which the contract refers shall be
exercise dominion over them, however the taken into consideration on the question of
parties may agree to limit the liability of the whether or not a stipulation limiting the
carrier considering that the goods have still to common carrier's liability is reasonable, just
through the inspection of the customs and in consonance with public policy.
authorities before they are actually turned over
to the consignee. This is a situation where we
2. As to Amount of Liability
may say that the carrier losses control of the
goods because of a custom regulation and it is
unfair that it be made responsible for what Art. 1749 Civil Code
may happen during the interregnum. A stipulation that the common carrier's liability
is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner
D. Stipulations/Agreement declares a greater value, is binding.
Limiting Liability
(Asked in 2002) Art. 1750 Civil Code
A contract fixing the sum that may be
1. As to Diligence Required recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is
Art. 1744 Civil Code valid, if it is reasonable and just under the
A stipulation between the common carrier and circumstances, and has been fairly and freely
the shipper or owner limiting the liability of the agreed upon.
former for the loss, destruction, or
deterioration of the goods to a degree less Shewaram v. PAL (1966)
than extraordinary diligence shall be valid, There are two requisites that must be fulfilled
provided it be: in order that the liability of PAL be limited
(1) In writing, signed by the shipper or owner; according to the stipulations behind the ticket
(2) Supported by a valuable consideration stub:
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
1. that the contract is just and reasonable
under the circumstances E. Applicable Law on Foreign
2. that the contract was fairly and freely Trade
agreed upon (per Art. 1750)
The fact that the conditions are printed at the
Art. 1753 Civil Code
back of the ticket stub in letters so small that
The law of the country to which the goods are
they are hard to read would not warrant the
to be transported shall govern the liability of
presumption that plaintiff was aware of those
the common carrier for their loss, destruction
conditions such that he had “fairly and freely
or deterioration.
agreed” to those conditions.
Ong Yiu v. CA (1979)
While the passenger had not signed the plane
ticket, he is nevertheless bound by the F. Rules on Passenger Baggage
provision thereof; such provisions have been (asked in 97 and 98)
held to be part of the contract of carriage and
valid and binding upon the passenger

TRANSPORTATION AND
Art. 1754 Civil Code

PUBLIC UTILITIES LAW

regardless of the latter’s lack of knowledge or The provisions of Articles 1733 to 1753 shall
assent to the regulation. It is what is known as apply to the passenger's baggage which is not
a contract of adhesion wherein one party in his personal custody or in that of his
imposes a ready made form of contract on the employee. As to other baggage, the rules in
other. The one who adheres to the contract is Articles 1998 and 2000 to 2003 concerning the
in reality free to reject it entirely. A contract responsibility of hotel-keepers shall be
limiting liability upon an agreed valuation does applicable.
not offend against the policy of the law
forbidding one from contracting against his
 When hotel-keeper liable
own negligence.
In the following cases, the hotel-keeper is
3. Factors Affecting Agreement liable regardless of the amount of care
exercised:
Art. 1746 Civil Code 1. loss or injury is caused by his servants
An agreement limiting the common carrier's or employees as well as by strangers
liability may be annulled by the shipper or (Art 2000) provided that notice has
owner if the common carrier refused to carry been given and proper precautions
the goods unless the former agreed to such taken (Art 1998)
stipulation.
2. loss is caused by the act of a thief or
Art. 1747 Civil Code robber done without the use of arms
If the common carrier, without just cause, and irresistible force (Art 2001)
delays the transportation of the goods or
changes the stipulated or usual route, the  When hotel-keeper not liable
contract limiting the common carrier's liability 1. loss or injury is caused by force
cannot be availed of in case of the loss, majeure (Art 2000), theft or robbery by
destruction, or deterioration of the goods. a stranger (not by hotel-keeper’s
servant or employee) with the use of
Art. 1748 Civil Code
An agreement limiting the common carrier's
arms or irresistible force (Art 2001),
liability for delay on account of strikes or riots etc unless he is guilty of fault or
is valid. negligence in failing to provide against
the loss or injury from his cause
4. Stipulations Limiting Liability 2. loss is due to the acts of the guests,
his family, servants, or visitors (Art
Art. 1751 Civil Code 2002)
The fact that the common carrier has no 3. loss arises from the character of the
competitor along the line or route, or a part things brought into the hotel (Art
thereof, to which the contract refers shall be 2002)
taken into consideration on the question of
whether or not a stipulation limiting the
Art. 2003 Civil Code
common carrier's liability is reasonable, just
The hotel-keeper cannot free himself from
and in consonance with public policy.
responsibility by posting notices to the effect
that he is not liable for the articles brought by
Art. 1752 Civil Code the guest. Any stipulation between the hotel-
Even when there is an agreement limiting the keeper and the guest whereby the
liability of the common carrier in the vigilance responsibility of the former as set forth in
over the goods, the common carrier is articles 1998 to 2001 is suppressed or
disputably presumed to have been negligent in diminished shall be void.
case of their loss, destruction or deterioration.
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
 What is a passenger baggage? foresight can provide, using the utmost
They are the things that a passenger will diligence of very cautious persons, with a due
bring with him consistent with a regard for all the circumstances.
temporary absence from where he lives.
Passenger baggage must have a direct  Is there any difference between
relationship with the passenger who is the extraordinary diligence for
travelling. goods and for persons?
e.g. A balikbayan box or suitcase is In the case of transport of persons, there
passenger baggage. However, 10,000 are no exceptions to the presumption of
cans of corned beef is not considered as negligence in the case of injuries or death,
passenger baggage. They are considered unlike in goods under Art. 1734.
as goods. If you carry goods with you, you
cannot bring them with you as part of your Isaac v. A. L. Ammen Transportation
[passenger] contract of carriage. You will (1975)
It is the prevailing rule that it is negligence per

TRANSPORTATION AND
need to get a separate contract of

PUBLIC UTILITIES LAW

se for a passenger on a railroad voluntarily or
carriage (“bill of lading”) in order to inadvertently to protrude his arm, hand, elbow,
transport them. These goods will then be or any other part of his body through the
transported whether or not you are window of a moving car beyond the outer edge
physically travelling with them. of the window or outer surface of the car, so as
to come in contact with objects or obstacles
 What are the kinds of passenger near the track, and that no recovery can be
baggage and the laws applicable had for an injury which but for such negligence
to them? would not have been sustained.
1. Passenger baggage in the custody of
the passenger (e.g. carry-on luggage). Spouses Landingin v. PANTRANCO (1970)
These are considered as necessary When a passenger dies or is injured, the
presumption is that the common carrier is at
deposits. Articles 1998, 2000-2003
fault or that it acted negligently (Article 1756).
apply. This presumption is only rebutted by proof on
2. Passenger baggage not in the custody the carrier's part that it observed the
of the passenger (e.g. checked-in "extraordinary diligence" required in Article
luggage). Arts. 1733-1753 on 1733 and the "utmost diligence of very
extraordinary diligence apply. The cautious persons" required in Article 1755
liability is greater for baggage that is (Article 1756).
in the custody of the carrier in contrast
if such is in the possession of the Necesito v. Paras
passenger. While the carrier is not an insurer of the safety
of the passengers, it should nevertheless be
held answerable for the flaws of its equipment,
III. Common Carriage of if such flaws were discoverable. The rationale
for the common carrier’s liability for
Passengers manufacturing defects is the fact that the
(Asked in 97 and 01) passenger has neither choice nor control over
the carrier in the selection and use of the
A. Nature and Extent of equipment and appliances in use by the
Responsibility carrier. Having no privity whatever with the
manufacturer or vendor of the defective
equipment, the passenger has no remedy
Art. 1733 Civil Code
against him.
Common carriers, from the nature of their
business and for reasons of public policy, are
bound to observe extraordinary diligence in the B. Duration of Responsibility
vigilance over the goods and for the safety of
the passengers transported by them, according La Mallorca v. CA (1966)
to all the circumstances of each case. It has been recognized as a rule that the
Such extraordinary diligence in the vigilance relation of carrier and passenger does not
over the goods is further expressed in Articles cease at the moment the passenger alights
1734, 1735, and 1745, Nos. 5, 6, and 7, while from the carrier's vehicle at a place selected by
the extraordinary diligence for the safety of the the carrier at the point of destination, but
passengers is further set forth in Articles 1755 continues until the passenger has had a
and 1756. reasonable time or a reasonable opportunity to
leave the carrier's premises. And, what is a
reasonable time or a reasonable delay within
Art. 1755 Civil Code
this rule is to be determined from all the
A common carrier is bound to carry the
circumstances.
passengers safely as far as human care and
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
Force majeure is not in itself a defense.
Aboitiz vs CA Extraordinary diligence is the defense. Proof of
It is of common knowledge that, by the very force majeure becomes relevant in complying
nature of petitioner's business as a shipper, the with the requirement of extraordinary
passengers of vessels are allotted a longer diligence.
period of time to disembark from the ship than
other common carriers such as a passenger E. Limitation of Liability;
bus. Such vessels are capable of
Validity of Stipulations
accommodating a bigger volume of both as
compared to the capacity of a regular Art. 1757 Civil Code
commuter bus. Consequently, a ship passenger The responsibility of a common carrier for the
will need at least an hour as is the usual safety of passengers as required in Articles
practice, to disembark from the vessel and 1733 and 1755 cannot be dispensed with or
claim his baggage whereas a bus passenger lessened by stipulation, by the posting of
can easily get off the bus and retrieve his notices, by statements on tickets, or otherwise.
luggage in a very short period of time.

TRANSPORTATION AND
PUBLIC UTILITIES LAW
Art. 1758 Civil Code
 Does the duty of extraordinary When a passenger is carried gratuitously, a
diligence occur right at the stipulation limiting the common carrier's
perfection of the contract of liability for negligence is valid, but not for wilful
acts or gross negligence.
transportation?
The perfection of the contract of carriage The reduction of fare does not justify any
does not necessarily coincide with the limitation of the common carrier's liability.
commencement of the duty of
extraordinary diligence. It may occur at F. Responsibility for Acts of
the same time or later. Employees
 Does the duty of extraordinary Art. 1759 Civil Code
diligence get interrupted? Common carriers are liable for the death of or
No. In PAL v. CA, it was held that PAL had injuries to passengers through the negligence
to continue to exercise extraordinary or willful acts of the former's employees,
diligence even in the case of stranded although such employees may have acted
passengers until they have reached their beyond the scope of their authority or in
violation of the orders of the common carriers.
final destination.
This liability of the common carriers does not
cease upon proof that they exercised all the
 Is there a duty of extraordinary diligence of a good father of a family in the
diligence for comfort and safety? selection and supervision of their employees.
No. The duty really only involves bringing
the person to the destination. But in PAL v. Art. 1760 Civil Code
CA, the Court held that PAL had the duty The common carrier's responsibility prescribed
to provide all means and comfort and in the preceding article cannot be eliminated or
convenience to its passengers when they limited by stipulation, by the posting of notices,
got stranded. by statements on the tickets or otherwise.

