Transportation Law Notes

LAW ON TRANSPORTATION
Let me start. What are the laws governing common carriers?
1. New Civil Code
2. Warsaw Convention - International Transportation by Air
3. Code of Commerce Maritime Trade
4. Carriage of Goods by Sea Act (COGSA) for goods transported by sea from foreign
country to the Philippines
5. Salvage Law
6. Public Service Act
7. Constitution
Common Carrier is one of public utility. It is imbued with public interest. PUBLIC UTILITY is a
business or service engaged in regularly supplying the public with some commodity or service which
is of public consequence. Example: Delivery of electricity, water, gas, transportation service,
telecommunication. As you can see, these are services catering to the need of the public that is of
public consequence. Public Utilities are highly regulated because it is imbued with public interest.
Going now to our main topic, the common carrier business. Common Carriers definition is
found in Article 1732 of the New Civil Code. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.
You need to understand the very definition of common carrier by heart. If a respondent is
established to be a common carrier, we have to consequences:
1. Extraordinary diligence is required on the part of the respondent
2. In case of damage to cargo or injury/death to the passenger, there is a legal presumption of
fault on the part of the carrier.
3. It is incumbent upon the common carrier that it exercised extraordinary diligence
Now, even if you are not primarily operating as a common carrier but merely as ancillary or
done on occasional, episodic, unscheduled basis or offered to a narrow segment of the community, it
will still be considered as common carrier. What defines a common carrier is the nature of the carrier
at the time the incident in issue happened.
The concept of "extra-ordinary diligence" was explained in Compania Maritima v. Court of
Appeals:
The extraordinary diligence in the vigilance over the goods tendered for shipment
requires the common carrier to know and to follow the required precaution for avoiding
damage to, or destruction of the goods entrusted to it for sale, carriage and delivery. It
requires common carriers to render service with the greatest skill and foresight and "to
use all reasonable means to ascertain the nature and characteristics of goods tendered
for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires."
Jurisprudence teaches us that we should not limit the context of common carriers to those that
transport cargo by means of motor vehicles, aircraft, vessel and other traditional means. In the case
of FISRT PHILIPPINE INDUSTRIAL CORPORATION. Where the issue was raised whether a
pipeline is a common carrier. A "common carrier" may be defined, broadly, as one who holds

Transportation Law Notes

himself out to the public as engaged in the business of transporting persons or property from place to
place, for compensation, offering his services to the public generally.
De Guzman vs. Court of Appeals. Art. 1732, Civil Code makes no distinction between one
whose principal business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 . . . avoids making
any distinction between a person or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1877 deliberately refrained from
making such distinctions.
Every person that now or hereafter may own, operate. manage, or control in the Philippines,
for hire or compensation, with general or limited clientele, whether permanent, occasional or
accidental, and done for general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed
route and whatever may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system gas, electric light heat and power, water supply and power petroleum,
sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations
and other similar public services.
Id like to point out that even Electric Distribution Companies is explicitly as one of a common
carrier business. Distribution of electricity to consumers. Thus, it requires congressional franchise.
But, please be reminded that stevedoring business do not qualify as a common carrier service.
Arrastre operators are also not considered as common carriers. Arrastre is akin to a salesman.
The most significant characteristic which distinguishes CC from a PC is the CCs obligation to
accept engagement from the public which it must serve indifferently.
Who are the parties to a contract of carriage? For the transportation of goods, we have the
shipper or cargo owner and the common carrier. Please take note that the consignee is not a
party to the contract of carriage. He is however the person for whose the benefit the contract is made.
Therefore, consignee may enforce the contract against the carrier since it is a stipulation for the
benefit of a third party (recall: oblicon concept on stipulation pour autrui). Insurance companies may
institute action but as a subrogee.
Please take note of the registered owner rule. This is a rule not just relevant to common
carriers but also to private carriers. Under this rule, the person who appears as the registered owner
of the means of conveyance (motor vehicle in this case) is liable for any damage or injury caused by
the negligent operation of the vehicle notwithstanding the fact that at the time if the incident, the
vehicle had been sold or transferred to another person by the said registered owner.
Now, take note that in going to court to institute an action you must go to court with clean
hands. Parties must not be in pari delicto because if thats the case, the court will leave it as it is. A
good example of this is the principle of KABIT system. It is where a franchisee or licensee allows
another to operate under the same franchise or license. It may not illegal per se, it is contrary to
public policy and this will not exempt them from liability. Example: X, owner of franchise sold his cars

