Batson, H.E., The Economic Concept of a Public Utility, Economica, No.

42 (November
REVIEWER: TRANSPORTATION AND PUBLIC UTILITY LAW 1933), pp 457-472.
 Concepts of a public utility
o Legal Concept
(Roe Anuncio)  Supported by the economic concept
PART ONE: PUBLIC UTILITIES  Once the politicians regulate, they pass laws
I. General Discussion o Political Concept
A. What is a public utility?
 Supported by the economic concept
 Politicians should regulate
Class notes:
o Economic Concept
Public utility
 This is narrower and more fundamental
 business or service engaged in regularly supplying the public with some  Factors that allow public utilities to price differentiation
commodity or service of public consequence. 1. Economies of scale
 may either be public use or public service.
2. High fixed costs
 examples: electricity, gas, transportation, water, telephone.

In the exercise of its police power, the State regulates public utility to protect the Cases:
interest of the public power.
CASE TITLE FACTS HELD/RATIO DOCTRINE CLASS
Basic principle: Private property devoted to public use ceases to be jus privati and NOTES
must submit to State control/regulation. Munn v. The General Being a When private property
Illinois Assembly of the public utility, is affected with public
Additional Readings: State of Illinois a public interest, it ceases to
Millar, Edythe S., Is the Public Utility Concept Obsolete?, Land Economics, Vol. 71, passed an act warehouse be jus privati only.
No. 3, Social Control of Private Power: The Past and Future of Public which regulated may be Property becomes
Utility Regulation (August 1995), pp. 273-285 public regulated by clothed with public
 Public utilities are not obsolete and should not be regulated. These goods warehouses, the State in interest when used in
are inelastic. which included the exercise a manner to make it
the fixing of of the of public consequence
o Cross-subsidization maximum latter’s and affect the
o Modernization charges for the police community at large.
o Consolidation and Concentration storage of grains. power. Such
 This trend of consolidation that consumes the Petitioners regulation
telecommunications industry in the U.S. is similar to the question the may be in
concept of a natural monopoly. Ultimately the number of statute for the form of
players will reduce therefore making it a natural encroaching upon rate fixing.
monopoly. their right to
Gray, Horace M., The Passing of the Public Utility Concept, The Journal of Land & private property.
Public Utility Economics, Vol. 16, No. 1 (February 1940), pp 8 -20 Luzon Petitioners are Petitioners A business may be
 Public utilities are obsolete and futile. There should be more government Stevedoring corporations are engaged affected with public
involvement by providing for positive reinforcements such as protecting the v. PSC engaged in in public interest and regulated
environment, etc. So far, government has been giving negative regulations. stevedoring or service, and for public good
What Gray wants is positive regulation. It will still be laissez fare but there lighterage and are thus although not under
are certain things you must avoid and be responsible. Gray also suggests harbor towage considered any duty to serve the
new institutions or alternatives wherein the Government will provide goods business, as well public public. A public utility
and services. The government will be involved by providing the public utility as in interisland utilities. is not determined by
and finance public utilities. Lastly, Gray suggests centralized economic service. They the number of people
planning. have no fixed it actually serves, nor
routes, a limited does the mere fact
clientele, and a that service is
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 range of rates for rendered only under Class notes:
their services. contract prevent a
company from being a The power to regulate public utility ultimately resides in Congress by virtue of its
public utility. police power, but may be held by agencies empowered by law.

Why would Congress want to delegate such a power? Agencies have the technical
know-how and skills to handle their tasks; it would be very impractical for Congress
B. What is a public service?
to handle everything.
Relevant Provision:
Public Service Act (CA 146), Section 13 (b) CASE FACTS HELD/RATIO DOCTRINE CLASS
 in essence, provides for the elements of public service, to wit: TITLE NOTES
1. any person who may own, operate, manage, control Albano The MICT A legislative franchise is not The power to
2. for hire or compensation v. project was needed because the power regulate public
3. with general or limited clientele Reyes awarded to to enter into contracts with utilities
4. permanent, occasional, or accidental ICTSI by the respect to the belongs to
5. for general business purposes PPA after the management, operation, Congress.
bidding. and development of the However, a
*Differentiate public utility from public service Petitioners MICT has been delegated valid
contend that a to the PPA by virtue of PD delegation of
All public services are public utilities but not all public utilities are public legislative 567. Moreover, MICT has such power
services. franchise is been privatized. Assuming may be made
But really, there is no difference. required, MICT arguendo it has not been to
being a public privatized, the decision still administrative
C. Legal Basis and Rationale for Regulation utility. stands because of the valid agencies.
delegation of power (from
Class notes: Congress to the
Regulation is done to protect public interest. administrative body PPA).
KMU v. LTFRB granted This is an undue delegation The
CASE TITLE FACTS HELD/RATIO DOCTRINE CLASS Garcia the provincial of legislative power. The Legislature
NOTES bus operators to Congress delegated its has not
Republic Meralco filed The State may, In regulating rates set the fare authority to regulate public authorized the
v. Meralco with the in the exercise charged by public rates, the utilities to the PSC under Public Service
Energy of its police utilities, the State former the Public Service Act. The Commission to
Regulation power, regulate protects the public providing only a LTFRB was also granted delegate that
Board (ERB) Meralco’s rates, against arbitrary and range within the said authority via EO power to a
an application the latter being excessive rates while which the rates 202. But the two common
for the revision a public utility. maintaining the should fall. mentioned admin bodies carrier or
of its rate efficiency and quality cannot delegate that power other public
schedules. of services rendered. to a common carrier, a service.
The rates must be one transport operator, or other
that yields a fair return public service. This would
on the public utility leave the riding public at
and also one that is the mercy of transport
reasonable to the operators who may
public for the services arbitrarily increase fares.
rendered. Batang Sangguniang The LGU may have power The power to
as Panlungsod (SP) over the operation of the regulate the
CATV v. issued a CATV but such does not fixing of rates
D. Where does the Power to Regulate Public Utilities Reside? CA Resolution cover the regulation of rate by
granting fixing which falls under the telecommunic
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 Batangas CATV jurisdiction of the NTC. The ation 3. Board of Power and Waterworks
to permit to LGU may regulate CATV companies  The Board of Transpo was merged with the Bureau of Land Transpo,
construct, install operations with regard to rests in the forming the Land Transpo Commission which was later on abolished by
and operate the physical realities of NTC. virtue of EO 125.
CATV system in constructing the CATV  The LTFRB was then created via EO 202.
Batangas City, system: use of public
authorizing the streets, rights of ways, E. Not a Public Utility
latter to set its founding of structures, CASE FACTS HELD/RATIO DOCTRINE CLASS
own rates for its parceling of large regions, TITLE NOTES
subscribers, but etc. Nebbia The NY The State may Although not a
any increase v. New Legislature regulate the prices public utility, a
shall be subject York created the Milk imposed by business may be
to the approval Control Board with Nebbia’s grocery regulated (through
of SP. the power to fix store. The business rate-fixing) as long
minimum and is of a public as the law is not
maximum retail consequence; arbitrary and has
Relevant provision: prices to be however, it is not a reasonable relation
charged by stores public utility to the purpose.
Public Service Act (CA 146), Section 13(a): to consumers. because there is no
 The Commission (PSC) shall have jurisdiction, supervision, and Nebbia, a grocery element of
control over all public services and their franchises, equipment, and store owner, was devoting private
other properties, and in the exercise of its authority, it shall have the charged with property to public
necessary powers and the aid of the public force: Provided, That public violating the use.
services owned or operated by government entities or government-owned or Board’s order.
controlled corporations shall be regulated by the Commission in the same Tatad DOTC and EDSA What EDSA LRT The Constitution
way as privately-owned public services, but certificates of public v. LRT Consortium Consortium owns requires a franchise
convenience or certificates of public convenience and necessity shall not be Garcia entered into a are the rail tracks, for the operation
required of such entities or corporations: And provided, further, That it Build-Lease- rolling stocks like of a public utility,
shall have no authority to require steamboats, motor ships and steamship Transfer the coaches, rail but it does not
lines, whether privately-owned, or owned or operated by any Government agreement where stations, terminals require
controlled corporation or instrumentality to obtain certificate of public the foreign corp and the power a franchise before
convenience or to prescribe their definite routes or lines of service. will undertake to plant, not a public one can own the
build and finance utility. While a facilities needed to
What happened to the PSC? It has been abolished. However, the PSA subsists. the MRT project, franchise is needed operate a public
and upon to operate these utility so long as it
Brief history of the PSC lifted from Footnote 2 in KMU v. Garcia: completion, they facilities to serve does not operate
 The Americans introduced the regulation of public utilities. will deliver the use the public, they do them to serve the
 Regulatory bodies were created, namely: and possession of not by themselves public.
1. Coastwise Rate Commission the project by way constitute a public
2. Board of Rate Regulation of lease for 25 utility. What
3. Board of Public Utility Commission years to the constitutes a public
4. Public Utility Commission DOTC. utility is not their
 During the Commonwealth era, the National Assembly passed CA 146 or the ownership but their
Public Service Act, creating the PSC. use to serve the
 PD 1 was issued in 1972: public.
- abolishing the PSC, and
- replacing it with 3 regulatory boards: Teresa Teresa Electric Filipinas does not A utility not
1. Board of Transportation Electric operated an need a intended for public
2. Board of Communication v. PSC electric plant municipal/legislativ service, but merely
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 under a subsisting e franchise for it to for its own use, is Section 6.
CPCN. Filipinas be entitled to a not a public utility
Cement Corp. is CPCN, as its which requires a  The use of property bears a social function, and all economic agents shall
engaged in the purpose for legislative/municipal contribute to the common good. Individuals and private groups,
manufacture and wanting to put up franchise. including corporations, cooperatives, and similar collective organizations,
sale of cement, for an electric plant is shall have the right to own, establish, and operate economic
which business it exclusively to cater enterprises, subject to the duty of the State to promote distributive
wished to install to its own use and justice and to intervene when the common good so demands.
and operate an not to render public Section 11.
electric plant for service.
its factory and  No franchise, certificate, or any other form of authorization for the
employees. operation of a public utility shall be granted except to citizens of
the Philippines or to corporations or associations organized under
the laws of the Philippines, at least sixty per centum of whose
capital is owned by such citizens; nor shall such franchise, certificate, or
Relevant provision:
authorization be exclusive in character or for a longer period than fifty years.
Public Service Act, Section 14: Neither shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal
 List of enterprises not covered by the definition of public service: by the Congress when the common good so requires. The State shall
1. Warehouses encourage equity participation in public utilities by the general public. The
2. Vehicles drawn by animals, and bancas moved by oar or sail, and participation of foreign investors in the governing body of any public utility
tugboats and lighters enterprise shall be limited to their proportionate share in its capital, and all
3. Airships within the Philippines, except as regards the fixing of their the executive and managing officers of such corporation or
maximum rates on freight and passengers association must be citizens of the Philippines.
4. Radio companies, except with respect to fixing of rates
5. Public services owned or operated by any instrumentality of the National Section 17.
Government or by any GOCC, except with respect to fixing of rates.
 In times of national emergency, when the public interest so
Nature of Concession Agreements requires, the State may, during the emergency and under reasonable
terms prescribed by it, temporarily take over or direct the operation
CASE FACTS HELD/RATIO DOCTRINE CLASS of any privately-owned public utility or business affected with
TITLE NOTES public interest.
Freedom MWSS, a government Manila Concessionair
from corporation, entered into Water and es are not Section 18.
Debt concession arrangements Maynilad are mere agents.  The State may, in the interest of national welfare or defense,
Coalition with private entities, Manila public establish and operate vital industries and, upon payment of just
v. MWSS Water and Maynilad. The utilities and compensation, transfer to public ownership utilities and other
MWSS issued a Notice of not just private enterprises to be operated by the Government.
Extraordinary Price agents.
Adjustment (NEPA) to both Section 19.
concessionaires, which was
 The State shall regulate or prohibit monopolies when the public
opposed by the latter.
interest so requires. No combinations in restraint of trade or unfair
competition shall be allowed.

