Reviewer based on TRANSPORTATION LAWS:
NOTES AND CASES Judge Noli Diaz
CHAPTER I: PRELIMINARY CONSIDERATIONS
Transportation Laws in PH
- Governed by New Civil Code (Articles 1732-
1766)
- Code of Commerce
- Special laws
*The 1987 Constitution provides some restrictions or
limitations in the issuance of franchise to public utilities,
which includes transportation industries.
May a 100% foreign corporation own a public utility?
The Constitution, in no uncertain terms, requires franchise
for the operation of a public utility. However, it does not
require a franchise before one can own the facilities
needed to operate a public utility so long as it does not
operate them to serve the public. What constitute a public
utility is not their ownership but their use to serve the
public.
The right to operate a public utility exist independently
and separately from the ownership of the facilities thereof.
- A mere owner or lessor of the facilities used by
public utility is not public utility.
The President, the Congress, and the Court cannot
directly create franchises that are exclusive in
character. What they cannot legally do directly, they
cannot do indirectly.
The President, Congress, and Court cannot create
indirectly franchises that are exclusive in character by
allowing the Board of Directors of a water district and the
Local Water Utilities Administration to create franchises
that are exclusive in character.1 – unconstitutional
ARTICLE 1732
Common Carriers: persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water,
or air for compensation offering their services to the
public.
No distinction as to:
= principal and ancillary business/ activity
1
For italicized items, please refer to the book in relation to
the cases cited therein.
= regular or scheduled and occasional, episodic or
unscheduled
= general public and narrow segment of the general
population
A certificate of public convenience is NOT a requisite
for the incurring of liability of a common carrier. Its
business impinges directly and intimately upon the safety
and well-being and property of those members of the
general community who happen to deal with such carrier.
Common Carrier v Private Carrier
Diligence required
CC: extraordinary diligence
:utmost diligence of very cautious persons with due
regard to all circumstances
PC: good father of a family
: if the undertaking is an isolated transaction, not a part
of the business or occupation, and the carrier does not
hold itself out to carry the goods for the general public or
to a limited clientele, although for a fee
Test for determining whether a party is a CC of goods:
(bkmh)
1. Engaged in the business of carrying goods for
others as public employment (business not a
casual occupation)
2. Must undertake to carry goods of the kind to
which his business is confined
3. Undertake to carry the method by which his
business is conducted and over his established
roads
4. Transportation must be for hire
In a contract of private carrier, the parties may freely
stipulate their duties and obligations which perforce
be binding on them. Unlike in a contract involving
common carrier, private carriage does not involve the
general public.
The parties may validly stipulate that responsibility for
the cargo rests solely on the charterer, exempting
shipowner from liability of loss of or damage to the cargo
caused by the negligence of ship captain.
As long as the same is not contrary to law, morals, good
customs, public order, or public policy.
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A customs broker, whose principal business is the
preparation of the correct customs declaration and the
proper shipping documents, is still considered a
common carrier if it also undertakes to deliver the
goods for its customers.
The law does not distinguish between one whose principal
business activity is the carrying of goods, and one, who
undertakes this task only as an ancillary activity.
The Court finds that the delivery of the goods is an
integral, albeit ancillary, part of its brokerage services.
ARTICLE 1733
Extraordinary diligence is required of common carriers.
To overcome the presumption of negligence, in the case
of loss, destruction or deterioration of goods, the common
carrier must prove that it exercised extraordinary
diligence.
For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient
number of competent officers and crew.
The failure of a common carrier to maintain in seaworthy
condition its vessel involved in a contract of carriage is a
clear breach of its duty.
CHAPTER II: VIGILANCE OVER THE GOODS
ARTICLE 1734
Exemption of CC from responsibility (NPACP):
1. Flood, storm, earthquake, lightning, or other
natural disaster or calamity
2. Act of public enemy in war
3. Act or omission of the shipper or owner
4. Character of the goods or defects in the packaging
or containers
5. Order or act of competent public authority
*Closed list
- other causes not mentioned in the list: CC must
present clear and convincing evidence that they are
not negligent
Exemption from caso fortuito or Act of God:
1. Cause of breach is independent of the will of the
debtor
2. Unforeseen or unavoidable
3. Impossibility of the debtor to fulfil his obligation
4. No participation from the debtor
2
Extraordinary diligence
Fire is NOT considered a natural disaster or calamity.