Transportation Law Notes

to Y and allowed him to operate under his franchise on an agreed amount. It came to a point Y want
to register it in his name. Y wants X to turn over the documents of the cars to him but X refused. Here,
the court will not take cognizance of this case because both parties are at fault. (In pari delicto)
For carriage of goods, the degree of carrier is extraordinary diligence. It is imperative to
impose this kind of diligence by reason of the nature of its business and in the exigencies of public
policy. Public must of necessity rely on the care and skill of common carrier in the vigilance over the
goods.
ARTICLE 1738. The extraordinary liability of the common carrier continues to be operative
even during the time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.
What we talk about here is Contract of Carriage. Take note that contract to carry is different
from contract of carriage. Contract to carry is a commitment to transport goods or passengers in the
future.
Our civil code has enumerated possible excuses that the carrier can use against the cargo
owner in the event there is a suit for breach of contract of carriage. These DEFENSES are found in
article 1734 of the civil code. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
The above mentioned defenses shall only be applicable if there is no contributory negligence
on the part of the carrier. These defenses must also be the proximate cause of the damage to the
goods. Before, after, and during the happening of the force majeure, carrier must exert effort to
minimize if not to prevent damage to or loss thereof. Also, there should be no prior, undue, or
unreasonable delay on the part if the carrier or improper deviation.
Public enemy presupposes an actual state of war. It may include pirates being regarded as
enemies of all civilized nations. Public enemy does not embrace rebels in insurrection against their
own government. But if they have occupied and hold in a hostile manner a certain portion or territory
of the state, and have declared their independence and cast off their allegiance to the republic,
appraising now takes the form of civil war and it would now fall into the contemplation of a public
enemy.
An issuance of a clean bill of lading precludes the carrier from raising defective condition as
an excuse. Instead, what should be issued is a foul bill of lading where in there is a manifestation of
the condition or defect of the cargo.
Act or omission of the shipper or the cargo owner himself. If the shipper is also negligent. It
does not necessarily mean that the common carrier is exempt from all liability but it may be mitigated.

Transportation Law Notes

Art. 1741.
If the shipper or owner merely contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall
be liable in damages, which however, shall be equitably reduced.
Take note that even if the contract does not provide for the degree of diligence, when it comes
to common carrier, the degree of diligence imposed by law shall be followed. Can we temper or
reduce carriers liability by way of stipulation? Yes. Parties can agree to reduce or temper the liability
but it cannot totally exonerate the carrier from liability, such stipulation shall be void. When is an
agreement to reduce liability valid?
1. The agreement should be in WRITING and must be signed by the parties thereto
- Take note a contract of carriage is not a formal contract but a consensual contract but if
parties would stipulate to reduce liability, it has to be in writing.
2. There is valuable consideration
3. Terms should be reasonable, just and not contrary to law.

ARTICLE 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust
and contrary to public policy:
1. That the goods are transported at the risk of the owner or shipper;
2. That the common carrier will not be liable for any loss, destruction, or deterioration of the
goods;
3. That the common carrier need not observe any diligence in the custody of the goods;
4. That the common carrier shall exercise a degree of diligence less than that of a good father
of a family, or of a man of ordinary prudence in the vigilance over the movables
transported;
5. That the common carrier shall not be responsible for the acts or omission of his or its
employees;
6. That the common carriers liability for acts committed by thieves, or of robbers who do not
act with grave or irresistible threat, violence or force, is dispensed with or diminished;
7. That the common carrier is not responsible for the loss, destruction, or deterioration of
goods on account of the defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
Now, what is the obligation of the carrier? Carrier is expected to fulfill their franchise and there
is a compulsory obligation to accept engagement from the public which it must serve indifferently or
indiscriminately such that absent valid excuse for refusal to receive the goods, carrier must accept the
goods. Nonetheless, there are various grounds which would excuse the carrier from accepting the
goods. However, they are not found under the new civil code, they are scattered in different
provisions of the code of commerce. Some of which are the following:
1. Dangerous Objects or Substances unless the franchise of the carrier is something that
allows him to transport dangerous objects or substances.
2. Goods are unfit for transportation due to improper packaging or defect in the containers
3. Accepting the goods would result to overloading
4. Goods are contrabands
5. Goods are injurious to health
You cannot equate diligence as to passengers and the diligence as to carriage of cargo. It both
requires extraordinary diligence but they have different indicators. There is actually no exact matrix or
rule. You will always have to see the circumstances in every incident. But even if there is no injury on
the part of the passenger, but if passenger feels insulted, belittled, or discriminated, damages may