II. Constitutional Provisions

Relevant provisions: a. Ownership

1987 Constitution, Article 12, NATIONAL ECONOMY AND PATRIMONY Class notes:

4 of 107
Ratio on the limitation of foreign participation: effective control by Filipinos  Acts requiring the approval of the Commission:
(i) To sell, alienate, or in any manner transfer shares of its capital
CASE FACTS HELD/RATIO DOCTRINE CLASS stock to any alien if the result of that sale, alienation, or transfer in itself or
TITLE NOTES in connection with another previous sale shall be the reduction to less
Gamboa PLDT a franchise and the The term The term than 60% of the capital stock belonging to Filipino citizens. Such
v. Teves right to engage in “capital” only “capital” only sale, alienation, or transfer shall be void and of no effect and shall be
(2011) telecommunications covers shares covers sufficient cause for ordering the cancellation of the certificate.
business. GTE, an American with the right voting
company and a major to vote. shares. b. Exclusivity
stockholder of PLDT, sold its
outstanding shares to PTIC. CASE FACTS HELD/RATIO DOCTRINE CLASS
46% of the shares of PTIC TITLE NOTES
were sold to PHI, and the Metro Adala applied for a The prohibition A franchise,
remaining 54% to First Cebu CPC to operate a mentioned is void certificate, or
Pacific, a foreign investment Water v. waterworks system. for being authorization
firm. Eventually, the shares Adala This was opposed by unconstitutional. cannot be
held by First Pacific grew to Metro Cebu, Article 14, Section exclusive.
81%. contending that 5, 1973
Gamboa MR of the previous case. The term The term pursuant to PD 198, Constitution
v. Teves “capital” “capital” the consent of the (which is also
(2012) covers both covers both district’s Board of reflected in the
common the voting Directors is required. 1987) prohibits
shares with and the the exclusivity of a
the right to non-voting franchise.
vote as well shares. Tawang Tawang applied for La Trinidad cannot The Congress
as shares v. La a CPC for the have an exclusive cannot grant an
with Trinidad operation and franchise. exclusive
beneficial maintenance of a franchise. Neither
ownership. waterworks system can it delegate
in a barangay in the power to
Benguet. La Trinidad grant the same
opposed this, to administrative
Relevant provisions: contending that the bodies.
Public Service Act, Section 16 (a): said barangay is
covered by its
 Proceedings of the PSC upon notice and hearing: franchise which it
(a) To issue certificates authorizing the operation of public services claims to be
within the Philippines whenever the Commission finds that the operation exclusive.
of the public service proposed and the authorization to do business will
promote the public interest in a proper and suitable manner.
Provided that certificates will be granted only to citizens of the
c. Subject to Amendment
Philippines or of the US or to corps., co-partnerships, associations, or
joint-stock companies constituted and organized under the laws of the CASE FACTS HELD/RATIO DOCTRINE CLASS
Philippines; Provided, that 60% of the stock or paid-up capital TITLE NOTES
must belong entirely to citizens of the Philippines or of the US; Provided RCPI RCPI operates a radio RCPI may extend A franchise is
further, that no such certificate shall be issued for a period of v. NTC communications the coverage of subject to
more than 50 years. network in Sorsogon its operations to amendment,
Public Service Act, Section 20(i) under a franchise, Catarman and alterations, or
and eventually in San Jose, on the modification.