C. Presumption of Negligence Maranan v. Perez (1967)

It is enough that the assault happens within the
Art. 1756 course of the employee's duty. It is no defense
In case of death of or injuries to passengers, for the carrier that the act was done in excess
common carriers are presumed to have been of authority or in disobedience of the carrier's
at fault or to have acted negligently, unless orders. The carrier's liability here is absolute in
they prove that they observed extraordinary the sense that it practically secures the
diligence as prescribed in Arts 1733 and 1755. passengers from assaults committed by its own
employees.
 Is the last clear chance doctrine
applicable in contracts of At least three very cogent reasons underlie this
rule. As explained in Texas Midland R.R. vs.
carriage?
Monroe:
No. The contract of carriage is contractual (1) the special undertaking of the carrier
in nature. This doctrine is a defense only requires that it furnish its passenger that
for torts and quasi-delicts. full measure of protection afforded by the
exercise of the high degree of care
D. Force Majeure prescribed by the law, inter alia from
violence and insults at the hands of
Bachelor Express v. CA strangers and other passengers, but above
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
all, from the acts of the carrier's own ACT DONE LIABILITY OF OBLIGOR
servants charged with the passenger's In good faith Only natural and probable
safety; consequences of the breach,
(2) said liability of the carrier for the servant's which have could have
violation of duty to passengers, is the reasonably been foreseen
result of the former's confiding in the In bad faith, All damages which may be
servant's hands the performance of his fraud, malice reasonably attributed to
contract to safely transport the passenger, or wanton breach
delegating therewith the duty of protecting attitude
the passenger with the utmost care
prescribed by law; and  What is the common carrier’s
(3) as between the carrier and the passenger,
responsibility towards strangers?
the former must bear the risk of wrongful
acts or negligence of the carrier's
Art. 1763 imposes only the duty of
employees against passengers, since it, ordinary diligence. In Bachelor Express,
and not the passengers, has power to the Court held that the common carrier

TRANSPORTATION AND
PUBLIC UTILITIES LAW
select and remove them. has a duty of extraordinary diligence for
the act of a co-passenger. However, in
G. Responsibility for Acts of Pilapil, the standard of diligence is only
Strangers and Co-passengers ordinary diligence, (Art. 1763), referring to
the acts of strangers.
Art. 1763 Civil Code
A common carrier is responsible for injuries H. Duty of Passenger; Effect of
suffered by a passenger on account of the Contributory Negligence
willful acts or negligence of other passengers
or of strangers, if the common carrier's Art. 1761Civil Code
employees through the exercise of the The passenger must observe the diligence of a
diligence of a good father of a family could good father of a family to avoid injury to
have prevented or stopped the act or omission. himself.

Art. 1762 Civil Code

Pilapil v. CA (1989)
The contributory negligence of the passenger
In consideration of the right granted to it by the
does not bar recovery of damages for his death
public to engage in the business of
or injuries, if the proximate cause thereof is the
transporting passengers and goods, a common
negligence of the common carrier, but the
carrier does not give its consent to become an
amount of damages shall be equitably reduced.
insurer of any and all risks to passenger and
goods. It merely undertakes to perform certain
duties to the public as the law imposes, and
holds itself liable for any breach thereof. IV. Damages Recoverable from
Under Art. 1763, a tort committed by a Common Carriers
stranger which causes injury to a passenger
does not accord the latter a cause of action
against the carrier. The negligence for which a A. In General
common carrier is held responsible is the
negligent omission by the carrier's employees Art. 2197 Civil Code
to prevent the tort from being committed when Damages may be:
the same could have been foreseen and (1) Actual or compensatory;
prevented by them. Further, when the violation (2) Moral;
of the contract is due to the willful acts of (3) Nominal;
strangers, as in the instant case, the degree of (4) Temperate or moderate;
care essential to be exercised by the common (5) Liquidated; or
carrier for the protection of its passenger is (6) Exemplary or corrective.
only that of a good father of a family.
B. Actual or Compensatory
 What is the common carrier’s
responsibility towards employees? One is entitled to an adequate
The common carrier is responsible even compensation only for pecuniary loss
beyond the scope of authority and in suffered and duly proved. (Art 2199)
violation of orders compared to quasi-
delicts under Art. 2180, which exempts These actual and compensatory damages
the employer if it was done outside of include those profits which the obligee
employment. However, there must be a failed to obtain. (Art 2200)
reasonable connection between the act
and the contract of carriage. Cariaga v. Laguna Tayabas Bus Co. (1960)
From the deposition of Dr. Romeo Gustilo, a
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
neurosurgeon, it appears that, as a result of luggages, PAN AM cannot be held liable for the
the injuries suffered by Edgardo, his right cancellation of Pangan’s contracts as it could
forehead was fractured necessitating the not have foreseen such an eventuality when it
removal of practically all of the right frontal accepted the luggages for transit.
lobe of his brain. From the testimony of Dr.
Jose A. Fernandez, a psychiatrist, it may be
C. Moral Damages
gathered that, because of the physical injuries
suffered by Edgardo, his mentality has been so
General Rule: moral damages are not
reduced that he can no longer finish his studies
as a medical student; that he has become recoverable in actions predicated on a
completely misfit for any kind of work; that he breach of contract of carriage
can hardly walk around without someone
helping him, and has to use a brace on his left Exception:
leg and feet. The lower court found that the 1. where death results
removal of the right frontal lobe of the brain of 2. where it is proved that carrier was
Edgardo reduced his intelligence by about guilty of fraud or bad faith, even if

TRANSPORTATION AND
PUBLIC UTILITIES LAW
50%; that due to the replacement of the right death does not result
frontal bone of his head with a tantalum plate
Edgardo has to lead a quite and retired life Bad faith is a breach of a known duty
because "if the tantalum plate is pressed in or through some motive of interest or ill will.
dented it would cause his death." The
impression one gathers from this evidence is Moral damages for mental anguish by
that, as a result of the physical injuries suffered reason of the death may be claimed by
by Edgardo Cariaga, he is now in a helpless
the spouse, legitimate and illegitimate
condition, virtually an invalid, both physically
and mentally. His award of actual damages is
descendants and ascendants of the
thus increased to P25,000. However, he cannot deceased. (Art 2206)
recover moral damages as LTB never acted
fraudulently or in bad faith. No proof of pecuniary loss is necessary in
order that moral, nominal, temperate,
Villa Rey v. CA (1970)
liquidated or exemplary damages may be
The determination of the amount involves 2 awarded. Assessment of such damages is
factors. discretionary to the court. (Art 2216)
1. The number of years on the basis of which
the damages shall be computed and
2. The rate at which the losses sustained by Fores v. Miranda (1959)
his sisters should be fixed Moral damages are not recoverable in damage
The determination of the indemnity to be actions predicted on a breach of the contract of
awarded to the heirs of a deceased person has transportation, in view of Articles 2219 and
therefore no fixed basis. Much is left to the 2220 of the new Civil Code.
discretion of the court considering the moral
An exception to this rule is Art 1764 which
and material damages involved, and so it has
makes the common carrier expressly subject to
been said that "(t)here can be no exact or
the rule of Art. 2206, that entitles the deceased
uniform rule for measuring the value of a
passenger to "demand moral damages for
human life and the measure of damages
mental anguish by reason of the death of the
cannot be arrived at by precise mathematical
deceased" but where the injured passenger
calculation, but the amount recoverable
does not die, moral damages are not
depends on the particular facts and
recoverable unless it is proved that the carrier
circumstances of each case. The life
is guilty of malice or bad faith.
expectancy of the deceased or of the
beneficiary, whichever is shorter, is an
Air France v. Carrascoso (1966)
important factor.
There was a contract to furnish a first class
passage. The contract was breached when the
As to the rate: total earnings less expenses
airline failed to furnish the first class ticket at
necessary in the creation of such earnings and
Bangkok. There was bad faith when Air
income (net earnings)
France’s employee compelled Carrascoso to
leave his first class seat for an economy class
Pan Am World v. IAC, supra (1988) one by forcibly ejecting him.
The rule laid down in Mendoza vs PAL is clear:
Under Art. 1107, a debtor in good faith like the
defendant herein, may be held liable only for D. Exemplary Damages
damages that were foreseen or might have
been foreseen at the time the contract of Art. 2229 Civil Code
transportation was entered into. In the absence Exemplary or corrective damages are imposed,
of a showing that PAN AM’s attention was by way of example or correction for the public
called to the special circumstances requiring good, in addition to the moral, temperate,
prompt delivery of respondent Pangan’s liquidated or compensatory damages.
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
leave much to be desired, particularly so in the
Art. 2232 Civil Code face of petitioners' grief over the death of their
In contracts and quasi-contracts, the court may mother, exacerbated by the tension and
award exemplary damages if the defendant anxiety wrought by the impasse and confusion
acted in a wanton, fraudulent, reckless, over the failure to ascertain over an
oppressive, or malevolent manner. appreciable period of time what happened to
Art. 2233 Civil Code her remains.
Exemplary damages cannot be recovered as a
matter of right; the court will decide whether or Airline companies are hereby sternly
not they should be adjudicated. admonished that it is their duty not only to
cursorily instruct but to strictly require their
Mecenas v. CA personnel to be more accommodating towards
In discussing the rule of exemplary damages in customers, passengers and the general public.
law, the Supreme Court looks to it as an
instruction to serve the ends of law and public F. Attorney’s Fees and Interest
policy by reshaping socially deleterious

TRANSPORTATION AND
PUBLIC UTILITIES LAW
behaviors, specifically in the case, to compel Art. 2208 Civil Code
common carriers to control their employees, to In the absence of stipulation, attorney's fees
tame their reckless instincts, and to force them and expenses of litigation, other than judicial
to take adequate care of humans beings and costs, cannot be recovered, except:
their property. (1) When exemplary damages are awarded;
(2) When the defendant's act or omission has
E. Nominal, Temperate and compelled the plaintiff to litigate with third
persons or to incur expenses to protect his
Liquidated interest;
(3) In criminal cases of malicious prosecution
Art. 2221 Civil Code against the plaintiff;
Nominal damages are adjudicated in order that (4) In case of a clearly unfounded civil action or
a right of the plaintiff, which has been violated proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident
or invaded by the defendant, may be bad faith in refusing to satisfy the plaintiff's
vindicated or recognized, and not for the plainly valid, just and demandable claim;
purpose of indemnifying the plaintiff for any (6) In actions for legal support;
loss suffered by him. (7) In actions for the recovery of wages of
household helpers, laborers and skilled workers;
Art. 2224 Civil Code (8) In actions for indemnity under workmen's
Temperate or moderate damages, which are compensation and employer's liability laws;
(9) In a separate civil action to recover civil liability
more than nominal but less than compensatory arising from a crime;
damages, may be recovered when the court (10) When at least double judicial costs are awarded;
finds that some pecuniary loss has been (11) In any other case where the court deems it just
suffered but its amount can not, from the and equitable that attorney's fees and expenses
nature of the case, be provided with certainty. of litigation should be recovered.
(12) In all cases, the attorney's fees and expenses of
Art. 2226 Civil Code litigation must be reasonable.
Liquidated damages are those agreed upon by
the parties to a contract, to be paid in case of Art. 2210 Civil Code
breach thereof. Interest may, in the discretion of the court, be
allowed upon damages awarded for breach of
Art. 1757 Civil Code contract.
The responsibility of a common carrier for the
safety of passengers as required in Articles Art. 2212 Civil Code
1733 and 1755 cannot be dispensed with or Interest due shall earn legal interest from the
lessened by stipulation, by the posting of time it is judicially demanded, although the
notices, by statements on tickets, or otherwise. obligation may be silent upon this point.
(1109a)
Alitalia v. IAC (1990)
Dr. Pablo is not entitled to be compensated for  What damages may be recovered
loss or damage to her luggage since they were in case of death of a passenger?
ultimately delivered to her. She is however 1. indemnity for the death of the victim
entitled to nominal damages, which is 2. indemnity for loss of earning capacity of
adjudicated in order that the right of the the deceased
passenger, which has been violated or invaded, 3. moral damages
may be vindicated or recognized, and not for 4. attorney’s fees and expenses of litigation
the purpose of indemnifying the passenger for 5. interest (in proper cases)
any loss suffered.
 In fixing a greater amount of
Saludo v. CA damages for death of a passenger,
The lamentable actuations of TWA's employees what may the courts consider?
REVIEWER IN COMMERCIAL LAW Chapter II. Common Carriers
1. life expectancy of the deceased
2. pecuniary loss to the plaintiff or beneficiary
3. loss of support
4. loss of service
5. loss of society
6. mental suffering of beneficiaries
7. medical and funeral expenses