CC presumed at fault or acted negligently in cases
other that those mentioned in Article 1734. Fire is not
considered a natural calamity or disaster.
- Force majeure generally applies to a natural
accident, such as that caused by lightning,
earthquake, a tempest or a public enemy. Hence,
fire is not considered a natural disaster or
calamity.
*Article 1680 of NCC: fire as an extraordinary
fortuitous event refers to leases or rural lands
ARTICLE 1735
Presumption of negligence: CC must prove that it
exercised extraordinary diligence.
Mere proof of delivery of goods in good order to a
carrier and the subsequent arrival of the same goods
at the place of destination in bad order makes of a
prima facie case against the carrier.
Presumption of negligence that attaches to common
carriers, once the goods it transports are lost, destroyed,
or deteriorated.
ARTICLE 1736
Period of time for the exercise of ED2: lasts from the time
the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the
same is delivered, actually or constructively, by the carrier
to the consignee, or to the person who has a right to
receive them.
ARTICLE 1737
XPN to Article 1736: right or stoppage in transitu
- One of the rights of unpaid seller when he has part
with the goods and the buyer is or becomes
insolvent.
- Unpaid seller is entitled to the possession of the
goods as if he had never parted with it.
- Responsibility of CC: reduced to a mere bailee or
depository. Diligence required is only that of a
good father of a family.
ARTICLE 1738
Two requisites necessary to avoid liability of CC/when
it responsibility ceases:
1. Notice of arrival of the goods to consignee, his
agent, or authorized representatives
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 2. Reasonable opportunity on the part of the
consignee to remove the goods or otherwise
dispose of them.
No ED by the carrier could have prevented the loss of
the goods after they had been deposited in the
Warehouse of the Bureau of Customs.
Since the warehouse belonged to and was maintained by
the government, it would be unfair to impute negligence
to the appellant, the latter having no control whatsoever
over the same.
ARTICLE 1739
Requirement in order for CC to be exempted from
responsibility as a result of natural disaster or
calamity:
1. Natural disaster must have been the proximate
and only cause of the loss
2. CC must have exercised due diligence to prevent
or minimize loss (before, during, after the
calamity)
3. CC has not negligently incurred in delay in
transporting the goods
ARTICLE 1740
If there is delay on the part of CC, a natural disaster shall
not free CC from responsibility.
ARTICLE 1741
Contributory negligence of the shipper or owner of goods
is a mitigating circumstance on the part of the CC. That is
to say, the damages recoverable from CC should be
equitably reduced by the Court.
Contributory negligence: want of ordinary care on the
part of the complaining party which concurring with the
defendant’s negligence is proximate cause of injury.
ARTICLE 1742
Even if the loss, destruction or deterioration of the goods
should be caused by the character of the goods, or the
faulty nature of the packaging or containers, the CC must
exercise due diligence to forestall or lessen the loss.
ARTICLE 1743
Order of public authority: CC is not responsible
Intervention of municipal officials, not of a character
that would render impossible the fulfilment by the
carrier of its obligations.
Dissenting opinion: Loading of the scrap iron on the
lighter had to be suspended because of Municipal Mayos
Jose Advincula’s intervention (public authority). CC has
no control over the situation.
ARTICLE 1744
Stipulation limiting the liability of CC (less than ED) =
valid
As long as the same must be:
a. In writing, signed by the shipper and the owner;
b. Supported by valuable consideration other than
the service rendered by CC;
c. Reasonable, just and not contrary to public
policy.
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 carrier's liability for acts committed
by thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or
diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or
other equipment used in the contract of carriage.
ARTICLE 1746
An agreement limiting the common carrier's liability may
be annulled by the shipper or owner if the common carrier
refused to carry the goods unless the former agreed to
such stipulation.
= merely voidable due to intimidation or undue influence
exerted by CC or his agents
ARTICLE 1747
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If the CC delays, he cannot avail of the contract limiting
his liability
ARTICLE 1748
Limiting liability on account of strikes or riots = valid
ARTICLE 1749
A stipulation that the common carrier's liability is limited
to the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value, is
binding.