5 of 107
 Catarman and San ground that its with public
Jose. Kayumanggi, original franchise interest.
also operating in San may be Agan The government The PIATCO Section 19, Art. XII
Jose and Catarman, amended. v. granted PIATCO contracts would of the 1987
sued RCPI for Pitaco the exclusive right create a Constitution
operating in San Jose to operate NAIA 3. monopoly in the mandates that the
and Catarman By virtue of the operation of State prohibit or
without a franchise. PIATCO Contracts, an international regulate monopolies
NAIA 3 would be commercial when public interest
the only passenger airport so requires.
Relevant provisions: international at the NAIA in Monopolies are not
passenger airport favor of PIATCO per se prohibited.
Public Service Act, Section 16: operating in the Given its
Island of Luzon, susceptibility to
(m) To amend, modify, or revoke at any time any certificate under the with the exception abuse, however, the
provisions of this act, whenever the facts and circumstances on the strength of which of those already State has the
said certificate was issued have been misrepresented or materially operating in Subic bounden duty to
changed. Bay Freeport regulate monopolies
(n) To suspend or revoke any certificate issued under the provisions of this act Special Economic to protect public
whenever the holder thereof has violated or willfully and consummately Zone, Clark interest.
refused to comply with any order, rule or regulation of the Commission or Special Economic
any provisions of this act; Provided, that the Commission for good cause may, Zone and in Laoag
prior to the hearing, suspend for a period not exceeding 30 days any certificate or the City.
exercise of any right or authority issued or granted under this act, by order of the
Commission, whenever such step shall, in the judgment of the Commission, be
necessary to avoid serious and irreparable damage or inconvenience to the public or e. Privatization of State-Operated Public Utilities
to private interest.
CASE FACTS HELD/RATIO DOCTRINE CLASS
d. Take-over Power TITLE NOTES
Kuwait Kuwait and PAL , PAL was The government
CASE FACTS HELD/RATIO DOCTRINE CLASS Airways then owned by the already a cannot act to
TITLE NOTES v. PAL government, private deprive public
David Pres. Arroyo Although the In times of national entered into a company (no utilities of their
v. issued PP 1017, President can emergency, the Commercial longer owned private rights when
Arroyo declaring a state declare a state of President may Agreement. PAL by the these public
of national national declare the existence eventually was government) at utilities, although
emergency and emergency, a of such state but privatized. A the time it previously state-
invoking Section legislation is only the Congress Commercial Memo signed the owned, have
17, Article 12 of needed to allow has the power to of Understanding CMU. It was already been
the Constitution. her to exercise determine WON the (CMU) was later on thus no longer privatized.
emergency operations of signed by certain bound by the However, such
powers. Absent privately owned officials of the acts of the privatized public
such legislation, business affected Philippine government as utilities remain
she cannot take with public interest government, which manifested by subject to State
over the or of a public utility memo departs from the signing of regulation.
operation of should be taken over the previously the CMU.
privately owned by the State. concluded
business/public Commercial
utility affected Agreement.
6 of 107
 PLDT v. ETCI applied with The NTC may grant A regulatory body
NTC the NTC for a provisional designated by the
III. Regulation of Public Utilities CPCN to operate authority. NTC is government can
Class notes: and maintain a the regulatory perform acts of
cellphone system agency of the regulation within its
The State can be the: and a paging national competence.
system. NTC government with
1. regulator granted it jurisdiction over all
2. operator provisional telecommunications
How can the State (government) end up as the owner and operator? authority. PLDT entities.
questions this.
1. Selling Francisc PNCC entered By virtue of PD The Congress may
2. BOT o v. TRB into joint venture 1112, TRB has delegate its
3. Created from the beginning agreements with sufficient power to authority to
private entities grant a person or regulate public
There is a constitutional provision which provides that gov't itself can operate public
for toll operation. entity to construct, utilities to
utilities. Ratio: to provide low cost services especially on those sector where there is
In issue here is maintain and administrative
low return of investment.
the authority of operate a toll bodies.
Examples of utilities operated by the government: the TRB to grant facility and issue a
franchises. corresponding toll
1. LRT operating permit.
2. Water districts from some provinces NAPOCO NPC acted to NPC acted beyond A regulatory body
R v. CA supply power in its competence. designated by the
Privatization v. Nationalization: areas where The generation of government can
CEPALCO has a electric power shall perform acts of
Privatization - gov't sells its interest in public utilities franchise for be undertaken regulation ONLY
Nationalization - gov't undertakes to reacquire public utilities light, heat and solely by the NPC within its
power supply. but the distribution competence.
of electric power
shall be undertaken
A. Authority to Operate by cooperatives,
private utilities
CASE FACTS HELD/RATIO DOCTRINE CLASS
(such as the
TITLE NOTES
CEPALCO), local
Albano The MICT project The PPA has been The authority to governments and
v. Reyes was awarded to granted the operate may come other entities duly
ICTSI by the PPA authority to award from not only the authorized.
after the bidding. the operation and Congress, but also
management of the from administrative
MICT to whichever agencies to which
entity it deems the Congress has Relevant provisions:
suitable. By virtue delegated such
Public Service Act, Section 16 (a):
of the contracts authority.
entered into  Proceedings of the PSC upon notice and hearing:
between the (a) To issue certificates authorizing the operation of public
parties, ICTSI services within the Philippines whenever the Commission finds
earned the that the operation of the public service proposed and the
authority to operate authorization to do business will promote the public interest in
the MICT. a proper and suitable manner. Provided that certificates will be

7 of 107
 granted only to citizens of the Philippines or of the US or to corps., co- the public interest in a
partnerships, associations, or joint-stock companies constituted and proper and suitable
organized under the laws of the Philippines; Provided, that 60% of the manner.
stock or paid-up capital must belong entirely to citizens of the KMU LTFRB granted One of the The applicant for a CPC Public
Philippines or of the US; Provided further, that no such certificate shall v. the provincial requirements for must prove that there is convenie
be issued for a period of more than 50 years. Garcia bus operators the grant of a a public need for the nce and
to set the fare CPC is that the public utility it is necessity
Public Service Act, Section 18:
rates, the applicant must applying a CPC for. exists
 It shall be unlawful for any individual, co-partnership, association, former prove that the when the
corporation or joint-stock company, their lessees, trustees, or receivers to providing only operation of the proposed
engage in any public service business without having first secured from the a range within public service facility or
Commission a certificate, except grantees of legislative franchises expressly which the rates proposed and service
exempting such grantee from the requirements of securing a certificate from should fall. the authorization meets a
the Commission, as well as those expressly exempted from the jurisdiction to do business reasonabl
of the Commission. will promote the e want of
public interest in the public
i. General Qualifications a proper and and
suitable manner. supply a
CASE FACTS HELD/RATIO DOCTRINE CLASS The burden of need
TITLE NOTES proof is on the which the
Vda. Diaz applied The grant of Requisites for the grant applicant. existing
de Lat for a CPCN CPCN was of a CPCN: (1) the facilities
v. PSC with the PSC proper. Diaz applicant must be a do not
to operate an satisfied all the citizen of the adequatel
ice plant requisites. A Philippines, or a y supply.
system. This mere reduction in corporation or co-
was granted. the earnings of partnership, association
competitor- or joint stock company
businesses does constituted and ii. Revocation or Cancellation
not suffice to organized under the
CASE TITLE FACTS HELD/RATIO DOCTRINE CLASS NOTES
constitute laws of the Philippines,
Divinagracia Divinagracia Though NTC Industries over The court
ruinous 60 per centum at least
v. CBS sought has the which the PSC looked into the
competition. of the stock or paid-up
before the authority to does not have power granted
capital of which belong
NTC the grant CPCs, it jurisdiction are to NTC. Is a
entirely to citizens of
cancellation/ does not have likewise spared radio
the Philippines; (2) the
revocation of the power to from the broadcasting
applicant must be
the cancel/revoke jurisdiction of company a
financially capable of
franchises the same, the public utility?
undertaking the
granted to absent any law administrative No. The
proposed service and
PBS and authorizing entities element that is
meeting the
CBS, alleging them. Although subsequently missing is "for
responsibilities incident
that PBS and the PSC replacing the hire or
to its operations; and
CBS failed to originally had PSC. compensation".
(3) the applicant must
comply with the power to
prove that the operation
the cancel/revoke,
of the public service
conditions the same did
proposed and the
set forth in not pass on to
authorization to do
their the NTC as
business will promote
respective broadcast
8 of 107
 legislative stations were CPC CPCN
franchises. not under the No franchise required Franchise required
PSC’s authority Auto-trucks, motor vehicles, etc. Power, telephone, etc.
back then.