TRANSPORTATION AND
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REVIEWER IN COMMERCIAL LAW Chapter III. Overland Transportation

Chapter III. Overland

Transportation
III. Effect of Civil Code
I. SCOPE OF OVERLAND
Art 1766, Civil Code
TRANSPORTATION
In all matters not regulated by this Code, the
II. NATURE OF CONTRACT
rights and obligations of common carriers shall
III. EFFECT OF CIVIL CODE
be governed by the Code of Commerce and by
IV. CONTRACT OF CARRIAGE
special laws.
A. BILL OF LADING
B. REFUSAL TO TRANSPORT
C. DOUBTFUL DECLARATION OF IV. Contract of Carriage
CONTENTS
D. NO BILL OF LADING A. Bill of Lading
V. RESPONSIBILITY OF THE CARRIER
A. WHEN IT COMMENCES

TRANSPORTATION AND
PUBLIC UTILITIES LAW
B. ROUTE Definition, Subject Matter
C. CARE OF GOODS
D. DELIVERY  What is a bill of lading?
VI. RIGHTS AND OBLIGATIONS OF It may be defined as a written
SHIPPER AND/OR CONSIGNEE acknowledgment of the receipt of goods
VII. APPLICABILITY OF PROVISIONS and an agreement to transport and to
deliver them at a specified place to a
 What does the Code of Commerce person named or on his order. It
cover? comprehends all methods of
It governs over overland transportation transportation.
and maritime admiralty. It governs only
commercial contracts. Each bill of lading is a contract in itself and
the parties are bound by its terms. A bill of
Commercial contracts involving common lading is also a receipt, and it is likewise a
carriers: refer first to the Civil Code, then symbol of the goods covered by it. It is
to the Code of Commerce also a document of title.

Private carriers involved in commercial  Who are the parties to a bill of

contracts: refer first to the Code of lading?
Commerce, then to the Civil Code, but 1. shipper
excluding the Civil Code provisions on 2. consignee
common carriers 3. carrier

 Essential Terms in a Bill of Lading

I. Scope of Overland 1. the name of the carrier, the date of
Transportation shipment,
2. the points of departure and arrival,
 What is overland transport? 3. the price, and with regard to baggage,
Overland transport applies to transport on 4. the number and weight of the
land and on small bodies of water, packages, with any other indications in
waterways, both natural and artificial, order to easily identify them. (Article
including transport on rivers which are not 352, Code of Commerce)
very large. (If it is transport at sea, then it
is admiralty) Form, Contents

 Specific Contents of a Bill of

II. Nature of Contract Lading
1. The name, surname, and domicile of
A contract considered commercial when: the shipper.
1. It involves merchandise or any 2. The name, surname, and domicile of
commercial goods. the carrier.
2. No matter what its object may be, the 3. The name, surname and domicile of
carrier is a merchant or is customarily the person to whom or to whose order
engaged in making transportation for the goods are addressed, or whether
the public. (Article 349, Code of they are to be delivered to the bearer
Commerce) of the said bill.
REVIEWER IN COMMERCIAL LAW Chapter III. Overland Transportation
4. A description of the goods, stating objections are so stated in the bill of
their generic character, their weight, lading. (Article 356, Code of Commerce)
and the external marks or signs of the
packages containing the same. C. Doubtful Declaration of
5. The cost of the transportation. Contents
6. The date on which the shipment is
In case of a well founded suspicion, the
made.
carrier may examine the package before
7. The place of the delivery to the carrier.
witnesses, in the presence of the shipper
8. The place and time at which the
or of the consignee.
delivery is to be made to the
consignee. In the absence of the shipper or
9. The damages to be paid by the carrier consignee, the examination shall be made
in case of delay, if any agreement is before a notary.
made on this point. (Article 351, Code
If the declaration should be correct, the

TRANSPORTATION AND
of Commerce)

PUBLIC UTILITIES LAW

expenses caused by the examination and
 Shipments made over railroads repacking the packages shall be defrayed
The bills of lading or declarations of by the carrier, and in a contrary case by
shipment furnished by the shipper should the shipper. (Article 357, Code of
refer, with regard to the rate, terms, and Commerce)
special conditions of the transportation, to
the schedules and regulations. (Article D. No Bill of Lading
351, Code of Commerce) In the absence of a bill of lading the claims
of the parties shall be decided by the legal
 Is the form material? proofs that each one may submit in
No. As long as it contains an support of his claims, in accordance with
acknowledgment by the carrier of the the general provisions established for
receipt of goods for transportation, it is in commercial contracts. (Article 354, Code
legal effect, a bill of lading. of Commerce)

Function  Shipments made by railroads

Should no schedule by determined, the
1. It is the legal basis of the contract carrier must apply the rate of the
between the shipper and the carrier merchandise paying the lowest, with the
2. All disputes as to the execution and conditions inherent therein, always
fulfillment of the contract shall be including such statement or reference to
decided on the basis of the bill of them in the bill of lading which he delivers
lading only, except forgery or material to the shipper.
errors in the drafting.
3. The obligations and actions between  Is a bill of lading essential to a
the parties shall be canceled upon contract of transportation?
return of the bill of lading, unless the No. While under Art. 350 the shipper and
claims which the contracting parties the common carrier may mutually demand
desired to reserve are reduced to that a bill of lading be made, it is not
writing (Article 353, Code of obligatory. The fact that a bill of lading is
Commerce) not issued does not preclude the existence
of a contract of transportation. Where no
If in case of loss, the consignee shall give bill of lading is issued, the disputes
the carrier a receipt for the goods between the parties shall be decided
delivered, this receipt producing the same according to the rules laid down in Art.
effects as the return of the bill of lading. 354.

B. Refusal to Transport
V. Responsibility of the Carrier
Carrier may refuse to accept packages
which appear unfit for transportation A. When it commences
If transportation is made by railway and Commences from the moment the carrier
the shipment is insisted on, the company receives the merchandise:
shall be exempt from all liability if its 1. in person or
REVIEWER IN COMMERCIAL LAW Chapter III. Overland Transportation
2. through a person entrusted thereto in in which, according to the bill of lading,
the place indicated for their reception they were at the time of their receipt,
(Article 355, Code of Commerce) without any detriment or impairment.

B. Route Effects:
No delivery: The carrier shall be obliged
General Rule: to pay the value of the goods not
Carrier cannot change the route if there is delivered at the point where they should
an agreement between the shipper and have been and at the time the delivery
the carrier should have taken place.
Effect:
Liable for damages  Partial Delivery:
Exception: The consignee may refuse to receive
Force Majeure. In case of an increase in them, when he proves that he can not
transportation charges, he shall be make use thereof without the others.

TRANSPORTATION AND
PUBLIC UTILITIES LAW
reimbursed for said increase after (Article 363, Code of Commerce)
presenting the formal proof thereof.
 Only a Reduction in the Value of
(Article 359, Code of Commerce)
Goods:
The obligation of the carrier shall be
C. Care of Goods reduced to the payment of the amount of
General Rule: said reduction in value, after appraisal by
Merchandise shall be transported at the experts. (Article 364, Code of Commerce)
risk and venture of the shipper  When consignee may refuse to
Effect: receive goods:
All damages and impairment suffered by 1. Partial Delivery (Article 363, Code of
the goods during the transportation, by Commerce)
reason of accident, force majeure, or by 2. When the goods are rendered useless
virtue of the nature or defect of the for purposes of sale or consumption in
articles, shall be for the account and risk the use for which they are properly
of the shipper. destined. [Effect: consignee may
demand payment of the goods at
The proof of these accidents is incumbent current market prices]
on the carrier. (Article 361, Code of 3. In case part of the goods is in good
Commerce) condition, the consignee may refuse to
The carrier shall be liable receive only the damaged goods if
1. if it is proved that they occurred on separation is possible. (Article 365,
account of his negligence or Code of Commerce)
2. because he did not take the In case of dispute as to the condition of
precautions usually adopted by careful the goods, the same shall be examined by
persons, unless the shipper experts appointed by the parties, and the
committed fraud in the bill of lading, third one, in case of disagreement,
making him believe that the goods appointed by the judicial authority.
were of a class or quality different from
what they really were. If the persons interested should not agree
with the report, said judicial authority shall
The carrier shall proceed with the sale of order the deposits of the merchandise in a
the goods and place them at the disposal, safe warehouse, and the parties interested
of the judicial authority or the officials shall make use of their rights in the proper
determined by special provisions, in case manner. (Article 367, Code of Commerce)
of:
a. loss of goods through force majeure 2. To whom Delivery is Made
b. there being no time for the owner to
dispose of the goods (Article 362, Code The carrier must deliver to the consignee
of Commerce) designated in the bill of lading. Otherwise,
he shall be liable for the damages that
D. Delivery may arise therefrom. (Article 368, Code of
Commerce)
1. Conditions of Goods
The carrier shall be obliged to deliver the 3. Judicial Deposit
goods transported in the same condition
REVIEWER IN COMMERCIAL LAW Chapter III. Overland Transportation
Judicial Deposit may be made if the numbers and dates, all the goods the
consignee: transportation of which is undertaken,
a. is not found at the domicile indicated stating the circumstances required by
in the bill of lading, Articles 350 et seq. for the responsive bills
b. refuses to pay the transportation of lading. (Article 378, Code of Commerce)
charges and expenses,
c. refuses to receive the goods, the
deposit of said goods shall be ordered
by the municipal judge. 7. Compliance with Administrative
The deposit shall have all the effects of a Regulations
delivery. (Article 369, Code of Commerce) The carrier shall be liable for all the
consequences arising from noncompliance
4. When to be Made on his part with the formalities prescribed
Rule: by the laws and regulations of the public