Transportation Law Notes

still be recovered from the common carrier, because utmost diligence is required as far as human
care and foresight can provide. Pag minura mo ang passenger, you will be liable, but dont worry,
kahit murahin mo ang monggo, you are not liable.
Duration of extraordinary care when dealing with passengers: This is the basic issue that
you can encounter in your study of transportation law. The basic rule is that once any part of the body
of the passenger is inside or within the premises of the carrier. The moment you landed on the
platform, you are considered as a passenger.
Law and jurisprudence dictate that a common carrier, both from the nature of its business and
for reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the
safety of passengers. The Civil Code, governing the liability of a common carrier for death of or injury
to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all the circumstances.
"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to passengers through
the negligence or willful acts of the formers employees, although such employees may have
acted beyond the scope of their authority or in violation of the orders of the common carriers.
"This liability of the common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employees."
"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account
of the willful acts or negligence of other passengers or of strangers, if the common carriers
employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission."
The law requires common carriers to carry passengers safely using the utmost diligence of
very cautious persons with due regard for all circumstances. Such duty of a common carrier to
provide safety to its passengers so obligates it not only during the course of the trip but for so
long as the passengers are within its premises and where they ought to be in pursuance to the
contract of carriage. The statutory provisions render a common carrier liable for death of or injury to
passengers (a) through the negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carriers employees through the
exercise of due diligence could have prevented or stopped the act or omission. In case of such death
or injury, a carrier is presumed to have been at fault or been negligent, and by simple proof of injury,
the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen
event or to force majeure. In the absence of satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the appellate court, have failed to show, the
presumption would be that it has been at fault, an exception from the general rule that negligence
must be proved.
You are very familiar with the case of LA MALLORCA VS. CA. Plaintiffs, husband and wife,
together with their 3 daughters, namely, Milagros, Raquel, and Fe boarded the Pambusco Bus No.
352, owned and operated by the defendant. At the time, they were carrying with them four pieces of
baggage containing their personal belonging. The bus reached Anao whereat it stopped to allow the

Transportation Law Notes

passengers bound therefor, among whom were the plaintiffs and their children to get off. Mariano
Beltran, then carrying some of their baggage, was the first to get down the bus, followed by his wife
and his children. Mariano led his companions to a shaded spot on the left pedestrian side of the road
about four or five meters away from the vehicle. Afterwards, he returned to the bus to get his other
bayong, which he had left behind, but in so doing, his daughter Raquel followed him, unnoticed by her
father. While said Mariano Beltran was on the running board of the bus waiting for the conductor to
hand him his bayong which he left under one of its seats near the door, the bus, whose motor was not
shut off while unloading, suddenly started moving forward, evidently to resume its trip,
notwithstanding the fact that the conductor has not given the driver the customary signal to start,
since said conductor was still attending to the baggage left behind by Mariano Beltran. Incidentally,
when the bus was again placed into a complete stop, it had travelled about ten meters from the point
where the plaintiffs had gotten off. At that precise time, he saw people beginning to gather around the
body of a child lying prostrate on the ground, her skull crushed, and without life. The child was none
other than his daughter Raquel, who was run over by the bus in which she rode earlier together with
her parents. La Mallorca claimed that there could not be a breach of contract in the case, for the
reason that when the child met her death, she was no longer a passenger of the bus involved in the
incident and, therefore, the contract of carriage had already terminated. It may be pointed out that
although it is true that respondent Mariano Beltran, his wife, and their children had alighted from the
bus at a place designated for disembarking or unloading of passengers, it was also established that
the father had to return to the vehicle to get one of his bags or bayong that was left under one of the
seats of the bus. The relation of carrier and passenger does not necessarily cease where the latter,
after alighting from the car, aids the carrier's servant or employee in removing his baggage from the
car. It has been recognized as a rule that the relation of carrier and passenger does not cease at the
moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point
of destination, but continues until the passenger has had a reasonable time or a reasonable
opportunity to leave the carrier's premises. And, what is a reasonable time or a reasonable delay
within this rule is to be determined from all the circumstances. Thus, a person who, after alighting
from a train, walks along the station platform is considered still a passenger. So also, where a
passenger has alighted at his destination and is proceeding by the usual way to leave the company's
premises, but before actually doing so is halted by the report that his brother, a fellow passenger, has
been shot, and he in good faith and without intent of engaging in the difficulty, returns to relieve his
brother, he is deemed reasonably and necessarily delayed and thus continues to be a passenger
entitled as such to the protection of the railroad and company and its agents.
Now, the next challenge is, to what extent are the carriers answerable for the acts of their
employees or agents? Agent is a very broad term, they may not be a regular employee but if you
give them the authority to act in your behalf, they are considered as agents. In a case where the taxi
driver stabbed a passenger, when the carried was sued, the court did not accept the defense of the
common carrier that the act of the driver is beyond the scope of his job and that carrier should not be
liable for acts of drivers beyond the scope of the authority given to them. Common carrier is still liable
without prejudice to its recovery from the driver itself. Take note that the contract of carriage is not
between the passenger and the driver but the passenger and the common carrier. Thus, any wrongful
conduct of your employee will inure to the employer. This is made to protect the public who entrust
their lives to the carriers.
What about acts of strangers? Strangers here refers to persons other than employees or
agents of the common carrier such as a co-passenger. The liability of the carrier is only when proven
that under the circumstances that the injury to or death of the passenger could have been avoided
had the common carrier or its employees have done something but failed to do so. If it will show that
nothing could have been done by the carrier, the latter may be excused from the liability. As an
example, a Bachelor Express passenger had an altercation with another passenger and stabbed him.
The driver and conductor did nothing to stop the altercation. Because of panic, two of the passengers