CASE FACTS HELD/RATIO DOCTRINE CLASS NOTES

Relevant provision: TITLE
PAL GrandAir GrandAir does not The law (as This case
Public Service Act, Section 16 (m):
v. applied for a need a legislative embodied in the abolished the
 To amend, modify, or revoke at any time any certificate under the CAB CPCN for the franchise, considering Constitution and distinction
provisions of this act, whenever the facts and circumstances on the strength operation of an that it has fulfilled all the Public between CPCs
of which said certificate was issued have been misrepresented or air transport the necessary Service Act) and CPCNs.
materially changed. service. This qualifications for the contemplates
was opposed issuance of a CPCN. not only
iii. CPC v. CPCN by PAL who is Section 4 of RA 776 “franchises”,
a holder of a enumerated the but also
Relevant Provision:
legislative requirements to “certificates”
Public Service Act, Section 15: franchise for determine the (CPC/CPCN).
the same field. competency of a
prospective operator.
 With the exception of those enumerated in the preceding section, no public
service shall operate in the Philippines without possessing a valid
and subsisting certificate from the Public Service Commission known as
"certificate of public convenience," or "certificate of public B. Rate-Fixing
convenience and necessity," as the case may be, to the effect that the
Relevant provisions:
operation of said service and the authorization to do business will promote
the public interests in a proper and suitable manner. Public Service Act, Section 16 (c): Proceedings of the Commission, upon notice and
hearing.
The Commission may prescribe as a condition for the issuance of the
certificate provided in the preceding paragraph that the service can be  To fix and determine individual or joint rates, tolls, charges,
acquired by the Republic of the Philippines or any instrumentality classifications, or schedules thereof, as well as commutation,
thereof upon payment of the cost price of its useful equipment, less mileage, kilometrage, and other special rates which shall be imposed
reasonable depreciation; and likewise, that the certificate shall be valid observed and followed thereafter by any public service: Provided, That the
only for a definite period of time; and that the violation of any of Commission may, in its discretion, approve rates proposed by
these conditions shall produce the immediate cancellation of the public services provisionally and without necessity of any hearing;
certificate without the necessity of any express action on the part of the but it shall call a hearing thereon within thirty days, thereafter, upon
Commission. publication and notice to the concerns operating in the territory affected:
Provided, further, That in case the public service equipment of an operator
is used principally or secondarily for the promotion of a private business, the
In estimating the depreciation, the effect of the use of the equipment, its net profits of said private business shall be considered in relation with the
actual condition, the age of the model, or other circumstances affecting its public service of such operator for the purpose of fixing the rates.
value in the market shall be taken into consideration.
Public Service Act, Section 20 (a): Acts requiring the approval of the Commission.
The foregoing is likewise applicable to any extension or amendment of  To adopt, establish, fix, impose, maintain, collect or carry into
certificates actually in force and to those which may hereafter be issued, effect any individual or joint rates, commutation, mileage or other
to permit to modify itineraries and time schedules of public services, and to special rate, toll, fare, charge, classification or itinerary. The
authorizations to renew and increase equipment and properties. Commission shall approve only those that are just and reasonable
and not any that are unjustly discriminatory or unduly preferential,
Class notes: only upon reasonable notice to the public services and other parties
9 of 107
 concerned, giving them a reasonable opportunity to be heard and the public utility alone
burden of the proof to show that the proposed rates or regulations are (to the exclusion of
just and reasonable shall be upon the public service proposing the same. the consuming
public).
Class notes:
KMU v. LTFRB granted The power to fix the The regulatory
Procedure: Garcia the provincial rates rests in the power vested in
bus operators LTFRB, as delegated the Congress,
1. Application by the public utility to set the fare by Congress. The or
2. Notice and hearing rates, the former cannot sub- administrative
3. Approval/Denial by the regulatory body former delegate the same bodies as the
providing only to the bus operators. case may be,
a range within includes the
CASE FACTS HELD/RATIO DOCTRINE CLASS NOTES which the rates authority to fix
TITLE should fall. rates. The
Padua TRB issued a TRB’s authority to The rate-fixing A public same cannot be
v. resolution grant provisional toll power of the hearing for delegated to
Ranada which rate adjustments TRB may be rate-fixing is the public
authorized does not require the done ex-parte, not necessary utilities
provisional toll posting of notices thereby not if the main themselves or
rate and the conduct of a requiring notice petition is their operators.
adjustments at hearing. and hearing. sufficient, Francis PNCC entered The promulgation of The TRB is The power to
the Skyway, in there is a co v. into joint toll rates is within vested the set rates and
view of “urgent submission of TRB venture the competence of power to fix toll the executive
public bond and an agreements the TRB. rates, in the power to
interest.” affidavit is with private exercise of its grant
submitted entities for toll quasi-legislative franchises
showing that operation. functions. can be both
the rate- granted to
fixing formula just one
was complied entity.
with. Examples are
Republi Meralco filed In determining the Rates must be Rate fixing CAB, LFTRB,
c v. with the just and reasonable just and could be very etc.
Meralc Energy rates to be charged reasonable, technical so
o Regulation by a public utility, 3 that which will most of the
Board (ERB) factors are yield a fair time it is
an application considered: 1) rate return to the delegated to C. Approval of Sales of Public Utility Assets or Equity
for the revision of return; 2) rate public utility a specialized Relevant provisions:
of its rate base; 3) computed and reasonable agencies.
schedules. revenue. The to the public. Public Service Act, Section 20: Acts requiring the approval of the Commission.
operating expenses
are deducted from (g) To sell, alienate, mortgage, encumber or lease its property, franchises,
the rate base. certificates, privileges, or rights or any part thereof; or merge or
Income tax, consolidate its property, franchises privileges or rights, or any part thereof,
however, are not to with those of any other public service. The approval herein required shall be
be considered given, after notice to the public and hearing the persons interested at a public
operating expenses hearing, if it be shown that there are just and reasonable grounds for making the
and must be mortgaged or encumbrance, for liabilities of more than one year maturity, or the sale,
shouldered by the alienation, lease, merger, or consolidation to be approved, and that the same are not

10 of 107
detrimental to the public interest, and in case of a sale, the date on which the same PLDT v. PLDT questions the Only the transfer of The sale of
is to be consummated shall be fixed in the order of approval: Provided, however, that NTC provisional authority franchise requires shares of stock
nothing herein contained shall be construed to prevent the transaction from being granted by the NTC Congressional of a public
negotiated or completed before its approval or to prevent the sale, alienation, or to ETCI to operate approval. The sale utility requires
lease by any public service of any of its property in the ordinary course of its and maintain a of shares of stock the approval of
business. cellphone system of ETCI needs only the regulatory
and a paging the approval of the body
(h) To sell or register in its books the transfer or sale of shares of its capital system, on the NTC which it exercising
stock, if the result of that sale in itself or in connection with another ground that the sale impliedly gave jurisdiction
previous sale, shall be to vest in the transferee more than forty per centum of 40% of the upon the issuance over the said
of the subscribed capital of said public service. Any transfer made in violation shares of stock of of the provisional public utility.
of this provision shall be void and of no effect and shall not be registered in the ETCI required authority to ETCI.
books of the public service corporation. Nothing herein contained shall be construed Congressional
to prevent the holding of shares lawfully acquired. approval.
Y Transit Yujuico Transit The transfer of The rule
Co. v. transferred 10 of its ownership over the requiring the
(i) To sell, alienate or in any manner transfer shares of its capital stock to
NLRC buses to its 10 buses from approval of the
any alien if the result of that sale, alienation, or transfer in itself or in
president, who then Yujuico to Y Transit PSC with
connection with another previous sale shall be the reduction to less than
sold it to Y transit. does not bind the respect to
sixty per centum of the capital stock belonging to Philippine citizens. Such
A labor union in public, absent the franchises
sale, alienation or transfer shall be void and of no effect and shall be sufficient cause
Yujuico filed a ULP approval of the applies here.
for ordering the cancellation of the certificate.
case against the BOT. Yu Transit
former which led to may, however,
CASE FACTS HELD/RATIO DOCTRINE CLASS a levy being made claim from Yujuico.
TITLE NOTES upon the 10 buses.
Montoya A jeep and a bus The owner, not the A lease of a All the transactions
v. collided. The issue is lessee, is liable to public utility did not secure the
Ignacio on who is to be held the victims, the without the approval of the BOT.
responsible to the lease not having approval of the
victims when the been secured by PSC does not
said jeep was the approval of the bind the
D. Power to Set Fees and other Charges
leased, without the PSC. public.
approval of the PSC, CASE TITLE FACTS HELD/RATIO DOCTRINE CLASS
at the time of the NOTES
accident. Republic ICC, a holder of a The imposition of A regulatory
Perez v. A jeepney carrying The registered A sale of a v. ICC franchise, applied the said permit body of public
Gutierrez passengers met an owner is liable, the public utility for a CPCN for the fee is a valid utilities may
accident. This approval of the PSC without the operation of exercise of impose fees
jeepney has of the said sale not approval of the international regulatory power. and other
previously been sold having been PSC does not telecom leased It is not a tax as it charges
to another, which secured. The bind the circuit service. NTC does not aim to pursuant to a
sale was not registered owner public. subjected the grant raise revenue, but valid exercise
approved by the may however claim of provisional merely to of regulatory
PSC. Who between from the authority to the reimburse the NTC powers.
the registered owner subsequent payment of a of its expenses in
and the subsequent purchaser. permit fee. the regulation of
purchaser is to be public utilities.
held liable to the
injured passengers?