ARTICLE 1750
A contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction, or deterioration
of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
ARTICLE 1751
The fact that the common carrier has no competitor along
the line or route, or a part thereof, to which the contract
refers shall be taken into consideration on the question of
whether or not a stipulation limiting the common carrier's
liability is reasonable, just and in consonance with public
policy.
ARTICLE 1752
Even when there is an agreement limiting the liability of
the common carrier in the vigilance over the goods, the
common carrier is disputably presumed to have been
negligent in case of their loss, destruction or deterioration.
The presumption of negligence against CC is not relaxed.
ARTICLE 1753
The law of the country to which the goods are to be
transported shall govern the liability of the common
carrier for their loss, destruction or deterioration.
ARTICLE 1754
The provisions of Articles 1733 to 1753 shall apply to the
passenger's baggage which is not in his personal custody
or in that of his employee. As to other baggage, the rules
in Articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be applicable.
*Rules on deposit
CHAPTER III: SAFETY OF PASSENGERS
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.
=Hazards of modern transportation
It is the duty of CCs to stop their conveyances within a
reasonable length of time in order to afford passengers an
opportunity to board and enter.
Once a passenger in the course of travel is injured, or does
not reach his destination safely, the carrier and driver are
presumed to be at fault.
Nature of the contract of Air Carriage
Imbued with public interest, CCs are required by law to
carry passengers 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.
It invites people to avail of the comforts and advantages it
offers – generates a relation attended with a public duty
Categories of International Transportation
1. Place of departure and place of destination are
situated within the territories of 2 High
Contracting Parties
2. Place of departure and place of destination are
situated within the territory of a single High
Contracting Party
*Round trip plane ticket was itself a complete written
contract between the carrier and the passenger.
*“Force majeure”, CCs are not the insurer of all risks.
*The power to admit or not an alien into the country is a
sovereign act, which cannot be interfered with by an
airline.
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.
A CC may not be absolved from liability in case of force
majeure or fortuitous event alone, CC must still prove that
it was not negligent in causing the death or injury resulting
from an accident.
It is the duty of a CC to overcome presumption of
negligence.
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It is clear that neither the law nor the nature of the business
of a transportation company makes it an insurer of the
passenger’s safety, but that its liability for personal
injuries sustained by its passengers rests upon its
negligence, its failure to exercise the degree of diligence
that the law requires.
ARTICLE 1757
The responsibility of a common carrier for the safety of
passengers as required in Articles 1733 and 1755 cannot
be dispensed with or lessened by stipulation, by the
posting of notices, by statements on tickets, or otherwise.
ARTICLE 1758
When a passenger is carried gratuitously, a stipulation
limiting the common carrier's liability for negligence is
valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the
common carrier's liability.
Liability of CCs for death or injuries to a non-
passenger
Despite the absence of a passenger-carrier relationship
between them, the appellate court, just the same, held the
patron thereof liable as a common carrier.
ARTICLE 1759
Common carriers are liable for the death of or injuries to
passengers through the negligence or wilful acts of the
former's employees, although such employees may have
acted beyond the scope of their authority or in violation
of the orders of the common carriers.
This liability of the common carriers does not cease upon
proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their
employees.
ARTICLE 1760
The common carrier's responsibility prescribed in the
preceding article cannot be eliminated or limited by
stipulation, by the posting of notices, by statements on the
tickets or otherwise.
*Dura Lex Sed Lex
=Liability of employer is not based on delict or quasi-
delict. The liability of CC is primary and cannot be
eliminated or limited by stipulation.
ARTICLE 1761
The passenger must observe the diligence of a good father
of a family to avoid injury to himself.
*CC is not an insurer against all risk of travel.
ARTICLE 1762
The contributory negligence of the passenger does not bar
recovery of damages for his death or injuries, if the
proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably
reduced.
*Passenger not entitled to moral and exemplary damages.
*Principle of last clear chance is inapplicable in cases of
breach of contract of carriage, as it only applies in a suit
between the owners and drivers of two colliding vehicles.
It does not arise where a passenger demands
responsibility from the carrier to enforce its contractual
obligations.
ARTICLE 1763
A common carrier is responsible for injuries suffered by
a passenger on account of the wilful acts or negligence of
other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good
father of a family could have prevented or stopped the act
or omission.