Transportation Law Notes

jumped of the bus while it is running resulting to their death. According to the Supreme Court, the
jumping incident could have been prevented had the driver and conductor been more careful. In this
case, there is breach of contract of carriage.
What is the liability of the carrier for luggage or baggage of passengers? If the baggage was
turned over /checked in or entrusted to the custody of the carrier, we treat the same as cargo. But,
liability will be minimal if not checked in. if it is a hand carry baggage, carriers liability will be that of
a depositary or bailee. However, it is not automatic that carrier is liable as depositary in cases of
hand carry baggage. There must be a prior declaration before such liability so kick in and
passenger should not be negligent.
I want to introduce the Concept of DEMURRAGE when it comes to cargo handling.
Demurrage refers to the compensation due the carriage due to the detention of the vessel by reason
of delay in the loading or unloading of the cargo. Here, the vessel was not able to start voyage
because shipper was delayed in loading or unloading his cargo. The cost of money due to the delay
should be compensated. In short, it is compensation to the carrier for the delay caused by the
shipper/cargo owner.
We will now discuss the causes of action or claims that may be brought against the carrier in a
breach of contract of carriage case. Of course, basic is the rule that the same act or omission could
bring about different causes of action. Depending upon the strategy advised by counsel, one can
pursue any or all of these actions, the caveat however of our rule of procedure is NO DOUBLE
RECOVERY and no recovery in excess of the damage complained of. We have learned that
negligent act of carrier could bring about the breach of contract of carriage. The proper person to
be pursued here is the carrier itself. The same act complained of may be a basis of a criminal
action. In this case, it is pursued against the actor himself. You can also claim for damages based on
quasi-delict.
Now, for actions for breach of contract, the prescriptive period in general is 6 years for
contracts which are not reduced onto writing while 10 years for contracts based on a written
document.
Now we go to COGSA. Take note that COGSA applies to goods from abroad sent to the
Philippines. Recall that the law of country of destination shall apply so goods exported from the
Philippines abroad shall not be covered by COGSA.
Claims that may arise from carriage of goods by sea which is covered by COGSA:
1. Damaged condition (Nagpadala ka ng monggo pagdating nagging monggo na)
2. Loss of cargo
*Misdelivery or delay in delivery does not fall under COGSA
We mentioned that misdelivery or even delay in the delivery of cargo does not fall under
COGSA. But, the carrier is still liable for damages incurred caused by the delay of the cargo. Now,
what if instead of filing of legal action against the courier, he opted to claim from the insurance
company, what will happen? The insurance company will have the claim by the concept of
subrogation. What is the period that will apply to the insurance company? 1 year also, subrogee will
have the same right as subrogor. When do we begin counting the prescriptive period for the
insurance company? 1 year from arrival of the goods if damaged and 1 year from expected arrival if
by reason of loss. Okay? The same rule applies since subrogee will only step in the shoe of the
subrogor. Note that same applies to assignees and other successors in interest.