11 of 107
E. Other Means of Regulation
Relevant Provisions:
Public Service Act, Section 16: Proceedings of the Commission, upon notice and
hearing.
(b) To approve, subject to constitutional limitations any franchise or privilege granted
under the provisions of Act No. Six Hundred and Sixty-seven, as amended by Act No.
One Thousand and twenty-two, by any political subdivision of the Philippines when, in
the judgment of the Commission, such franchise or privilege will properly conserve
the public interests, and the Commission shall in so approving impose such conditions
as to construction, equipment, maintenance, service, or operation as the public
interests and convenience may reasonably require, and to issue certificates of public
convenience and necessity when such is required or provided by any law or franchise.
(d) To fix just and reasonable standards, classifications, regulations, practices,
measurement, or service to be furnished, imposed, observed, and followed thereafter
by any public service.
(e) To ascertain and fix adequate and serviceable standards for the measurement of
quantity, quality, pressure, initial voltage, or other condition pertaining to the supply
of the product or service rendered by any public service, and to prescribe reasonable
regulations for the examination and test of such product or service and for the
measurement thereof.
(f) To establish reasonable rules, regulations, instructions, specifications, and
standards, to secure the accuracy of all meters and appliances for measurements.
(g) To compel any public service to furnish safe, adequate, and proper service as
regards the manner of furnishing the same as well as the maintenance of the
necessary material and equipment.
(h) To require any public service to establish, construct, maintain, and operate any
reasonable extension of its existing facilities, where in the judgment of said
Commission, such extension is reasonable and practicable and will furnish sufficient
business to justify the construction and maintenance of the same and when the
financial condition of the said public service reasonably warrants the original
expenditure required in making and operating such extension.
(i) To direct any railroad, street railway or traction company to establish and maintain
at any junction or point of connection or intersection with any other line of said road
or track, or with any other line of any other railroad, street railway or traction to
promote, such just and reasonable connection as shall be necessary to promote the
convenience of shippers of property, or of passengers, and in like manner direct any
railroad, street railway, or traction company engaged in carrying merchandise, to
construct, maintain and operate, upon reasonable terms, a switch connection with
any private sidetrack which may be constructed by any shipper to connect with the
railroad, street railway or traction company line where, in the judgment of the
Commission, such connection is reasonable and practicable and can be out in with
safety and will furnish sufficient business to justify the construction and maintenance
of the same.
(j) To authorize, in its discretion, any railroad, street railway or traction company to
lay its tracks across the tracks of any other railroad, street railway or traction
company or across any public highway.
(k) To direct any railroad or street railway company to install such safety devices or
about such other reasonable measures as may in the judgment of the Commission be
necessary for the protection of the public are passing grade crossing of (1) public
highways and railroads, (2) public highways and streets railway, or (3) railways and
street railways.
(l) To fix and determine proper and adequate rates of depreciation of the property of
any public service which will be observed in a proper and adequate depreciation
account to be carried for the protection of stockholders, bondholders or creditors in
accordance with such rules, regulations, and form of account as the Commission may
prescribe. Said rates shall be sufficient to provide the amounts required over and
above the expense of maintenance to keep such property in a state of efficiency
corresponding to the progress of the industry. Each public service shall conform its
depreciation accounts to the rates so determined and fixed, and shall set aside the
moneys so provided for out of its earnings and carry the same in a depreciation fund.
The income from investments of money in such fund shall likewise be carried in such
fund. This fund shall not be expended otherwise than for depreciation,
improvements, new construction, extensions or conditions to the properly of such
public service.
(o) To fix, determine, and regulate, as the convenience of the state may require, a
special type for auto-busses, trucks, and motor trucks to be hereafter constructed,
purchased, and operated by operators after the approval of this Act; to fix and
determine a special registration fee for auto-buses, trucks, and motor trucks so
constructed, purchased and operated: Provided, That said fees shall be smaller than
more those charged for auto-busses, trucks, and motor trucks of types not made
regulation under the subsection.
Public Service Act, Section 20: Acts requiring the approval of the Commission.
(b) To establish, construct, maintain, or operate new units or extend existing facilities
or make any other addition to or general extension of the service.
(c) To abandon any railroad station or stop the sale of passenger tickets, or cease to
maintain an agent to receive and discharge freight at any station now or hereafter
established at which passenger tickets are now or may hereafter be regularly sold, or
at which such agent is now or may hereafter be maintained, or make any permanent
change in its time tables or itineraries on any railroad or in its service.
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(d) To lay any railroad or street railway track across any highway, so as to make a
new crossing at grade, or cross the tracks of any other railroad or street railway,
provided, that this subsection shall not apply to replacements of lawfully existing
tracks.
(e) Hereafter to issue any stock or stock certificates representing an increase of
capital; or issue any share of stock without par value; or issue any bonds or other
evidence of indebtedness payable in more than one year from the issuance thereof,
provided that it shall be the duty of the Commission, after hearing, to approve any
such issue maturing in more than one year from the date thereof, when satisfied that
the same is to be made in accordance with law, and the purpose of such issue be
approved by the Commission. (f) To capitalize any franchise in excess of the amount,
inclusive of any tax or annual charge, actually paid to the Government of the
Philippines or any political subdivision thereof as the consideration of said franchise;
capitalize any contract for consolidation, merger or lease, or issue any bonds or other
evidence of indebtedness against or as a lien upon any contract for consolidation,
merger, or lease: Provided, however, that the provisions of this section shall not
prevent the issuance of stock, bonds, or other evidence of indebtedness subject to
the approval of the Commission by any lawfully merged or consolidated public
services not in contravention of the provisions of this section.
(j) To issue, give or tender, directly or indirectly, any free ticket free pass or free or
reduced rate of transportation for passengers, except to the following persons: (1)
officers, agents, employees, attorneys, physicians and surgeons of said public service,
and members of their families; (2) inmates of hospitals or charity institutions, and
persons engaged in charitable work; (3) indigent, destitute, and homeless persons
when transported by charitable societies or hospitals, and the necessary agents
employed in such transportation; (4) the necessary caretakers, going and returning,
of livestock, poultry, fruit, and other freight under uniform and non-discriminatory
regulation; (5) employees of sleeping car corporations, express corporations and
telegraph and telephone corporations, railway and marine mail service employees,
when traveling in the course of their official duly; (6) post-office inspectors, customs
officers and inspectors, and immigration inspectors when engaged in inspection; (7)
witnesses attending any legal investigation in which the public service is an interested
party; (8) persons injured in accidents or wrecks, and physicians and nurses
attending such persons; (9) peace officers and men of regularly constituted fire
departments.
(k) Adopt, maintain, or apply practices or measures, rules or regulations to which the
public shall be subject in its relations with the public service.
CASE FACTS HELD/RATIO DOCTRINE CLASS
TITLE NOTES
NPC NPC acted to The NPC does not Another means of
v. CA supply power in have the authority regulation is the
areas where to determine determination of which
CEPALCO has a whether or not it between two public
franchise for can supply utilities has the right to
light, heat and electricity to the render service to the
power supply. areas involved in public in a given area.
this dispute. The
same is vested in
the DOE.
(Pau Gairanod)
PART TWO: TRANSPORTATION LAW
II. General Discussion
1. Definition
Class Notes:
- Removal of goods or persons from one place or another
- Contract of transportation = one whereby a certain person or association of
persons obligate themselves to transport persons or things from one to another
for a fixed price
2. Relationship to a Public Utility
Class Notes:
- If you examine Section 13(b) of the Public Service Act, various modes of
transportation are listed, thus putting such modes within the coverage of the
term “public service” if used by certain persons for hire or compensation, with
general or limited clientele.
a. Relevant Provisions:
PUBLIC SERVICE ACT, Section 13(b). (b) The term "public service" includes
every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes,
any common carrier, railroad, street railway, traction railway, sub-way
motor vehicle, either for freight or passenger, or both with or without
fixed route and whether may be its classification, freight or carrier
service of any class, express service, steamboat or steamship line,
pontines, ferries, and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine railways, marine repair shop,
[warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation
system, gas, electric light, heat and power water supply and power, petroleum,
sewerage system, wire or wireless communications system, wire or wireless
broadcasting stations and other similar public services: Provided, however, That
a person engaged in agriculture, not otherwise a public service, who owns a
motor vehicle and uses it personally and/or enters into a special contract
whereby said motor vehicle is offered for hire or compensation to a third party or
third parties engaged in agriculture, not itself or themselves a public service, for
operation by the latter for a limited time and for a specific purpose directly
connected with the cultivation of his or their farm, the transportation, processing,
and marketing of agricultural products of such third party or third parties shall
not be considered as operating a public service for the purposes of this Act.
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3. Nature of a Franchise service, cannot be
taken or
Cases: interfered with
CASE TITLE FACTS HELD DOCTRINE CLASS without due
NOTES process of law.
Raymundo Nicanor de Guzman as The Certificates of Y Transit Yujuico who sold the The The transfer of
v. Luneta Guzco Transit attachment public Co. v. NLRC subject buses of ownership of ownership from
Motor purchased trucks from and convenience Yujuico Transit Co. to the buses Yujuico Transit
Luneta Motor Co. and execution in secured by public "Y" Transit Co., Inc. wasn’t Co., Inc. to Jesus
executed promissory favor of service operators Yujuico Transit properly Yujuico, and from
notes guaranteed by Luneta Motor are liable to Employees Union filed transferred Jesus Yujuico to
a chattel mortgage. were valid. execution.If the complaints against to Y Transit "Y" Transit Co.,
De Guzman failed to holder of a Yujuico Transit Co., Co. Inc. lacked the
pay. Garnishment was certificate of Inc. for unfair labor prior approval of
issued against Guzco public practice and non- the BOT as
Transit’s CPCs. Luneta convenience can payment of living required by
Motor Co was the sell it voluntarily, allowances. An alias Section 20 of the
highest bidder. there is no valid writ of execution was Public Service Act.
However, the same reason why the issued upon the Where the
certificates were later same certificate buses. Union says registered owner
sold by De Guzman to cannot be taken that the transactions is liable for
petitioner Raymundo. and sold leading to the transfer obligations to
involuntarily of the buses to "Y" third parties and
pursuant to Transit Co., Inc. were vehicles
process. void because they registered under
lacked the approval of his name are
Cogeo- A CPC was obtained The Assoc A CPC is included the BOT as required levied upon to
Cubao by Lungsod Silangan usurped in the term by the Public Service satisfy his
Operator to ply the Cogeo- Lungsod "property" and Act. obligations, the
and Driver Cubao route. Troubled Silangan’s can be sold. transferee of such
Association by Lungsod's Board property Still,It is affected vehicles cannot
v. CA Resolution No. 9 rights with a public prevent the levy
adopting a Bandera' entitling the interest. Thus, a by asserting his
System, the Assoc latter to CPC does not ownership
decided to form a damages. confer upon the because as far as
human barricade on holder any the law is
and assumed the proprietary right concerned, the
dispatching of or interest or one in whose
passenger jeepneys franchise in the name the vehicle
which gave rise to the route covered is registered
suit for damages. thereby and in remains to be the
the public owner and the
highways. A CPC transferee merely
as property, holds the vehicles
representing the for the registered
right and owner
authority to
operate its 4. Scope of a Franchise
facilities for public
14 of 107
Case: CASE TITLE FACTS HELD DOCTRINE CLASS
CASE FACTS HELD DOCTRINE CLASS NOTES
TITLE NOTES Batangas Orlanes was an WON a Prior Operator
San Pablo Pantranco Can a land If a river, stream Transportation irregular certificate of Rule: So long
v. requested authority transportation or lake interrupts v. Orlanes operator public as the first
Pantranco to acquire a boat company be a highway, a between convenience licensee
from the Maritime allowed to operate common carrier Bantilan and going to be keeps and
Industry Authority a ferry service or a need not apply for Taal who seeks issued to a performs the
to operate a coastwise/inter- a separate to have a CPC second terms and
ferryboat service island shipping certificate of to operate a line operator to conditions of
from areas in service as an public of auto trucks operate a its license and
Samar for its buses incident to its convenience and set aside public utility complies with
and freight trucks franchise because the water and nullify the in a field the
that had to cross WITHOUT having will be considered prohibition where, and reasonable
the San Bernardo to file a separate a continuation of against him in in rules and
Strait. application? For a the highway. his CPC (he competition regulations of
MIA denied the ferry service, YES. However, the sea shall not have with, a first the
request because For a cannot be or receive any operator Commission
the routes were coastwise/inter- considered a passengers or who is and meets
already adequately island service, NO. continuation of freight at any of already the
covered. Pantranco the highway. the points operating, reasonable
invoked the ruling Thus, a common served by the adequate demands of
in Javellana v carrier must apply Batangas and the public, it
Public Service for a separate Transportation). satisfactory should have
Commission, where certificate of Batangas service = NO more or less
it was held that a public Transportation of a vested
ferry service is an convenience to alleged that and
allowable incident operate a sea grant Orlanes preferential
to the transport of route. would result in right over a
passengers for the ruinous person who
purpose of competition and seeks to
"continuing the to the grave acquire
highway" prejudice of the another and a
interrupted by "a company and later license
small body of without any over the
water." Pantranco benefit to the same route.
reasoned that the public. Otherwise,
use of the MV the first
Black Double was license would
in the concept of a not have
private carrier protection on
since it would only his
ferry its own investment,
passengers, buses and would be
and vehicles. subject to
ruinous
5. Prior Operator Rule competition
and thus
defeat the
Case:
15 of 107
 very purpose is the person
and intent for listed as owner
which the on the
Public Service tricycle’s
Commission registration
was created certificate.
Lita Spouses Court Although not
6. Kabit System Enterprises, Ocampo should not outrightly
Inc. v. purchased have taken penalized as a
Cases: Second from the Delta cognizance criminal offense,
CASE FACTS HELD DOCTRINE CLASS NOTES Civil Cases Motor five cars of the case. the "kabit
TITLE Division to be used as Parties in system" is
Teja v. IAC Pedro bought Parties are Although Pedro taxicabs. Since pari delicto! recognized as
a tricycle from in pari failed to pay for they had no being contrary to
Teja Marketing delicto , so the tricycle, franchise to public policy and,
for no relief for Jaucian was operate therefore, void
transportation either. engaging in the taxicabs, they and inexistent
services which kabit system, contracted under. It is a
became the which is void with Lita fundamental
object of a because of public Enterprises, principle (in pari
chattel policy based on Inc. for the delicto) that the
mortgage with CC 1409. use of the court will not aid
the Rural Bank Art. 1409. The latter's CPC. either party to
of Camaligan following The cars were enforce an illegal
because Pedro contracts are registered in contract, but will
paid to pay. inexistent and the name of leave them both
Jaucian, the void from the Lita where it finds
one who beginning: (1) Enterprises, them.
handled the Those whose Inc.
mortgaging, cause, object or Possession,
was actually purpose is however,
part of Teja contrary to law, remained with
Marketing. The morals, good the spouses
“kabit customs, public Ocampo who
system”: order or public operated and
Jaucian and policy maintained the
Teja Marketing same under
were made to the name
appear as Acme Taxi.
different One of said
persons taxicabs
because Pedro collided with a
had no tricycle motorcycle
franchise of whose driver
his own and died from
only attached head
his tricycle to injuriesTwo of
former’s MCH the vehicles of
Line. Jaucian respondent