TRANSPORTATION AND
PUBLIC UTILITIES LAW
Period fixed for the delivery of the goods administration during the entire course of
Effect of Noncompliance: the trip and on the arrival at the point of
The carrier shall pay the indemnity agreed destination.
upon in the bill of lading. If no indemnity is Exception: when his omission arises from
fixed, the carrier shall be liable for the his having been induced into error by false
damages which may have been caused by statements of the shipper in the
the delay. (Article 370, Code of declaration of the merchandise.
Commerce) If the carrier has acted in accordance with
If no period is fixed, the carrier shall be a formal order received from the shipper
under the obligation to forward the goods or consignee of the merchandise both
in the first shipment of the same or similar shall incur liability. (Article 377, Code of
merchandise which he may make to the Commerce)
point of delivery (Article 358, Code of
Commerce)
VI. Rights and Obligations of
5. Two or More Carriers Shipper and/or Consignee
The succeeding carrier by virtue of A. Right to Damages
agreements or combined services with
other carriers shall: 1. Condition Imposed on Right
a. assume the obligations of the carriers
who preceded him,  When to claim for damages
DAMAGE WHEN TO CLAIM
b. reserve his right to proceed against
Ascertainable from Claim for damages
the latter if he should not be directly
package must be made upon
responsible for the fault which gives receipt
rise to the claim of the shipper or of Only upon opening Claim for damages may
the consignee the package be made within 24
c. assume all the actions and rights of hours upon receipt
those who may have preceded him in
After such periods OR transportation
the transportation.
charges have been paid, no more claims
The sender and the consignee shall have for damages will be entertained. (Art 366,
an immediate right of action against: Code of Commerce)
a. the carrier who executed the
transportation contract, or b. the other 2. Amount of Damages for Loss
carriers who received the goods
In case of lost or mislaid goods:
transported without reserve.
The appraisement of the goods which the
The reservations made by the latter shall carrier must pay shall be fixed in
not exempt them from the liabilities they accordance with what is stated in the bill
may have incurred by reason of their own of lading. (Article 372, Code of Commerce)
acts. (Article 373, Code of Commerce) A stipulation limiting the liability of the
carrier for the loss, destruction, or
6. Obligation to Keep Registry deterioration of the goods to a degree less
than extraordinary diligence shall be valid,
Transportation agents shall be obliged to provided it be:
keep a special registry in which there shall
be entered, in progressive order of
REVIEWER IN COMMERCIAL LAW Chapter III. Overland Transportation
(1) In writing, signed by the shipper or 4. The expenses arising from the change of
owner; consignment shall be defrayed by the
(2) Supported by a valuable consideration shipper. (Article 360, Code of Commerce)
other than the service rendered by the
common carrier; and D. Obligation to Pay
(3) Reasonable, just and not contrary to Transportation Charges
public policy. (Art. 1744, Civil Code)
Rule:
Consignee shall pay expenses and
transportation charges on the goods
3. Amount of Damages for Delay received after twenty-four hours have
elapsed from the time of the delivery.
The amount cannot exceed the current
price of the goods transported on the day Effect of Delay in Payment:
and at the place where the delivery was to Carrier may request the judicial sale of the

TRANSPORTATION AND
PUBLIC UTILITIES LAW
have been made. (Article 371(3), Code of goods (Article 374, Code of Commerce)
Commerce)
Lien:
B. Right to Abandon The goods transported shall be obligated to
answer for the transportation charges and
 Instances when abandonment is for the expenses and fees. (Article 375, Code
proper: of Commerce, Art. 2241, Civil Code)

1. Delay on account of the fault of the Duration:

carrier (Article 371, Code of Commerce) This right shall be limited to eight days after
 Procedure: the delivery has been made, and after said
Inform the carrier in writing before the prescription the carrier shall have no further
arrival of the same at the point of right of action than that corresponding to an
destination. The carrier shall satisfy the ordinary creditor. (Article 375, Code of
total value of the goods, as if they had Commerce)
been lost or mislaid.
The preference of the carrier to the payment
2. Partial delivery of the goods. (Article of what is due him shall not be affected by
363, Code of Commerce) the bankruptcy of the latter, provided the
If part of the goods transported should action is brought within the eight days
be delivered the consignee may refuse mentioned in Article 375. (Article 376, Code
to receive them, when he proves that he of Commerce)
can not make use thereof without the
others. E. Obligation to Return Bill of
Lading
3. Goods Rendered Useless (Article 365,
After the contract has been complied with
Code of Commerce)
the bill of lading issued by the carrier shall
If, on account of the damage, the goods
be returned to him, and by virtue of the
are rendered useless for purposes of sale
exchange of this certificate for the article
or consumption in the use for which they
transported, the respective obligations and
are properly destined the consignee shall
actions shall be considered as canceled,
not be bound to receive them, and may
unless in the same act the claims which the
leave them on the hands of the carrier,
contracting parties desired to reserve are
demanding payment therefor at current
reduced to writing, exception being made of
market prices.
the provisions of Article 366.
If in case of loss or for any other reason
C. Right to Change Consignment whatsoever, the consignee can not return
 Conditions for Change of upon receiving the merchandise the bill of
Consignment: lading subscribed by the carrier, he shall
1. No change in the place where delivery is give said carrier a receipt for the goods
to be made delivered, this receipt producing the same
2. At the time of making the change of the effects as the return of the bill of lading.
consignee the bill of lading subscribed by (Article 353. (2) (3), Code of Commerce)
the carrier be returned to him, if one
were issued VII. Applicability of Provisions
3. Bill of lading to be exchanged for
another containing the novation of the The provisions contained in Articles 349 et
contract. seq. shall also be understood as relating to
REVIEWER IN COMMERCIAL LAW Chapter III. Overland Transportation
persons who, although they do not
personally effect the transportation of
commercial goods, contract to do so
through others, either as contractors
for a special and fixed transaction or as
freight and transportation agents.
In either case they shall be subrogated to
the place of the carriers with regard to the
obligations and liability of the latter, as well
as with regard to their right. (Article 379,
Code of Commerce)

TRANSPORTATION AND
PUBLIC UTILITIES LAW
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce

Chapter IV. Admiralty and

Maritime Commerce III. Vessels

I. SOURCE OF LAW
A. Meaning
II. CONCEPT OF ADMIRALTY;
JURISDICTION Vessels are those engaged in navigation,
III. VESSELS whether coastwide or on the high seas,
A. MEANING including floating docks, pontoons,
B. NATURE AND ACQUISITION dredges, scows, and any other floating
IV. PERSONS PARTICIPATING IN MARITIME apparatus destined for the services of the
COMMERCE industry or maritime commerce. Vessels
A. SHIPOWNERS AND SHIPAGENTS engaged in the business of carrying or
B. CAPTAINS AND MANAGERS
C. OTHER OFFICERS AND CREW
transporting passengers or goods for
D. SUPERCARGOES compensation, offering their services to

TRANSPORTATION AND
PUBLIC UTILITIES LAW
V. ACCIDENTS AND DAMAGES IN the public, are common carriers, and are
MARITIME COMMERCE governed primarily by the Civil Code and
A. AVERAGES suppletorily by the Code of Commerce and
B. ARRIVAL UNDER STRESS special laws.
C. COLLISIONS
VI. SPECIAL CONTRACTS B. Nature and Acquisition
A. CHARTER PARTIES
B. LOANS ON BOTTOMRY AND Lopez v. Duruelo
RESPONDENTIA The word vessel used in the section was not intended
C. BILL OF LADING to include all ships, craft or floating structures of
D. PASSENGERS ON SEA VOYAGE every kind without limitation, and the provision of
that section should not be held to include minor craft
VII. CARRIAGE OF GOODS BY SEA ACT
engaged only in river or bay traffic. Vessels of a
minor nature, such as river boats and those carrying
I. Source of Law passengers from ship to shore, are governed as to
their liability in passengers by the Civil Code.

Main source of law: Code of Commerce Article 573, Code of Commerce

Merchant vessels constitute property which
If common carrier, apply Civil Code first, may be acquired and transferred by any of the
then Code of Commerce and special laws. means recognized by law. The acquisition of a
Maritime law includes coastwise, vessel must be included in a written
oceanwise and commercial laws. instrument, which shall not produce any effect
with regard to third persons if not recorded in
the mercantile registry.
II. Concept of Admiralty; The ownership of a vessel shall also be
Jurisdiction acquired by the possession thereof in good
faith for three years, with a good title duly
Admiralty is distinguished from overland recorded.
transportation based on two factors: In the absence of any of these requisites,
a. Size of the vessel uninterrupted possession for ten years shall be
b. Size of the body of water over which a necessary in order to acquire ownership.
vessel traverses.
A captain can not acquire by prescription the
ship of which he is in command.
BP 129 Section 19. Jurisdiction in civil cases. —
Regional Trial Courts shall exercise exclusive
original jurisdiction: Vessels shall continue to be considered as
xxx personal property. (Article 585, Code of
(3) In all actions in admiralty and maritime Commerce)
jurisdiction where he demand or claim exceeds
One hundred thousand pesos (P300,000.00)
or , in Metro Manila, where such demand or IV. Persons Participating in
claim exceeds Two hundred thousand pesos
(400,000.00); (as amended by R.A. 7691) Maritime Commerce

Under BP 129, it is the amount of the A. Shipowners and Shipagents

claim that is relevant in determining
jurisdiction of the courts over cases 1. Definition
involving admiralty.
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
Shipowner has possession, control and fulfillment of the obligations which are
management of the vessel and the his in accordance with Articles 610 and
consequent right to direct her navigation 612.
and receive freight earned and paid, while 6. For those arising by reason of his going
his possession continues. out of his course or taking a course
which he should not have taken
Shipagent is the person intrusted with the without sufficient cause, in the opinion
provisioning of a vessel, or who represents of the officers of the vessel, at a
her in the port in which she happens to be. meeting with the shippers or
supercargoes who may be on board.
2. Liabilities No exception whatsoever shall exempt
him from this obligation.
The owner of a vessel and the agent shall 7. For those arising by reason of his
be civilly liable for the acts of the captain voluntarily entering a port other than
and for the obligations contracted by the

TRANSPORTATION AND
his destination, with the exception of

PUBLIC UTILITIES LAW

latter to repair, equip, and provision the the cases or without the formalities
vessel. (Article 586, Code of Commerce) referred to in Article 612.
8. For those arising by reason of the
The agent shall also be civilly liable for the nonobservance of the provisions
indemnities in favor of third persons which contained in the regulations for lights
arise from the conduct of the captain in and evolutions for the purpose of
the care of the goods which the vessel preventing collisions. (Article 618,
carried Code of Commerce)

Exemption: abandonment of the vessel 3. Part Owners

(Article 587, Code of Commerce)
The owner or agent shall not be liable for The association of part-owners shall be
the obligations contracted by the captain governed by the resolutions of a majority
if the latter exceeds his powers and of the members. If there are only two part
privileges. However, if the amounts owners, in case of disagreement, the
claimed were made use of for the member having the largest interest shall
benefit of the vessel, the owner or be decisive. If the interests are equal, it
agent shall be liable. (Article 588, Code of shall be decided by lot. (Article 589, Code
Commerce) of Commerce)