Transportation Law Notes

Take note that if the claim is for loss of cargo, notice of claim is not applicable. This is because
it is certain that there is a claim. It is certain that there is a cause of action arising from the non-arrival
of the cargo. However, parties may stipulate that prior notice of claim be needed before the party can
institute a legal action.
Let us talk about the award of damages. This will be further discussed in your civil law subject.
What are t5he applicable damages that the court may award in case of breach of contract cases?
1. Actual or Compensatory Damages
- It should be supported by evidence
- For passengers, the death will be considered, the earning capacity, medical expenses,
and other costs.
- Costs for restoration of the original physical condition should be awarded but take note,
it is limited to RESTORATION. If it is enhanced, it will not be covered.
- Funeral expenses are recoverable
- For damage to cargo, the value of cargo and the cost of identical article you need to
purchase from the market as well as lost opportunities.
- Attorneys fees are also recoverable as well as cost of litigation but there has to be
showing that you are forced to litigate by reason of unwarranted refusal of the carrier to
heed to your claim.
2. Moral damages
- The court automatically awards moral damages in case of death of a passenger. But
even if there is no death, there is a possibility for the court to award moral damages if it
can be shown that the action of the carrier is tainted with fraud.
3. Temperate Damages
- If the court is convinced but some pecuniary loss was suffered but court cannot be
provided with certainty as to the amount. Like the supplier of Monggo to manufacturers
of Hopia. If you fail to deliver monggo to one manufacturer by reason of delay of
delivery, there is already an effect in the business of the Monggo supplier.
4. Liquidated Damages
- In lieu of actual damages especially if there is an amount stipulated in the contract of
carriage. Court will only change it if it finds the amount unconscionable, exorbitant,
iniquitous, or excessive. The court may reduce or increase as the case may be.
5. Exemplary Damages
- Corrective damages. It is to set an example to deter others from doing the same act.
Please note that for the court to be justified in awarding damages, plaintiff must be
entitled to actual and moral damages.
MARITIME LAWS
Caveat: Maritime is in the code of commerce. Code of Commerce is a law prior to civil code.
You can see that there are principles in civil code that runs contrast with code of commerce so you
have to remember that between a general law and a specific law, the specific law will prevail in so far
as the specific cases are concerned. Example: No vessel no Liability Rule runs contrast with civil law
concepts. Under the civil code, you are not exempted from liability just because of the loss of the
thing subject of the contract. On the other hand, in maritime law, if you own a vessel, you are
exempted from claims that are maritime in nature by reason of the total loss of the ship by reason of
the no vessel no liability rule. This is also called LIMITED LIABILITY RULE.
LIMITED LIABILITY RULE provides that the liability of the ship owner as well as his agent, in
connection with losses related to maritime transactions shall be confined to the ship or the vessel