16 of 107
 spouses was contends that person upon the damage
levied upon to recognize whom caused to his
and sold at an operator responsibility vehicle. In Lim,
public auction. under the may be fixed in evil does not exist
Thereafter, kabit system case of an because:
Nicasio as the real accident with the 1. The case arose
Ocampo party-in- end view of from the
decided to interest is protecting the negligence of
register his utterly riding public. another vehicle to
taxicabs in his subversive of whom no
name. He public policy. representation, or
requested the misrepresentation,
manager of as regards the
petitioner Lita ownership and
Enterprises, operation of the
Inc. to turn passenger
over the jeepney was
registration made.
papers to him, 2. The riding
but the latter public was not
refused. bothered nor
Lim v. CA Gonzales WON a new One of the Lim v. Court of inconvenienced at
purchased a owner of a primary factors Appeals is an the very least by
passenger jeepney considered in the important case the illegal
jeepney from operating granting of a because it shows arrangement.
Vallarta, who under the CPC is the that a kabit has
was the holder old owner’s financial capacity rights too! The Baliwag Two Issuance of The "Kabit
of a CPC. certificate of the holder of thrust of the law Transit Inc. passenger bus one SSS ID System" has
Gonzales of public the license, so in enjoining the v CA lines with is not been defined as
continued convenience that liabilities kabit system is similar buses determinant an arrangement
operating the (or kabit arising from not so much as to and similar of whether "whereby a
jeep but did system) accidents may be penalize the routes were or not the person who has
not transfer may sue for duly parties but to being kabit been granted a
the damages compensated. identify the operated by system was certificate of
registration to against an The registered person upon firm names engaged in. convenience
his name. Jeep opposing owner of the whom "Baliwag allows another
collided with a party who vehicle is not responsibility may Transit' and person who
truck owned caused the allowed to prove be fixed in case of "Baliwag owns motor
by Lim. Lim vehicular that another an accident with Transit, Inc." vehicles to
alleges that accident? person has the end view of (BTI). operate under
Gonzales is Yes become the protecting the Martinez, such franchise
not a real owner so that he riding public. claiming to be for a fee." The
party-in- may be thereby THUS, if the an employee determining
interest since relieved of danger sought to of both bus factor is the
the vehicle responsibility.The be enjoined does lines with one possession of a
was registered thrust of the law not exist, a kabit ID Number, franchise to
in another’s in enjoining the has the right to filed a petition operate which
name. The kabit system is proceed against a with the Social negates the
petitioner to identify the third person for Security existence of the