The captain shall be civilly liable to the A vessel can not be detained, attached or
agent, and the latter to the third persons levied upon execution in her entirety for
who may have made contracts with the the private debts of a part owner, but shall
former: be limited to the interest the debtor may
1. For all the damages suffered by the have in the vessel. (Article 589, Code of
vessel and his cargo by reason of want Commerce)
of skill or negligence on his part. If a The owners of a vessel shall be civilly
misdemeanor or crime has been liable in the proportion of their
committed he shall be liable in contribution to the common fund, for the
accordance with the Penal Code. results of the acts of the captain.
2. For all the thefts committed by the
crew, reserving his right of action Exemption: Abandonment of his part of
against the guilty parties. the vessel (Article 590 Code of Commerce)
3. For the losses, fines, and confiscations
imposed an account of violation of the All the part owners shall be liable, in
laws and regulations of customs, proportion to their respective ownership,
police, health, and navigation. for:
4. For the losses and damages caused by a. the expenses of repairs to the vessel,
mutinies on board the vessel, or by b. other expenses which are incurred by
reason of faults committed by the crew virtue of a resolution of the majority.
in the service and defense of the c. the expenses of maintenance,
same, if he does not prove that he equipment, and provisioning of the
made full use of his authority to vessel, necessary for navigation.
prevent or avoid them. (Article 591, Code of Commerce)
5. For those arising by reason of an
undue use of powers and non- 4. Relations with the Captain
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
The agent may discharge the duties of The agent can not order a new voyage,
captain of the vessel. If two or more co- nor make contracts for a new charter, nor
owners request the position of captain, the insure the vessel, without the authority of
disagreement shall be decided by a vote her owner or by virtue of a resolution of
of the members; and if the vote should the majority of the co-owners, unless
result in a tie, the position shall be given these privileges were granted him in the
to the part owner having the larger certificate of his appointment.
interest in the vessel. If the interest should
be the same, the matter shall be decided If he should insure the vessel without
by lot. (Article 596, Code of Commerce) authority, he shall be secondarily liable for
the solvency of the underwriter. (Article
The agent shall agree with the captain, 598, Code of Commerce)
and shall contract in the name of the
owners, regarding repairs, details of Standard Oil v. Castelo (1921)
equipment, armament, provisions, fuel, It is important to remember that the owner of

TRANSPORTATION AND
PUBLIC UTILITIES LAW
the ship ordinarily has vastly more capital
and freight of the vessel, and, in general,
embarked upon a voyage than has any
in all that relates to the requirements of individual shipper of cargo. Moreover, the
navigation. (Article 597, Code of owner of the ship, in the person of the captain,
Commerce) has complete and exclusive control of the crew
and of the navigation of the ship, as well as of
The agent shall indemnify the captain for the disposition of the cargo at the end of the
all the expenses he may have incurred voyage. It is therefore proper that any person
from his own funds or from those of other whose property may have been cast overboard
persons, for the benefit of the vessel. by order of the captain should have a right of
(Article 602, Code of Commerce) action directly against the ship's owner for the
breach of any duty which the law may have
The agent shall have a right to discharge imposed on the captain with respect to such
the captain and members of the crew: cargo. The evident intention of the Code, taken
a. before a vessel goes out to sea: in all of its provisions, is to place the primary
When the contract does not state a liability upon the person who has actual control
over the conduct of the voyage and who has
definite period, he shall have a right to
most capital embarked in the venture, namely,
discharge them by paying them the the owner of the ship, leaving him to obtain
salaries earned according to their recourse, as it is very easy to do, from other
contracts, and without any indemnity. individuals who have been drawn into the
(Article 603, Code of Commerce) venture as shippers.
b. during the voyage: the captain or
member of the crew shall receive their Yu Con v. Ipil (1916)
salary until the return to the place It is well and good that the shipowner be not
where the contract was made, unless held criminally liable for such crimes or quasi
crimes; but he cannot be excused from liability
there are good reasons for the
for the damage and harm which, in
discharge (Article 604, Code of consequence of those acts, may be suffered by
Commerce) the third parties who contracted with the
c. if there is a contract for a definite captain, in his double capacity of agent and
period or voyage: the captain or subordinate of the shipowner himself. In
member of the crew shall not be maritime commerce, the shippers and
discharged until the fulfillment of their passengers in making contracts with the
contracts, except for reasons of captain do so through the confidence they
insubordination in serious matters, have in the shipowner who appointed him; they
presume that the owner made a most careful
robbery, theft, habitual drunkenness,
investigation before appointing him, and,
and damage caused to the vessel or to above all, they themselves are unable to make
its cargo by malice or manifest or such an investigation, and even though they
proven negligence. (Article 605, Code should do so, they could not obtain complete
of Commerce) security, inasmuch as the shipowner can,
d. if captain is part-owner: Captain whenever he sees fit, appoint another captain
can not be discharged without the instead.
agent returning him the amount of his
interest therein (Article 606, Code of 6. Doctrine of Limited Liability and
Commerce) Exceptions

5. Voyage and Charter Contracts The real and hypothecary nature of the
liability of the shipowner or agent had its
origin in the prevailing continues of the
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
maritime trade and sea voyages during liability to the value of the vessel, or to the
the medieval ages, attended by insurance thereon, if any. In the instant case it
innumerable hazards and perils. does not appear that the vessel was insured.
Art. 587 of the Code of Commerce appears to
To offset against these adverse conditions deal only with the limited liability of shipowners
and encourage shipbuilding and maritime or agents for damages arising from the
commerce, it was deemed necessary to misconduct of the captain in the care of the
goods which the vessel carries, but this is a
confine the liability of the owner or agent
mere deficiency of language and in no way
arising from the operation of a ship to the indicates the true extent of such liability.
vessel, equipment, and freight, or
insurance, if any, so that if the shipowner
Exceptions to the Doctrine of Limited
or agent abandoned the ship, equipment,
Liability:
and freight, his liability was extinguished.
a. Claims under the Workmen’s
The agent shall be civilly liable for the Compensation (Abueg vs San Diego)

TRANSPORTATION AND
PUBLIC UTILITIES LAW
indemnities in favor of third persons which b. Expenses for repairing, provisioning
arise from the conduct of the captain in and equipping the vessel
the care of the goods which the vessel c. Injury or damage due to the fault of
carried; but he may exempt himself the shipowner
therefrom by abandoning the vessel with d. Vessel is insured
all her equipments and the freight he may e. Vessel is not abandoned or there was
have earned during the voyage. (Article no total loss.
587, Code of Commerce)
7. Specific Rights and Prerogatives
The owners of a vessel shall be civilly
liable in the proportion of their a. Right of option of purchase and
contribution to the common fund, for the withdrawal in the sales made to
results of the acts of the captain, referred strangers to be exercised within 9
to in Article 587. days following the record of the sale in
the registry and by delivering the
Each part owner may exempt himself from price at once. (Article 575, Code of
this liability by the abandonment before a Commerce)
notary of the part of the vessel belonging b. Preference in the charter of the vessel
to him. (Article 590, Code of Commerce) by offering equal conditions and price
In case of collision, the liability of the (Article 593, Code of Commerce)
shipowner shall be understood as limited c. Right to elect a manager who shall
to the value of the vessel with all her represent the owners. The
appurtenances and all the freight earned appointment of director or agent shall
during the voyage. (Article 837, Code of be revocable at the will of the
Commerce) members. (Article 594, Code of
Commerce)
Liability for wages of the captain and the d. Right to demand profits by means of
crew and for advances made by the ship an executory action without further
agent if the vessel is lost by shipwreck or requisites than the acknowledgment
capture. (Article 643, Code of Commerce) of the signatures of the instrument
approving the account. (Article 601,
Yangco v. Laserna et al (1941) Code of Commerce)
If the shipowner or agent may in any way be
held civilly liable at all for injury to or death of
B. Captains and Managers
passengers arising from the negligence of the
captain in cases of collisions or shipwrecks, his
liability is merely co-extensive with his interest 1. Powers
in the vessel such that a total loss thereof
results in its extinction. In arriving at this Inherent powers of a captain or master of
conclusion, the fact is not ignored that the ill- a vessel:
fated S. S. Negros, as a vessel engaged in 1. To appoint or make contracts with the
interisland trade, is a common carrier, and that crew in the absence of the agent and
the relationship between the petitioner and the propose said crew, should said agent
passengers who died in the mishap rests on a be present; but the agent shall not be
contract of carriage. But assuming that permitted to employ any member
petitioner is liable for a breach of contract of against the captain's express refusal.
carriage, the exclusively "real and hypothecary
2. To command the crew and direct the
nature" of maritime law operates to limit such
vessel to the port of its destination, in
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
accordance with the instructions he head to the nearest neutral port,
may have received from the agent. inform his agent or shippers, and await
3. To impose, in accordance with the an occasion to sail under convoy, or
agreements and the laws and until the danger is over or he has
regulations of the merchants marine, received express orders from the ship
on board the vessel, correctional agent or the shippers. (Article 623,
punishment upon those who do not Code of Commerce)
comply with his orders or who conduct b. In case of a hurricane or if the cargo
themselves against discipline, holding suffered damages or averages: To
a preliminary investigation on the make a protest within 24 hours
crimes committed on board the vessel following his arrival and ratify it within
on the high seas, which shall be turned 24 hours upon arrival at his
over to the authorities, who are to take destination. (Article 624, Code of
cognizance thereof, at the first port Commerce)

TRANSPORTATION AND
touched. c. Upon arrival at the port of destination:

PUBLIC UTILITIES LAW

4. To make contracts for the charter of To get the necessary permission from
the vessel in the absence of the agent the health and customs officers, and
or of her consignee, acting in perform the other formalities required
accordance with the instructions by the regulations of the
received and protecting the interests administration, delivering the cargo
of the owner most carefully. without any defalcation, to the
5. To adopt all the measures which may consignee, and in a proper case, the
be necessary to keep the vessel well vessel, rigging and freightage to the
supplied and equipped, purchasing for ship agent. (Article 625, Code of
the purpose all that may be necessary, Commerce)
provided there is no time to request
instructions of the agent. 3. Prohibited Acts and Transactions
6. To make, in similar urgent cases and
on a voyage, the repairs to the hull a. The captain cannot make any
and engines of the vessel and to her transaction for his exclusive account.
rigging and equipment which are Should he do so, the profit shall belong
absolutely necessary in order for her to to the other persons in interest but
be able to continue and conclude her losses shall be for his own exclusive
voyage; but if she should arrive at a account (Article 613, Code of
point where there is a consignee of the Commerce)
vessel, he shall act in concurrence with b. Indemnify for all the losses in case he
the latter. (Article 610, Code of fails to complete the voyage, save in
Commerce) case of a fortuitous event (Article 614,
Code of Commerce)
When the captain has no funds and does c. Without the consent of the agent, to
not expect to receive any from the agent, have himself substituted by another
he shall procure the funds: person (Article 615, Code of
1. By requesting said funds of the Commerce)
consignees or correspondents of a d. Contract loans on respondentia or
vessel. borrow money on bottomry for his own
2. By applying to the consignees of the transactions, except on the portion of
cargo or to the persons interested the vessel he owns. (Article 617, Code
therein. of Commerce)
3. By drawing on the agent. e. Borrowing money on bottomry or
4. By borrowing the amount required by pledging or selling the merchandise
means of a bottomry bond. without the formalities required by the
5. By selling a sufficient amount of the Code (Article 621, Code of Commerce)
cargo to cover the amount absolutely
necessary to repair the vessel, and to C. Other Officers and Crew
equip her to pursue the voyage.
(Article 611, Code of Commerce) 1. Duties
A sailor contracted to serve on a vessel
2. Duties cannot:
a. In case of knowledge of appearance of a. rescind his contract
privateers or men of war: To make b. fail to comply therewith
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
 except: by reason of a legitimate no reduction in the wages agreed
impediment upon. (Article 638, Code of Commerce)
c. pass from the service of one vessel to
another without obtaining written e. Revocation of the voyage arose from a
consent. just cause independent of the will of
 effects: the second contract shall the agent or charterer and the vessel
be void, and the captain may should not have left the port: Members
choose between forcing him to of the crew shall not have any other
fulfill the service to which he first right than to receive the wages earned
bound himself or look for a person up to day when revocation took place.
to substitute him at his expense. (Article 639, Code of Commerce)
The sailor shall also lose the wages
earned on the first contract f. Vessel and freight are totally lost by
(Article 635, Code of Commerce) reason of capture or wreck: Right of