Transportation Law Notes

itself which is considered to be hypothecated for such obligations or which stands as a security or
guaranty for their fulfillment. So, loss of the ship has the effect of exonerating the owner from liability.
Now, why do we have limited liability rule? This is an incentive on the part of ship owners. But take
note, that as an owner of the ship, if you lose the ship itself, it is a very big loss. Loss of the ship is
burdensome enough for a ship owner that he will have hard time to overcome. This rule has its origin
as far back as medieval times. IT IS BECAUSE OF THE CONDITION OF THE SEA, THE RISK
ATTENDING MARITIME TRADE. TRADE IS FULL OF UNKNOWN HAZARDS. By reason of the
limited liability rule, this encourages people to invest in businesses connected with navigation.
Claims that can be extinguished by reason of the loss of the ship shall only be those claims
that are related to the navigation. If it is not germane to that, such as workmens compensation
liability claim, it shall not be covered by the limited liability Rule. Another thing is, if the ship owner is
at fault, the limited liability rule shall not be applied. If there is a finding of negligence attributable to
the owner (e.g. shipowner allowing to gamble or drink in the course of the voyage) shall be
tantamount to negligence. If the vessel is not sea worth or cargo worthy, he cannot invoke limited
liability. If there is only partial loss of the ship and ship owner want to take advantage of the benefit
of the limited liability, absent bad faith, ship owner can abandon the ship.
Lets move on to CHARTER PARTY. It is a contract wherein the entire ship or part of it is let by
the owner to another person for a particular period or use for a compensation. Take note that when a
charter party is entered into by the shipowner, the liability of the shipowner will be affected. There are
2 types of charter party.
1. Contract of Affreightment
- It is where a part of the ship is let to the charterer. The shipowner is still the common
carrier responsible as such. Affreightment is to be determined by the terms of the
charter party agreement. Charterer is free from liability to third parties because the
general owner has the possession, command and control remains in the hands of the
owner.
2. Bareboat / Demise Charter
- It is where the charterer is given the right to have full control and command of the ship.
It is the charterer that mans the vessel with his own people. He will supply for the
provisioning of the vessel. Possession and command of the vessel is completely
relinquished to the charterer. It is short of transfer of ownership or title of the ship. The
only left to the owner is the title to the ship. There is an assumption of control,
command, and navigation.
Lets take up BOTTOMRY and RESPONDENTIA loan. This is different from re usual loan that
we have taken up in civil law. Bottomry (remember boat = ship) and respondentia (shipment = cargo).
So, what is hypothecated or used as a collateral in case of bottomry is the ship and in case of
respondentia, it is the cargo. What kind of loan is it? It is a loan payment of which depends upon the
safe arrival of the ship or cargo at the port which they have specified in the loan agreement. This loan
does not become due and demandable unless the cargo/ship as the case may be arrives at the port
of destination agreed upon by the parties.
In civil law, we have the concept First in time, stronger in right in Tagalog Una syang
naging akin. In maritime law, the last lender will be accorded preference. The reason for this
is, as long as the ship is preserved, the previous lenders takes benefit. Where it not for the
last lender, the prior lenders would not have benefited from the continued preservation of the
ship.

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Transportation Law Notes

Loss of the thing extinguishes lenders right to initiate collection. However class, bear in mind
that under Article 731 of the Code of Commerce, if the loss is attributable to any of the following, the
lender does not lose his right to collect for payment notwithstanding the loss of the ship/cargo:
1. If loss is attributable to the inherent defect of the thing itself
2. If loss is with malice or fault on the part of the borrower
3. Barratry of the captain or crew
4. Vessel found to be engaged in an illicit or contraband activity
General average loss refers to a loss that directly affects two or more interest in a common
marine adventure unlike particular average loss which affects a particular interest only. This loss
involves an extraordinary sacrifice reasonably made during a peril for the sole purpose of preserving
other properties in a common marine adventure. This sacrifice could include throwing of some cargo
over board (jettison), using cargo as fuel, cutting away of spare or sails etc. The act must however be
extraordinary, beyond the normal routine work of the ship crew and master and the peril or danger
that warrants such a sacrifice must also be more than the ordinary perils of the sea. The sacrifice in
itself should be aimed at preserving the whole marine adventure and should be made for the common
safety of all other interests.
Particular average loss. This is a partial loss or damage caused to any particular cargo or
property where the damage is suffered by a particular interest. The damage or loss should be of a
particular subject matter in which case the damage suffered cannot be partially shifted to others and
the loss would be borne by the persons directly affected by the damage to the said cargo. Remember
that it is a partial loss hence not the entire cargo or property would be damaged but a part of it. The
damage could either be to the cargo or the ship.
Who bears the general average claim? Those who benefited from the sacrifice. Depending
upon the case, you have to take into consideration everyone who benefited from the average from the
cargo owners, shipowner.
Now, we go to collision and allision. Collision is when there is an impact between two or more
moving vessels. Allision is when one is stationary but the other is moving. But, for purposes of
liability, the law does not distinguish whether it is a test of collision or a test of allision.
What are the possible losses?
1. Damage to the ship
2. Loss of or damage to cargo
3. Death or injury to passengers
Who bears the liability?
Basic answer, the part at fault bears consequential losses.
If both are at fault: (Art. 827)
o Damage to the ship individually liable for their own vessel
o Loss of or damage to cargo jointly and severally liable
o Death or injury to passengers jointly and severally liable
DOCTRINE OF LAST CLEAR CHANCE is not applicable here but this will not
discount its applicability in other collision case (Ex: Collision of two moving
vehicles)
DOCTRINE OF LAST CLEAR CHANCE is a rule of law in determining
responsibility for damages caused by negligence, which provides that if the

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plaintiff (the party suing for damages) is negligent, that will not matter if the
defendant (the party being sued for damages caused by his/her negligence)
could have still avoided the accident by reasonable care in the final moments (no
matter how slight) before the accident.
Now, let us talk about the different zones of collision:
1. 1st Zone when collision becomes apparent
2. 2nd Zone collision becomes practically certain
3. 3rd Zone actual impact
Common Carriers