17 of 107
 Commision to "Kabit System" concession to inspect negligent accommodation you invite
compel BTI to and not the the latter’s logs. He and not passengers (i.e. someone to
remit to the issuance of one contracted malaria. liable for passengers ride with you
SSC his SSS ID Number Demetrio asked damages. whose requests because (1)
Premium for both bus lines Valencia if he could to ride were not for
contributions from which the hitch a ride with him accommodated compensation
for certiain existence of said to Barrio Samoay, by the driver), or hire, (2) no
years. BTI system was since there was no which may also limited or
denied having inferred other means of be considered general
employed transportation. invited guests clientele!
Martinez, Because he was within the
saying that he feverish, Lara meaning of the
was employed sat/reclined/crouched law. There is no
by Tuazon in the middle of the difference
who since back part of the pick- between a
1948 owned up. Valencia invited passenger who
and operated Lara to sit in the front was expressly
buses separate area, but the latter invited to ride
and distinct declined. Thus, the and a passenger
from BTI. seating arrangement who asked for a
remained the same as ride – both may
Class Notes: before. The pick-up be considered
o It is not per se illegal. It is only contrary to public policy, not law. was travelling on a invited guests.
Nevertheless, while you cannot be held criminally liable for it, a really bumpy road . As such, the
contract in this system remains void. Lara fell from the pick- level of care
o Note the different “contracts” in the cases under Kabit System. up and suffered required of
They vary—lease, resale, straightforward sale, sale in installments serious injuries. Valencia was
with mortgage, etc. Whatever the nature of these supposed only the duty to
contacts, they are void. exercise
o Reason why the kabit system is contrary to public policy: People reasonable care
need to know who to run after. It would be unfair if the public so that they may
cannot rely on official documents that evidence who the actual be transported
franchise holder is. safely to their
o Kabit arrangement v. unregistered sale: If kabit arrangement, VOID destination. An
as to the parties and third persons. If unregistered sale, not binding owner of an
against third persons BUT valid as to the parties  becomes automobile owes
binding as to third persons only upon registration of the sale a guest the duty
to exercise
7. Private nature; rights and obligations of parties inter se arising from ordinary or
transactions relating to transportation reasonable care
to avoid injuring
a. absent a transportation contract him.

Case:
Class Notes:
CASE FACTS HELD DOCTRINE CLASS NOTES - Absent a transportation contract:
TITLE o Obligation of driver: The owner or operator of an automobile owes
Lara v. Demetrio went to Valencia The pick-up’s Not a public
the duty to an invited guest to exercise reasonable care in its
Valencia Valencia’s lumber was not passengers were utility when

18 of 107
 operation, and not unreasonably to expose him to danger and
injury by increasing the hazard of travel.
 There is no difference between a passenger who was
expressly invited to ride and a passenger who asked for a
ride – both may be considered invited guests.
o Obligation of a passenger: A passenger must observe the diligence
of a good father of a family to avoid injury to himself. (NCC 1761)
networks of transportation and communication system, as well as in the
fast, sale, efficient and reliable postal, transportation and communication
services.
To accomplish such mandate, the Ministry shall have the following
objectives:
1. Promote the development of dependable and coordinated networks
of transportation and communication systems;