TRANSPORTATION AND
2. Rights the crew to demand any wages shall

PUBLIC UTILITIES LAW

be extinguished. If a portion of the
a. Duration of the period fixed in the vessel or freight should be saved, the
contract: He cannot be discharged crew shall retain their rights on the
until the end of the return voyage salvage on the remainder of the vessel
(Article 636, Code of Commerce) as well as value of the freightage or
 exception: the cargo saved. (Article 643, Code of
i. The perpetration of a crime Commerce)
which disturbs order on the
vessel. g. Sailor becomes sick: He shall not lose
ii. Repeated offenses of his right to wages during the voyage,
insubordination, against unless the sickness is the result of his
discipline, or against the own fault. If the sickness should be
fulfillment of the service. caused by an injury received in the
iii. Repeated incapacity or service or defense of the vessel the
negligence in the fulfillment of sailor shall be attended and cured from
the service to be rendered. the common funds. (Article 644, Code
iv. Habitual drunkenness. of Commerce)
v. Any occurrence which
incapacitates the sailor to carry h. Sailor dies: If a sailor should die during
out the work under his charge, the voyage his heir shall be given the
with the exception of the wages earned and not received. If he
provisions contained in Article should have died a natural death and
644. should have been engaged on wages
vi. Desertion. (Article 637, Code of there shall be paid what may have
Commerce) been earned up to the date of his
death. If the death should have
The captain cannot abandon any occurred in the defense of the vessel,
member of his crew on land or on the sailor shall be considered as living,
sea, except when the member is: and his heirs shall be paid, at the end
i. guilty of some crime of the voyage, the full amount of
ii. imprisoned wages or the full part of the profits due
iii. delivered to a competent him as to the others of his grade.
authority (Article 645, Code of Commerce)
b. Before setting out on a voyage: He  Just Causes for Revocation of the
may be dismissed for any reason. The Voyage
captain is obliged to pay him his wages 1. A declaration of war or interdiction of
as if he had rendered services. (Article commerce with the power to whose
637, Code of Commerce) territory the vessel was bound.
2. The blockade of the port of destination
c. If voyage is revoked by the agent or or the breaking out of an epidemic
charterers: The member of the crew after the agreement.
shall be indemnified. 3. The prohibition to receive in said port
the goods which make up the cargo of
d. Revocation or change of the voyage: the vessel.
Increase in the wages if necessary, but
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
4. The detention or embargo of the same
by order of the Government, or for any The following shall be considered
other reason independent of the will of averages:
the agent. 1. All extraordinary or accidental
5. The inability of the vessel to navigate. expenses which may be incurred
(Article 640, Code of Commerce) during the navigation for the
preservation of the vessel or cargo, or
The officers and the crew of the vessel both.
shall be exempted from all obligations 2. All damages or deterioration the vessel
contracted, if they deem it proper, in the may suffer from the time she puts to
following cases: sea from the port of departure until
1. If, before the beginning of the voyage, she casts anchor in the port of
the captain attempts to change it, or destination, and those suffered by the
there occurs a naval war with the merchandise from the time it is loaded
in the port of shipment until it is

TRANSPORTATION AND
power to which the vessel was

PUBLIC UTILITIES LAW

destined. unloaded in the port of consignment.
2. If a disease should break out and be (Article 806, Code of Commerce)
officially declared epidemic in the port
of destination. 1. Simple or Particular
3. If the vessel should change owner or Simple or particular averages shall be all
captain. (Article 647, Code of the expenses and damages caused to the
Commerce) vessel or to her cargo which have not
redounded to the benefit and common
D. Supercargoes profit of all the persons interested in the
vessel and her cargo, and especially the
 What is a supercargo?
following:
He or she is an agent of the owner of
1. The damages suffered by the cargo
goods shipped as cargo on a vessel, who
from the time of its embarkation until
has charge of the cargo on board, sells the
it is unloaded, either on account of the
same to the best advantage in the foreign
nature of the goods or by reason of an
markets, buys cargo to be brought back
accident at sea or force majeure, and
on the return voyage of the ship, and
the expenses incurred to avoid and
comes home with it.
repair the same.
 Duties of a Supercargo: 2. The damages suffered by the vessel in
a. He shall discharge on board the vessel her hull, rigging, arms, and equipment,
the administrative duties which the for the same causes and reasons, from
agent or shippers may have assigned the time she puts to sea from the port
them; of departure until she anchored in the
b. He shall keep an account and record of port of destination.
their transactions in a book (Article 3. The damages suffered by the
649, Code of Commerce) merchandise loaded on deck, except in
c. He cannot, without special coastwise navigation, if the marine
authorization or agreement, make any ordinances allow it.
transaction for their own account 4. The wages and victuals of the crew
during the voyage, with the exception when the vessel should be detained or
of the ventures which, in accordance embargoed by a legitimate order or
with the custom of the port of force majeure, if the charter should
destination, they are permitted to do. have been for a fixed sum for the
d. He is not permitted to invest in the voyage.
return trip more than the profits from 5. The necessary expenses on arrival at a
the ventures, unless there is a special port, in order to make repairs or
authorization thereto from the secure provisions.
principals. (Article 651, Code of 6. The lowest value of the goods sold by
Commerce) the captain in arrivals under stress for
the payment of provisions and in order
to save the crew, or to cover any other
V. Accidents and Damages in requirement of the vessel against
Maritime Commerce which the proper amount shall be
charged.
A. Averages
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
7. The victuals and wages of the crew 6. The expenses caused through floating
during the time the vessel is in a vessel intentionally stranded for the
quarantine. purpose of saving her.
8. The damage suffered by the vessel or 7. The damage caused to the vessel
cargo by reason of an impact or which it is necessary to break open,
collision with another, if it were scuttle, or smash in order to save the
accidental and unavoidable. If the cargo.
accident should occur through the fault 8. The expenses of curing and
or negligence of the captain, the latter maintaining the members of the crew
shall be liable for all the damage who may have been wounded or
caused. crippled in defending or saving the
9. Any damage suffered by the cargo vessel.
through the faults, negligence, or 9. The wages of any member of the crew
barratry of the captain or of the crew, detained as hostage by enemies,

TRANSPORTATION AND
without prejudice to the right of the privateers, or pirates, and the

PUBLIC UTILITIES LAW

owner to recover the corresponding necessary expenses which he may
indemnity from the captain, the vessel, incur in his imprisonment, until he is
and the freight. (Article 809, Code of returned to the vessel or to his
Commerce) domicile, should he prefer it.
The owner of the goods which gave rise to 10. The wages and victuals of the crew of
the expense or suffered the damage shall a vessel chartered by the month
bear the simple or particular averages. during the time it should be
(Article 810, Code of Commerce) embargoed or detained by force
majeure or by order of the
2. Gross or General Government, or in order to repair the
damage caused for the common good.
General or gross averages shall be all the 11. The loss suffered in the value of the
damages and expenses which are goods sold at arrivals under stress in
deliberately caused in order to save the order to repair the vessel because of
vessel, her cargo, or both at the same gross average.
time, from a real and known risk, and 12. The expenses of the liquidation of the
particularly the following: average. (Article 811, Code of
1. The goods or cash invested in the Commerce)
redemption of the vessel or cargo 13. If in lightening a vessel on account of a
captured by enemies, privateers, or storm, in order to facilitate her entry
pirates, and the provisions, wages, and into a port or roadstead, part of her
expenses of the vessel detained during cargo should be transferred to lighters
the time the arrangement or or barges and be lost, the owner of
redemption is taking place. said part shall be entitled to indemnity,
2. The goods jettisoned to lighten the as if the loss has originated from a
vessel, whether they belong to the gross average (Article 817, Code of
vessel, to the cargo, or to the crew, Commerce)
and the damage suffered through said 14. If, as a necessary measure to
act by the goods kept. extinguish a fire in a port; roadstead;
3. The cables and masts which are cut or creek, or bay, it should be decided to
rendered useless, the anchors and the sink any vessel, this loss shall be
chains which are abandoned in order considered gross average, to which the
to save the cargo, the vessel, or both. vessels saved shall contribute.
4. The expenses of removing or
transferring a portion of the cargo in a. Essential Requisites
order to lighten the vessel and place
her in condition to enter a port or In order to recover the costs and
roadstead, and the damage resulting expenses, the following are necessary:
therefrom to the goods removed or i. Previous resolution of the captain
transferred. adopted after deliberation with the
5. The damage suffered by the goods of sailing mate and other officers
the cargo through the opening made in ii. Hearing of the persons interested.
the vessel in order to drain her and In case an interested person should
prevent her sinking. not be heard, he shall not
contribute to the gross average.
(Article 813, Code of Commerce)
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
iii. Resolution to be entered in the log
book, stating the motives and d. Jason Clauses (York - Antwerp
reasons therefore as well as the Rules)
votes and reason for disagreement
(Article 814, Code of Commerce) The York-Antwerp Rules is an
iv. Minutes to be signed by all the international system of rules (they are
persons present or in urgent cases, not law or international treaties, but
the captain. are just widely in use) for the
v. Captain shall deliver one copy of liquidation and payment of average to
the minutes to the maritime judicial avoid the problem of characterization.
authority of the first port he may
make within 24 hours and ratify it The Jason Clause is a standard
under oath (Article 814, Code of provision in maritime contracts. It
Commerce) provides for uniform rules on

TRANSPORTATION AND
adjustment, proof and liquidation of

PUBLIC UTILITIES LAW

Magsaysay Inc vs Agan (1955) avergaes in maritime accidents to
Requisites for General Average: address various systems of
1. There must be a common danger. This determining the same.
means, that both the ship and the cargo,
after it has been loaded, are subject to the
(Rule D)
same danger, whether during the voyage,
or in the port of loading or unloading, that Rights to contribution in general
the danger arises from the accidents of the average shall not be affected, though
sea, dispositions of the authority, or faults the event which gave rise to the
of men, provided that the circumstances sacrifice or expenditure may have
producing the peril should be ascertained been due to the fault of one of the
and imminent or may rationally be said to parties to the adventure; but this shall
be certain and imminent. This last not prejudice any remedies which may
requirement excludes measures be open against that party for such
undertaken against a distant peril.
fault.
2. That for the common safety, part of the
vessel or of the cargo or both is sacrificed
deliberately. B. Arrival Under Stress
3. That from the expenses or damages
caused follows the successful saving of the 1. When Made
vessel and cargo.
4. That the expenses or damages should have If the captain during the navigation should
been incurred or inflicted after taking believe that the vessel can not continue
proper legal steps and authority.
the voyage to the port of destination on
account of:
b. Effects a. the lack of provisions,
b. well founded fear of seizure, privateers
All the persons having an interest in or pirates, or
the vessel and cargo at the time of the c. by reason of any accident of the sea
occurrence of the average shall disabling her to navigate.
contribute. (Article 812, Code of
Commerce) He shall assemble the officers and shall
call the persons interested in the cargo
c. Jettison who may be present, and who may attend
the meeting without the right to vote; and
Order of Jettison: if, after examining the circumstances of
1. Those which are on deck, the case, the reasons should be
beginning with those which considered well founded, it shall be
embarrass the handling of the decided to make the nearest and most
vessel or damage her, preferring, if convenient port drafting and entering in
possible, the heaviest ones and the log book the proper minutes, which
those of least utility and value. shall be signed by all. (Article 819, Code of
2. Those in the hold, always Commerce)
beginning with those of the
greatest weight and smallest value, The arrival under stress shall not be
to the amount and number considered legal in the following cases:
absolutely indispensable. (Article 1. If the lack of provisions should arise
815, Code of Commerce) from the failure to take the necessary
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
provisions for the voyage, according to injury occasioned shall be looked upon
usage and custom, or if they should as particular average to the vessel run
have been rendered useless or lost into. (Article 832, Code of Commerce)
through bad stowage or negligence in
their care. d. Culpable: The owner of the vessel at
2. If the alleged risk of enemies, fault shall indemnify the losses and
privateers, or pirates is not based on damages suffered, after an expert
well known, manifest, positive or appraisal. (Article 826, Code of
justifiable facts. Commerce)
3. If the injury to the vessel should have
been caused by reason of her not e. Both vessels may be blamed for
being repaired, rigged, equipped, and the collision: Each one shall be liable
arranged in a convenient manner for for his own damages, and both shall be
the voyage, or by reason of some jointly responsible for the losses and

TRANSPORTATION AND
erroneous order of the captain. damages suffered by their cargoes.