De Guzman vs. CA, G.R. No. L-47822, 168 SCRA 612, December 22, 1988

First Philippine Industrial Corp. vs. CA, 300 SCRA 661, G.R. No. 125948, December 29, 1998

Calvo vs. UCPB General Insurance, G.R. 148496, March 19, 2002

Sanchez Brokerage vs. CA, et al., G.R. 147079, December 21, 2004

Schmitz Transport & Brokerage vs. Transport Venture, et al., G.R. 150255, April 22, 2005

Philippine Charter Insurance vs. Unknown Owner of the Vessel , G.R. 161833, July 8, 2005

Lea Mer Industries vs. Malayan Insurance, G.R. 161745, September 30, 2005

Cebu Salvage vs. Philippine Home Assurance, G.R. 150403, January 25, 2007

Spouses Cruz vs. Sun Holidays, Inc., G.R. 186312, June 29, 2010

Charter Parties

Planters Producers vs. CA, 226 SCRA 476 (1993)

Coastwise Lighterage Corporation vs. Court of Appeals, G.R. No. 114167, 245 SCRA 796 , July 12, 1995

Valenzuela Hardwood and Industrial Supply, Inc.vs. Court of Appeals, 274 SCRA 642 , June 30, 1997

Caltex (Philippines), Inc. vs. Sulpicio Lines, Inc., 315 SCRA 709 , September 30, 1999

Breach of contract of carriage-vigilance over goods

Belgian Overseas Chartering and Shipping N.V. vs. Philippine First Insurance Co., Inc., G.R. No. 143133,
383 SCRA 23, June 05, 2002

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FGU Insurance vs. CA, et al.,G.R. 137775, March 31, 2005

Sulpicio Lines, Inc. vs. First Lepanto-Taisho Insurance, G.R. No. 140349, 462 SCRA 125 , June 29, 2005

Delsan Transport Lines vs. American Home Assurance, G.R. 149019, August 15, 2006

Breach of contract og carriage-safety of passengers

Calalas vs. CA, et al., G.R. 122039, May 31, 2000

Notice of claim

Philippine Charter Insurance vs. Chemoil, G.R. 136888, June 29, 2005

Contributory negligence- the 80-20 ratio

Estacion vs. Bernardo, et al., G.R. 144723, February 27, 2006

Joint liability of carrier and arrastre operator

Eastern Shipping Lines vs. CA, 234 SCRA 78 (1994)

Arrastre vs. stevedore

Mindanao Teminal and Brokerage Service, Inc. vs. Phoenix Assurance, et al.G.R. 162467, May 8, 2009

Liability to boarding and alighting passengers

Dangwa Transportation Co. vs. CA,et al., G.R. 95582, October 7, 1991

Overtaking-doctrine of last clear chance

Engada vs CA, G.R. 140698, June 20, 2003

Lapanday vs. Angala, et al., G.R. 153076, June 21, 2007

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Contributory negligence- force majeure

Fortune Express,Inc. vs. CA, et al., G.R. 119756, March 18,1999

Japan Airlines vs. CA, et al., G.R. 118664, August 7, 1998

Involuntary upgrading

Cathay Pacific vs. Spouses Vasquez, G.R. 150843, March 14, 2003

No moral damages due brothers & Sisters of deceased passenger

Sulpicio Lines Vs. Curso, et al., G.R. 157009, March 17, 2010

III. Convention for the Unification of Certain Rules Relating to Internal Carriage by Air (Warsaw Convention)
Meaning of International Transportation

Mapa,et al. vs. CA, et al., G.R. 122308, 275 SCRA 286 , July 08, 1997

Santos III vs. Northwest Orient Airlines, G.R. No. 101538, 210 SCRA 256 , June 23, 1992

Lhuillier vs. British Airways, G.R. No. 171092, 615 SCRA 380 , March 15, 2010

Bumped off passenger; misplaced and lost baggage

Pan American Airlines vs. Rapadas 209 SCRA 67 (1992)

Cathay Pacific vs. CA, 219 SCRA 520, G.R. No. 60501. 219 SCRA 520 , March 05, 1993

Lufthanza German Airlines vs. CA, G.R. No. 83612, 238 SCRA 290 , November 24, 1994