*A tort committed by a stranger, which causes injury to a
passenger, does not accord the passenger a cause of action
against the carrier.
*A CC can be held liable for failing to prevent a hijacking
by frisking passengers and inspecting their baggage.
*CC is liable for its failure to take the necessary
precautions against an approaching typhoon – foreseeable
event.
CHAPTER IV: DAMAGES FOR BREACH OF
CONTRACT OF COMMON CARRIERS
ARTICLE 1764
Damages
*Preponderance of evidence: all that the passenger has to
prove is his contract of carriage between him and the
common carrier, and the fact of its non-performance
CC as employer, is subsidiarily liable if driver is
insolvent. Such can be obtained in the same criminal case
against the driver-employee during execution proceedings
after proper motion and due notice and hearing against CC
as employer.
If CC was held to pay damages, he may ask
reimbursement from his driver in a proper case.
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Computation of indemnity
Life expectancy:
2/3 x [80 – age of the deceased]
Compensation for loss of earning capacity:
Net Earning Capacity = Life Expectancy x (Gross Annual
Income – Reasonable and Necessary Living Expenses)
*RNLE: 50% of his projected gross annual income
Example:
Amelie = Age: 28
= GAI: P475,200 (P39,600 per month)
= RNLE: P237,600 (50% of GAI)
NEC = [2/3 x (80 – 28)] x [475,000 – 237,600]
= [2/3 x 52] x [237,600]
= 35 x 237,600
NEC = P8,316,000
Amount re4coverable by the heirs of a victim, of a tort
is not the loss of the entire earnings, but the loss of that
portion of the earnings, which the beneficiary would
have received.
- Only net earnings. That is, total of the earnings
less expenses necessary in the creation of such
earnings or income and minus the living and other
incidental expenses.
Factors to be considered in the award of damages
-Discretion of the court considering moral and material
damages
1. Pecuniary loss to plaintiff or beneficiary
2. Loss of support
3. Loss of service
4. loss of society
5. mental suffering of beneficiaries
6. medical and funeral expenses
*Moral damages – each case must be governed by its own
peculiar facts. However, it must be commensurate to the
loss or injury suffered.
*Aggrieved party does not have to prove that the CC was
at fault or negligent; all he has to prove all that the
passenger has to prove is the contract of carriage between
him and the common carrier, and the fact of its non-
performance.
*Passengers have a right to be treated by the carrier’s
employees with kindness, respect, courtesy, and due
consideration
*To prove actual damages, the best evidence available to
the injured party must be presented.
*The Court may award indemnity for the victims for loss
of earning capacity even when they are not employed or
they have no history of earnings.
- The prevailing minimum wage under the Labor
Code will be the basis of the computation in arriving for
such award.
Nominal damages are recovered where a legal right is
technically violated and must be vindicated aginst an
invasion that has produced no actual present loss of any
kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have
been or can be shown.
Attorney’s fees are recoverable only in the concept of
actual damages, not as moral damages or judicial costs.
Amount must be proven and must be specifically prayed
for.
In breach of contract of air carriage, moral damages may
be revered where: 1.) the mishap results in the death of a
passenger; 2.) where the carrier is guilty of fraud or bad
faith; or 3.) where the negligence of the carrier is so gross
and reckless as to virtually amount to bad faith.
*Where the award of moral and exemplary damages is
eliminated, so must the award for attorney’s fees be
deleted.
*Brothers and sisters of a deceased passenger in a breach
of contract of carriage are not entitled to an award of
moral damages.
*Subsidiary liability of an employer under Article 103,
RPC, is enforeceable in the same criminal case where
award was made.
*Release of claims executed by the injured party
discharging the insurance and transportation companies
from any and all liability is valid.
ARTICLE 1765
The Public Service Commission may, on its own motion
or on petition of any interested party, after due hearing,
cancel the certificate of public convenience granted to any
common carrier that repeatedly fails to comply with his or
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its duty to observe extraordinary diligence as prescribed
in this Section.
ARTICLE 1766
In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the
Code of Commerce and by special laws.
*Warsaw Convention has the force and effect of law in
this country. However, it does not “exclusively regulate”
the relationship between passenger and carrier on an
international flight.
- Claims can be covered by the Civil Code
provisions on tort and may not be within the purview of
the Warsaw Convention.

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