PUBLIC UTILITIES LAW

4. Whenever malice, negligence, want of (Article 827, Code of Commerce)
foresight, or lack of skill on the part of
the captain is the reason for the act f. Inscrutable Fault (it can not be
causing the damage. (Article 820, decided which of the two vessels was
Code of Commerce) the cause of the collision): Each one
shall be liable for his own damages,
and both shall be jointly responsible
2. Expenses for the losses and damages suffered
by their cargoes. (Article 828, Code of
The expenses caused by the arrival under Commerce) Asked in 97 Bar Exams
stress shall always be for the account of
the shipowner or agent, but the latter shall
not be liable for the damage which may be D. Shipwreck
caused the shippers by reason of the
arrival under stress, provided that it is The losses and deteriorations suffered by
legitimate. a vessel and her cargo by reason of
shipwreck or stranding shall be
Otherwise, the shipowner or agent and the
individually for the account of the owners,
captain shall be jointly liable.
the part of the wreck which may be saved
(Article 821, Code of Commerce)
belonging to them in the same proportion.
(Article 840, Code of Commerce)
C. Collisions
(Asked in 95 and 98 Bar Exams) Wreck or Stranding caused by malice,
negligence or lack of skill of the captain or
Collision – the impact of two vessels both the vessel is insufficiently repaired and
of which are moving. prepared: The owner or the freighters may
demand indemnity of the captain for the
Allision – the striking of a moving vessel damages caused to the vessel or cargo by
against one that is stationary. the accident. (Article 841, Code of
Commerce)
1. Classes and Effects
Goods saved from the wreck shall be liable
a. Fortuitous Collision: Each vessel for the payment of the expenses of the
and her cargo shall be liable for their salvage. Said amount must be paid by the
own damage (Article 830, Code of owners of the goods before they are
Commerce) delivered to them. (Article 842, Code of
Commerce)
b. Vessel forced to collide with
another one by a third vessel:
Owner of third vessel shall indemnify
VI. Special Contracts
for the losses and damages caused
(Article 831, Code of Commerce)
A. Charter Parties
c. By reason of fortuitous event,
vessel properly anchored and 1. Definition
moored collides with another: The
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
A charter party is a contract by virtue of charter party at all. (Puromines vs
which the owner or agent of a vessel binds CA)
himself to transport merchandise or
persons for a fixed price. b. Contract of Affreightment

It is a contract by which the owner or A contract of affreightment is one

agent of the vessel leases for a certain in which the owner of the vessel
price the whole or portion of a vessel for leases part or all of its space to
the transportation of the goods or persons haul goods for others. It is a
from one port to another. contract for special service to be
rendered by the owner of the
Towage is not a charter party. It is a vessel and under such contract the
contract for the hire of services by which a general owner retains the
vessel is engaged to tow another vessel possession, command and

TRANSPORTATION AND
from one port to another for consideration. navigation of the ship, the

PUBLIC UTILITIES LAW

charterer or freighter merely
 Kinds: having use of the space in the
 As to extent of vessel hired: vessel in return for his payment of
a. Total the charter hire. (Puromines vs CA)
b. Partial - charterer as a rule does
not acquire the right to fix the Puromines, Inc. vs. Court of Appeals
date when the vessel should
depart, unless such right is Although a charter party may transform a
expressly granted in the common carrier into a private one, the same
however is not true in a contract of
contract
affreightment on account of the distinctions
between a contract of affreigment and a
demise or bareboat charter.

 As to time: Owner Pro Hac Vice – demise charter to

a. Until a fixed day or for a whom the owner of the vessel has
determined number of days or completely and exclusively relinquished
months possession, command and navigation of
b. For a voyage the vessel. In this kind of charter, the
charterer mans and equips the vessel and
 As to freightage: assumes all responsibility for navigation,
a. For a fixed amount for the management and operation. He thus acts
whole cargo as the owner of the vessel in all important
b. For a fixed rate per ton aspects during the duration of the charter.
c. For so much per month

 As to control over the vessel: 2. Forms and Effects

a. Demise or Bareboat charter:
 Drawn in duplicate
Under the demise or bareboat  Signed by the contracting parties
charter of the vessel, the charterer
will generally be regarded as the  The charter party shall include the
owner for the voyage or service following statements:
stipulated. The charterer mans the 1. The kind, name, and tonnage of the
vessel with his own people and vessel.
becomes the owner pro hac vice, 2. Her flag and port of registry.
subject to liability to others for 3. The name, surname, and domicile of
damages caused by negligence. To the captain.
create a demise, the owner of a 4. The name, surname, and domicile of
vessel must completely and the agent, if the latter should make the
exclusively relinquish possession, charter party.
command and navigation thereof 5. The name, surname, and domicile of
to the charterer, anything short of the charterer, and if he states that he
such a complete transfer is a is acting by commission, that of the
contract of affreightment (time or person for whose account he makes
voyage charter party) or not a the contract.
6. The port of loading and unloading.
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
7. The capacity, number of tons or the detention of his vessel beyond the
weight, or measure which they number of days allowed by the charter
respectively bind themselves to load party for loading and unloading of for
and transport, or whether it is the total sailing. It is an extended freight or reward
cargo. to the vessel in compensation for the
8. The freightage to be paid, stating earnings she is improperly caused to lose.
whether it is to be a fixed amount for
the voyage or so much per month, or  What are lay days?
for the space to be occupied, or for the Lay days are days allowed to charter
weight or measure of the goods of parties for loading and unloading the
which the cargo consists, or in any cargo.
other manner whatsoever agreed
upon.
9. The amount of primage to be paid to B. Loans on Bottomry and

TRANSPORTATION AND
the captain.

PUBLIC UTILITIES LAW

Respondentia
10. The days agreed upon for loading and
unloading. 1. Definition
11. The lay days and extra lay days to be
allowed and the rate of demurrage.  Loan on Bottomry
(Article 652, Code of Commerce) It is a contract in the nature of a
mortgage, by which the owner of the ship
If the freight should be received without borrows money for the use, equipment
the charter party having been signed, the and repair of the vessel for a definite
contract shall be understood as executed term, and pledges the ship as a security
in accordance with what appears in the bill for its repayment, with maritime or
of lading, which shall be the only extraordinary interest on account of the
instrument with regard to the freight to maritime risks to be borne by the lender, it
determine the rights and obligations of the being stipulated that if the ship be lost in
owner, of the captain, and of the the course of the specific voyage or during
charterer. (Article 653, Code of the limited time, by any of the perils
Commerce) enumerated in the contract, the lender
 Is there a valid contract if there shall also lose his money.
was no charter party and bill of
lading?  Loan on Respondentia
If we take Art. 653 literally, no. However, if It is a contract made on the goods laden
we take into account the fact that delivery on board the ship, and which are to be
of the cargo does not constitute the sold or exchanged in the course of the
making of a contract but rather the partial voyage, the borrower’s personal
performance thereof, the mere fact of responsibility being deemed the principal
delivery and receipt of such cargo, the security for the performance of the
good faith and mutual consent with which contract. The lender must be paid his
they have been made, should be a better principal and interest, though the ship
substitute for the charter party than the perishes, provided that the goods are
bill of lading which is nothing more than saved.
proof of such delivery.
Ordinary Loan Loan on Bottomry
or Respondentia
 What is primage? Collateral is not Collateral required
It was formerly a small allowance or required
compensation payable to the master and Collateral may be any Collateral must be a
marines of a ship, to the former for the property, real or vessel or cargo
personal subject to maritime
use of his cables and ropes to discharge
risks
the goods of the merchant; to the latter Absolutely repayable Depends upon the
for the lading and unlading in any port of safe arrival at the port
haven. Today, it is no longer a gratuity but of the collateral of the
is included in the freight rate. loan
Subject to usury law Not subject to usury
 What is demurrage? law
It is the sum fixed by the contract of Need not be in writing Must be in writing
carriage, or which is allowed, as except the interest
remuneration to the owner of a ship for Need not be Must be registered in
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
registered to be the registry of vessels expected to earn. (Article 725, Code of
binding on third of the port of entry of Commerce)
persons registry of the vessel
Loss of collateral does Loss of collateral
not extinguish the extinguishes the same 5. By Whom
same
The captain can not contract loans on
respondentia, and should he do so the
2. Character of Loan
contracts shall be void.
A loan on bottomry or respondentia shall
Neither can he borrow money on bottomry
be considered that which the repayment
for his own transactions, except on the
of the sum loaned and the premium
portion of the vessel he owns, provided no
stipulated, under any condition
money has been previously borrowed on
whatsoever, depends on the safe arrival in
the whole vessel, and provided there does

TRANSPORTATION AND
port of the goods on which it is made, or

PUBLIC UTILITIES LAW

not exist any other kind of lien or
of their value in case of accident. (Article
obligation thereon. When he is permitted
719, Code of Commerce)
to do so, he must necessarily state what
interest he has in the vessel. (Article 617,
3. Form Code of Commerce)

 Loans on bottomry or C. Bill of Lading

respondentia may be executed:
1. By means of a public instrument. 1. Form
2. By means of a bond signed by the
contracting parties and the broker who  Provisions in the bill of lading;
took part therein. 1. The name, registry, and tonnage of the
3. By means of a private instrument. vessel.
(Article 720, Code of Commerce) 2. The name of the captain and his
domicile.
 In a bottomry or respondentia 3. The port of loading and that of
bond there must be stated: unloading.
1. The kind, name, and registry of the 4. The name of the shipper.
vessel. 5. The name of the consignee, if the bill
2. The name, surname, and domicile of of lading is issued to order.
the captain. 6. The quantity, quality, number of
3. The names, surnames, and domicile of packages, and marks of the
the person giving and of the person merchandise.
receiving the loan. 7. The freight and the primage stipulated.
4. The amount of the loan and the
premium stipulated. The bill of lading may be issued to bearer,
5. The time for repayment. to order, or in the name of a specific
6. The goods pledged to secure person, and must be signed within twenty-
repayment. four hours after the cargo has been
7. The voyage for which the risk is run. received on board. (Article 706, Code of
(Article 721, Code of Commerce) Commerce)

4. On What Constituted Four true copies of the original bill of

lading shall be made, all of which shall be
a. On the hull of the vessel. signed by the captain and by the freighter.
b. On the rigging. Of these copies the freighter shall keep
c. On the equipment, provisions, and one and send another to the consignee;
fuel. the captain shall take two, one for himself
d. On the engine, if the vessel is a and another for the agent. (Article 707,
steamer. Code of Commerce)
e. On the cargo. (Article 724, Code of
Commerce) 2. Probative Value

No loans can be made on the salaries of A bill of lading drawn up in accordance

the crew, nor on the profits which it is with the provisions of this title shall be
proof as between all those interested in
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
the cargo and between the latter and the have been caused by the captain
underwriters, proof to the contrary being exclusively.
reserved by the latter. (Article 709, Code If passenger agrees to await the
of Commerce) repair of the vessel, he can not be
required to pay any increased price of
D. Passengers on Sea Voyage passage, but his living expenses
during the delay shall be for his own
1. Nature of Contract: account.
Non-transferrable without the consent of
the captain or of the consignee. (Article d. Delay in the departure of the vessel:
605, Code of Commerce) Passengers shall have a right to
remain on board and to be furnished
with food for the account of the vessel,
2. Obligations of Passengers
unless the delay is due to an

TRANSPORTATION AND
accidental cause or to force majeure.