British Airways vs. CA, G.R. No. 121824 285 SCRA 450 , January 29, 1998

Non-use of original contracted route; notice of loss

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Savellano, et al. vs. Savillo, et al., G.R. No. 151783, July 8, 2003

Applicability of periods of prescription provided in Article 29 of the Warsaw Convention and Article 1146 of
the Civil Code

Philippine Airlines, Inc. vs. Savillo, G.R. No. 149547, 557 SCRA 66 , July 04, 2008

IV. Maritime Commerce

Duties of a captain

Inter-Orient Maritime Enterprise, et al. vs. NLRC, G.R. No. 115286 August 11, 1994

Duties of a pilot

Far Eastern Shipping vs. CA and PPA, G.R. No. 130068, 297 SCRA 30 , October 01, 1998

Maritime contracts; maritime liens

Crescent Petroleum, Ltd., vs. MV Lok Maheshwari, et al., G.R. No. 155014, 474 SCRA 623 , November 11,
2005

Limited liability rule

Philippine Shipping Company, et al., vs. Vergara, G.R. No. L-1600 6 Phil., 281, June 01, 1906

Yangco vs. Laserna, et al., G.R. No. L-47447-47449 73 Phil., 330 , October 29, 1941

Loadstar Shipping vs. CA, et al., G.R. No. 131621 315 SCRA 339 , September 28, 1999

Monarch Insurance, et al. vs. CA, et al., G.R. No. 92735 333 SCRA 71 , June 08, 2000

Aboitiz Shipping vs. New India Assurance, G.R. No. 156978 488 SCRA 563 , May 02, 2006

Doctrine of inscrutable fault; doctrine of last clear chance not applicable in maritime collision

Williams vs. Yangco, 27 Phil 68, G.R. No. L-8325, 27 Phil. 68 , March 10, 1914

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Bill of lading

Telengtan Bros. vs. CA, 236 SCRA 617, G.R. No. 110581 236 SCRA 617 , September 21, 1994

Keng Hua Paper Products vs. CA, et al., G.R. No. 116863 286 SCRA 257 , February 12, 1998

Averages

American Home Assurance vs. CA, 236 SCRA 343, G.R. No. 94149 208 SCRA 343 , May 05, 1992

Philippine Home Assurance vs. CA, et al., G.R. No. 106999 257 SCRA 468 , June 20, 1996

Barrois vs. Carlos A. Go Thomg and Co., 7 SCRA 535, No. L-17192, March 30, 1963

VI Carriage of Goods by Sea Act

Insurance Company of North America vs. Philippine Ports Terminals, Inc., G.R. No. L-6420, 97 Phil. 288 ,
July 18, 1955

E.E. Elser, Inc. vs CA, G.R. No. L-6517, 96 Phil. 264 November 29, 1954

Ang vs. American Steamship Agencies, G.R. No. L-22491, 19 SCRA 123 , January 27, 1967

Mitsui O.S.K. Lines vs. CA, G.R. No. 119571, 287 SCRA 366 , March 11, 1998

Yek Tong Lin Fire & Marine Ins. Co. Ltd. Vs. APL Inc, G.R. L-11081, April 30, 1958

Union Carbide vs. Manila Railroad, G.R. No. L-27798 ., 77 SCRA 359 , June 15, 1977

Dole Philippines vs. Maritime Co., G.R. No. L-61352 148 SCRA 118 , February 27, 1987

Mayer Steel Pipe Corp., et al vs. CA, et al, G.R. No. 124050 274 SCRA 432 , June 19, 1997

Philippine Carter Insurance Corp. vs. Neptune Orient Lines, et al., G.R. No. 145044, 554 SCRA 335 , June
12, 2008

Chamber of Filipino Retailers vs. Villegas, 44 SCRA 406, G.R. No. L-29864, 27 SCRA 166 , February 28, 1969

Tatad, et al. vs. Garcia, et al., G.R. No. 114222, 243 SCRA 436 , April 06, 1995

Vargas vs. Langcay, G.R. No. L-17459, 6 SCRA 174 , September 29, 1962

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Erezo vs. Jepte, G.R. No. L-9605, 102 Phil. 103 , September 30, 1957

PCI Leasing and Finance, Inc. vs. UCPB General Insurance Co., Inc. G.R. No. 162267, 557 SCRA 141 , July
04, 2008

Divinagarcia vs. Consolidated Broadcasting System, Inc., et al., G.R. No. 162272, 584 SCRA 213 , April 07,
2009