PUBLIC UTILITIES LAW

Should the passage price not have been
If the delay should exceed ten
agreed upon, the judge or court shall
days, the passengers who request it
summarily fix it, after a statement of
shall be entitled to the return of the
experts. (Article 693, Code of Commerce)
passage; and if it were due exclusively
to the captain or agent they may
The captain shall be given preference over
demand indemnity for losses and
the other creditor with respect to the
damages.
goods belonging to the passenger with for
the collection of freight. (Article 704,
Code of Commerce)
VII. Carriage of Goods by Sea Act
Should the passenger not arrive on board (Commonwealth Act No. 65)
at the time fixed, or should leave the
vessel without permission from the 1. Applicability
captain, when the latter is ready to leave
the port, the captain may continue the COGSA is a special law that governs all
voyage and demand the full passage contracts of carriage of goods by sea
price. (Article 694, Code of Commerce) between or to and from the Philippine
ports.
The passenger shall conform to the orders
given by the captain, without any  Application of laws:
distinction whatsoever (Article 700, Code
of Commerce) a. If the common carrier is coming to the
Philippines:
First: Civil Code
3. Rights of Passengers Second: COGSA (in foreign trade)
Third: Code of Commerce
a. Voyage is suspended before beginning
the voyage through the fault of the b. If the private carrier is coming to the
captain or passengers: The passengers Philippines:
shall be entitled to have their passage First: COGSA
refunded and to recover the losses and Second: Code of Commerce
damages Third: Civil Code (excluding rules on
common carriers)
b. Suspension due to force majeure: The
passengers shall only be entitled to the c. If the private or common carrier is
return of the passage money (Article from the Philippines to a foreign
697, Code of Commerce) country:
Apply the law of the foreign country
c. Voyage already begun is interrupted: (per Art. 1753, CC) UNLESS the parties
Passengers obliged to pay only the make COGSA applicable
passage in proportion to the distance
covered, and shall not be entitled to  Hierarchy of laws:
recover for losses and damages if due 1) Art. 1766, CC (COGSA as only in
to force majeure, but have a right to matters not regulated by this Code)
indemnity if the interruption should this notwithstanding the fact that
COGSA is a special law.
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
Goods in a foreign country shipped which provides for a one-year period of
to the Philippines are governed by the limitation on claims for loss of, or damage to,
Civil Code cargoes sustained during transit--may be
2) Art. 1753, CC applied suppletorily to the case at bar."

2. Limitation on Liability 4. Prescription of Claim

(Asked in 92, 95, 00 and 04 Bar
Under Sec. 4(5), the limit is set at a Exams)
maximum of $500 per package or
customary freight unit. In any event the carrier and the ship shall
be discharged from all liability in respect
Belgian Overseas vs. Philippine First of loss or damage unless suit is brought
Insurance (2002) within one year after delivery of the goods
The Civil Code does not limit the liability of the or the date when the goods should have

TRANSPORTATION AND
PUBLIC UTILITIES LAW
common carrier to a fixed amount per been delivered.
package. In all matters not regulated by the
Civil Code, the right and the obligations of The absence of a notice shall not affect or
common carriers shall be governed by the prejudice the right of the shipper to bring
Code of Commerce and special laws. Thus, the
suit within one year after the delivery of
COGSA, which is suppletory to the provisions of
the Civil Code, supplements the latter by the goods or the date when the goods
establishing a statutory provision limiting the should have been delivered. (Sec. 3 (6))
carrier's liability in the absence of a shipper's
declaration of a higher value in the bill of Filipino Merchants Insurance, Inc. v.
lading. In the case before us, there was no Alejandro (1986)
stipulation in the Bill of Lading limiting the Clearly, the coverage of the Act includes the
carrier's liability. Neither did the shipper insurer of the goods. Otherwise, what the Act
declare a higher valuation of the goods to be intends to prohibit after the lapse of the one-
shipped. Petitioners' liability should be year prescriptive period can be done indirectly
computed based on US$500 per package and by the shipper or owner of the goods by simply
not on the per metric ton price declared in the filing a claim against the insurer even after the
Letter of Credit. lapse of one year.

Maritime Agencies & Services, Inc. v. CA

3. Notice of Claim The period for filing the claim is one year, in
accordance with the Carriage of Goods by Sea
Notice and the general nature of the loss Act.
or damage must be given in writing to the
carrier or his agent at the port of This was adopted and embodied by our
discharge before or at the time of the legislature in Com. Act No. 65 which, as a
removal of the goods. (Sec. 3 (6)) special law, prevails over the general
provisions of the Civil Code on prescription of
actions. Section 3(6) of that Act provides as
follows: 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
Belgian Overseas vs. Philippine First one year after delivery of the goods or the date
Insurance (2002) when the goods should have been delivered;
First, the provision of COGSA provides that the Provided, that if a notice of loss for damage;
notice of claim need not be given if the state of either apparent or concealed, is not given as
the goods, at the time of their receipt, has provided for in this section, that fact shall not
been the subject of a joint inspection or survey. effect or prejudice the right of the shipper to
Prior to unloading the cargo, an Inspection bring suit within one year after the delivery of
Report as to the condition of the goods was the goods or the date when the goods should
prepared and signed by representatives of both have been delivered.
parties. Second, as stated in the same
provision, a failure to file a notice of claim
within three days will not bar recovery if it is
nonetheless filed within one year. This one-
year prescriptive period also applies to the
shipper, the consignee, the insurer of the
goods or any legal holder of the bill of lading.
"Inasmuch as the neither the Civil Code nor the
Code of Commerce states a specific
prescriptive period on the matter, the COGSA—
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce

Chapter V. territories of
Warsaw two High
Contracting
Convention Parties
regardless of
I. DEFINITION AND APPLICABILITY
whether or
III. LIABILITIES not there be a
IV. LIMITATION ON LIABILITYbreak in the
V. WHEN LIMITATIONS UNAVAILABLE
VI. CONDITIONS ON LIABILITY
transportation
VII. VENUE OF COURT ACTIONSor a
transshipmen
t; and
I. Definition 2. That where
and the place of
Applicabilit

TRANSPORTATION AND
departure and

PUBLIC UTILITIES LAW

y the place of
destination
 Internationa are within the
l air territory of a
transportati single High
on: Contracting
Transportation by Party if there
air between is an agreed
points of contact stopping
of two high place within a
contracting territory
parties, or those subject to the
countries that sovereignty,
have acceded to mandate or
the Convention. authority of
another
 Applicability power, even
of the though the
Convention power is not a
The Convention is party to the
applicable to: Convention.
1. International
transport by
air II. Liabilities
2. Transport of
persons,  The
baggage, or liabilities
goods are:
1. Damage
 Under the sustained in
Warsaw the event of
Convention, the death or
there are two wounding of a
categories passenger
of taking place
"internation on board the
al aircraft or in
transportati the course of
on by air": any of the
1. That where operations of
the place of embarking or
departure and disembarking
the place of 2. Loss or
destination damage to
are situated any checked
within the baggage or
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce
goods General Rule: 2. Default Action must be
sustained $20 per kilogram amounting to filed within 2
during the Exception: In willful years from:
transport by case of special misconduct a. date of arrival
air declaration of 3. Accepting at the
3. Delay in the value and passengers destination
transport by payment of a without ticket b. date of
air of supplementary 4. Accepting expected
passengers, sum by goods without arrival
baggage, or consignor, carrier airway bill or c. date on which
goods is liable to not baggage the
more than the without transportation
NOTE: declared sum baggage stopped. (Art.
Enumeration of unless it proves check 29)

TRANSPORTATION AND
causes of action the sum is

PUBLIC UTILITIES LAW

as above stated greater than
is not an actual value. VI. Venue of
exclusive list. Court
(Northwest An agreement Actions
Airlines vs. relieving the
Cuenca) carrier from In Santos vs
V. Conditions
liability or fixing a Northwest Orient
lower limit is null on Liability
Airlines, it was
III. Limitation and void. (Art. held that the
23) Action for
on Liability provisions of
Damages
Article 28 (1) of
1. Passengers Carrier is not the Warsaw
entitled to the 1. Notice of
General Rule: Convention
foregoing limit if Claim
$100,000 per concern
the damage is A written
passenger jurisdiction, not
caused by willful complaint must
Exception: merely venue.
misconduct or me made within:
Agreement to a
default on its a. 3 days from
higher limit Thus, actions for
part. (Art. 25) receipt of
baggage damages must
2. Checked-in be brought, at
baggage Alitalia v. b.
CA 7 days from the option of the
General Rule: The WC does not operate asreceipt an exclusiveof
plaintiff, either:
enumeration of the instances goods
of an absolute
$20 per kilogram 1. Before the
c. In It case
limit of the extent of liability. of
does not
Exception: In preclude the application of thedelay,
Civil Code and court of the
14
case of special other pertinent local laws. It does not regulate domicile of
days from
declaration of or exclude liability for otherreceipt
breaches of of the carrier:
value and contract by the carrier, or misconduct of its 2. Court of
baggage/goo
payment of a employees, or for some particular or principal
exceptional type of damage. ds
supplementary place of
sum by business of
The complaint is
consignor, carrier carrier;
a condition
is liable to not IV. When precedent. 3. Court where
more than the Limitations he has a
Without the
declared sum Unavailabl place of
complaint, the
unless it proves e business
action is barred
the sum is through which
except in case of
greater than the contract
 When can a fraud on the part
actual value. has been
common of the carrier.
carrier not (Art. 26) made;
3. Hand- 4. Before the
avail itself
carried court at the
of this 2. Prescriptive
baggage place of
limitation? Period
$1000/passenger destination
1. Willful
misconduct (Art. 28 (1))
4. Goods to be
shipped
REVIEWER IN COMMERCIAL LAW Chapter IV. Admiralty and Maritime Commerce

TRANSPORTATION AND
PUBLIC UTILITIES LAW
- end of Transportation and Public Utilities Law
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