b. liability of registered owner 2. Guide government and private investment in the development of
the country's inter- model transportation and communication
Case: systems in a most practical, expeditious, and orderly fashion for maximum
CASE FACTS HELD DOCTRINE CLASS safety, service, and cost effectiveness;
TITLE NOTES
3. Impose appropriate measure so that technical, economic and other
PCI A Mitsubishi Lancer Is PCI Leasing, The registered
condition for the continuing economic viability of the
Leasing v. owned by UCPB was as the owner of a vehicle
transportation and communication entities are not jeopardized and
UCPB insured by the general registered is liable for any
do not encourage inefficiency and distortion of traffic patronage;
General insurance branch of owner of a quasi delicts that
Insurance UCPB (UCPB-GI).The truck involved may be caused by
4. Develop an integrated plan for a nationwide transmission system in
Lancer was hit by a in a quasi the vehicle, even
accordance with the national and international telecommunication service
truck, owned by PCI delict, liable if a third person
requirement including, among others,radio and television broadcast relaying,
Leasing. The driver jointly and was driving it at
leased channel services and data transmission;
and the passenger of severally with the time. The
the Lancer both its driver who remedy of the
5. Guide government and private investment in the establishment, operation
sustained injuries. The is the registered owner
and maintenance of an international switching system for incoming and
truck driver continued employee of its is to file a third
outgoing telecommunication services;
to his destination and lessee? YES party complaint
did not bother to help against the third
6. Encourage the development of a domestic telecommunication industry in
the victims. UCPB-GI person.
coordination with the concern entities particularly, the manufacture of
paid for the insurance
communications/ electronics equipment and components to complement and
and made repeated
support as much as possible, the expansion, development, operation and
demands towards PCI
maintenance of the nationwide telecommunications network;
Leasing for the
repayment of the
7. Provide for a safe, reliable and efficient postal system for the country.
amount. PCI Leasing’s
defense was that it
was not liable for the
collision, since the - EO 125, Section 5. Powers and Functions. To accomplish its mandate, the
Department shall have the following powers and functions:
truck driver was not its
1. Formulate and recommend national policies and guidelines for the
employee, but
preparation and implementation of integrated and comprehensive
SUGECO’s.
transportation and communications systems at the national, regional
and local levels;
III. Regulation of the Transportation Industry
1. The Department of Transportation and Communication
2. Establish and administer comprehensive and integrated programs
for transportation and communications, and for this purpose, may call on
Relevant provision/s:
any agency, corporation, or organization, whether public or
EO 125, Section 4. SECTION 4. Mandate. The Ministry shall be the primary policy,
private, whose development programs include transportation and
planning, programming, coordinating, implementing, regulating, and
communications as an integral part thereof, to participate and assist
administrative entity of the Executive Branch of the government in the
in the preparation and implementation of such program;
promotion, development and regulation of dependable and coordinated
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3. Assess, review and provide direction to transportation and
communication research and development programs of the
government in coordination with other institutions concerned;
4. Administer and enforce all laws, rules and regulations in the field
of transportation and communications;
5. Coordinate with the Department of Public Works and Highways in
the design, location, development, rehabilitation, improvement,
construction, maintenance and repair of all infrastructure projects
and facilities of the Department. However, government corporate entities
attached to the Department shall be authorized to undertake specialized
telecommunications, ports, airports and railways projects and facilities as
directed by the President of the Philippines or as provided by law;
6. Establish, operate and maintain a nationwide postal system that shall
include mail processing, delivery services, and money order services and
promote the art of philately;
7. Issue certificates of public convenience for the operation of public
land and rail transportation utilities and services;
8. Accredit foreign aircraft manufacturers and/or international
organizations for aircraft certification in accordance with established
procedures and standards;
9. Establish and prescribe rules and regulations for identification of
routes, zones and/or areas of operations of particular operators of
public land services;
10. Establish and prescribe rules and regulations for the establishment,
operation and maintenance of such telecommunications facilities in areas
not adequately served by the private sector in order to render such domestic
and overseas services that are necessary with due consideration for
advances in technology;
11. Establish and prescribe rules and regulations for the operation and
maintenance of a nationwide postal system that shall include mail
processing, delivery services, money order services and promotion of
philately;
12. Establish and prescribe rules and regulations for issuance of
certificates of public convenience for public land transportation
utilities, such as motor vehicles, trimobiles and railways;
13. Establish and prescribe rules and regulations for the inspection and
registration of air and land transportation facilities, such as motor
vehicles, trimobiles, railways and aircrafts;
14. Establish and prescribe rules and regulations for the issuance of
licenses to qualified motor vehicle drivers, conductors, and airmen;
15. Establish and prescribe the corresponding rules and regulations for
the enforcement of laws governing land transportation, air
transportation and postal services, including the penalties for
violations thereof, and for the deputation of appropriate law enforcement
agencies in pursuance thereof;
16. Determine, fix and/or prescribe charges and/or rates pertinent to
the operation of public air and land transportation utility facilities and
services, except such rates and/or charges as may be prescribed by
the Civil Aeronautics Board under its charter, and, in cases where
charges or rates are established by international bodies or
associations of which the Philippines is a participating member or
by bodies or associations recognized by the Philippine government
as the proper arbiter of such charges or rates;
17. Establish and prescribe the rules, regulations, procedures and
standards for the accreditation of driving schools;
18. Administer and operate the Civil Aviation Training Center (CATC)
and the National Telecommunications Training Institute (NTTI);
and
19. Perform such other powers and functions as may be prescribed by
law, or as may be necessary, incidental, or proper to its mandate or
as may be assigned from time to time by the President of the
Republic of the Philippines.
EO 292, Book IV, Title XV.
CHAPTER 1
General Provisions
SECTION 1. Declaration of Policy.—The State is committed to the
maintenance and expansion of viable, efficient, fast, safe and dependable
transportation and communications systems as effective instruments for
national recovery and economic progress. It shall not compete as a matter
of policy with private enterprise and shall operate transportation and
communications facilities only in those areas where private initiatives are
inadequate or non-existent.
SECTION 2. Mandate.—The Department of Transportation and
Communications shall be the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity of the
Executive Branch of the government in the promotion, development and
regulation of dependable and coordinated networks of transportation and
communications systems as well as in the fast, safe, efficient and reliable postal,
transportation and communications services.
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SECTION 3. Powers and Functions.—To accomplish its mandate, the Department
shall:
(1) Formulate and recommend national policies and guidelines for the
preparation and implementation of integrated and comprehensive
transportation and communications systems at the national, regional and local
levels;
(2) Establish and administer comprehensive and integrated programs for
transportation and communications, and for this purpose, it may call on any
agency, corporation or organization, whether public or private, whose
development programs include transportation and communications as
integral parts thereof, to participate and assist in the preparation and
implementation of such programs;
(3) Assess, review and provide direction to transportation and
communications research and development programs of the government in
coordination with other institutions concerned;
(4) Administer and enforce all laws, rules and regulations in the field of
transportation and communications;
(5) Coordinate with the Department of Public Works and Highways in the
design, location, development, rehabilitation, improvement, construction,
maintenance and repair of all infrastructure projects and facilities of the
Department. However, government corporate entities attached to the Department
shall be authorized to undertake specialized telecommunications, ports, airports and
railways projects and facilities as directed by the President of the Philippines or as
provided by law;
(6) Establish, operate and maintain a nationwide postal system that shall include mail
processing, delivery services and money order services and promote the art of
philately;
(7) Issue certificates of public convenience for the operation of public land
and rail transportation utilities and services;
(8) Accredit foreign aircraft manufacturers or international organizations
for aircraft certification in accordance with established procedures and standards;
(9) Establish and prescribe rules and regulations for identification of routes,
zones or areas of operation of particular operators of public land services;
(10) Establish and prescribe rules and regulations for the establishment, operation
and maintenance of such telecommunications facilities in areas not adequately served
by the private sector in order to render such domestic and overseas services that are
necessary with due consideration for advances in technology;
(11) Establish and prescribe rules and regulations for the issuance of
certificates of public convenience for public land transportation utilities,
such as motor vehicles, trimobiles and railways;
(12) Establish and prescribe rules and regulations for the inspection and
registration of air and land transportation facilities, such as motor vehicles,
trimobiles, railways and aircraft;
(13) Establish and prescribe rules and regulations for the issuance of
licenses to qualified motor vehicle drivers, conductors and airmen;
(14) Establish and prescribe the corresponding rules and regulations for enforcement
of laws governing land transportation, air transportation and postal services, including
the penalties for violations thereof, and for the deputation of appropriate law
enforcement agencies in pursuance thereof;
(15) Determine, fix or prescribe charges or rates pertinent to postal
services and to the operation of public air and land transportation utility
facilities and services, except such rates or charges as may be prescribed by the Civil
Aeronautics Board under its charter and, in cases where charges or rates are
established by international bodies or associations of which the Philippines is a
participating member or by bodies or associations recognized by the Philippine
government as the proper arbiter of such charges or rates;
(16) Establish and prescribe the rules, regulations, procedures and
standards for the accreditation of driving schools;
(17) Administer and operate the Civil Aviation Training Center (CATC) and
the National Telecommunications Training Institute (NTTI); and
(18) Perform such other powers and functions as may be provided by law.
SECTION 4. Organizational Structure.—The Department shall consist of the
Department Proper, the Department Regional Offices, the Land
Transportation Franchising and Regulatory Board, and the Attached
Agencies.
Class Notes:
o The INHERENT right to regulate transportation belongs to the legislature. It
delegated to DOTC.
 Still, supposedly, there are some powers still with Congress  ex.
Granting of franchises to carriers as implied by Rep. Act 9813 (BUT
there’s debate about this because CAB is supposed to have the right
to grant without needing legislative assent anymore)
o Bodies under DOTC : CAAP, LTFRB, etc.
 How does DOTC control them? Amend, revoke decisions, rules, etc.
 One of the USecs is ex officio on the board of these
agencies.
a. Air
i. Civil Aviation Authority of the Philippines
Relevant provision/s:
RA 9497, Section 4. Creation of the Authority. - There is hereby
created an independent regulatory body with quasi-judicial
and quasi-legislative powers and possessing corporate
attributes to be known as the Civil Aviation Authority of the
Philippines (CAAP), hereinafter referred to as the "Authority"
attached to the Department of Transportation and
Communications (DOTC) for the purpose of policy coordination.
For this purpose, the existing Air Transportation Office
created under the provisions of Republic Act No. 776, as
amended, is hereby abolished.
Notwithstanding the foregoing, nothing in this Act shall
diminish the powers and functions of the Civil Aeronautics
Board (CAB) as provided for under Republic Act. No. 776, also
known as "The Civil Aeronautics Act of the Philippines", as
amended.
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(a) Establishment of Authority Headed by a Director
General - The Authority shall beheaded by a Director
General of Civil Aviation, referred to in this Act as the "Director
General," who shall be appointed by the President of the
Philippines and shall be responsible for all civil aviation in
the Philippines and the administration of this Act. The
Director General shall be appointed based on the qualifications
herein provided and shall have a tenure of office for a period of
four (4) years. His appointment may be extended for
another non-extendible term of four (4) years and shall
only be removed for cause in accordance with the rules and
regulations prescribed by the Civil Service Commission.
(b) Responsibility of the Director General - The Director
General shall be responsible for the exercise of all powers
and the discharge of all duties of the Authority and shall
have control over all personnel and activities of the Authority.
RA 9497, Section 21. Policies. - In the exercise and
performance of its powers and duties under this Act, the
Authority shall consider the following, among other things, as
being in the public interest and in accordance with the
public convenience and necessity:
(a) The development and utilization of the air potential of
the Philippines;
(b) The encouragement and development of an air
transportation system properly adapted to the present and
future of foreign and domestic commerce of the Philippines;
(c) The regulation of air transportation in such manner as to
support sound economic condition in such transportation
and to improve the relations between air carriers;
(d) Ensuring the safety, quality, reliability, and affordability
of air transport services for the riding public; and
(e) The encouragement and development of a viable and
globally competitive Philippine aviation industry .
RA 9497, Section 35. Powers and Functions of the Director
General. - The Director General shall be the chief executive
and operating officer of the Authority. He shall have the
following powers, duties and responsibilities:
(a) To carry out the purposes and policies established in
this Act; to enforce the provisions of the rules and
regulations issued in pursuance to said Act; and he shall
primarily be vested with authority to take charge of the
technical and operational phase of civil aviation matters;
(b) To designate and establish civil airways, to acquire,
control, operate and maintain along such airways,
navigation facilities and to chart such airways and arrange
for their publication including the aeronautical charts or
maps required by the international aeronautical agencies,
by utilizing the equipment, supplies or assistance of existing
agencies of the government as far as practicable;
(c) To issue airman's certificate specifying the capacity in which
the holder thereof is authorized to serve as airman in connection
with aircraft and shall be issued only upon the finding that the
applicant is properly qualified and physically able to perform the
duties of the position. The certificate shall contain such terms,
conditions and limitations as the Director General may determine to
be necessary to assure safety in air commerce: Provided,
however, That the airman's license shall be issued only to
qualified persons who are citizens of the Philippines or
qualified citizens of countries granting similar rights and
privileges to citizens of the Philippines;
(d) To issue airworthiness certificate for aircraft which shall
prescribe the duration of such certificate, the type of service for
which the aircraft may be used, and such other terms and
conditions and limitations as are required;
(e) To issue air carrier operating certificate in accordance with
the minimum safety standards for the operation of the air carrier to
whom such certificate is issued. The air carrier operating certificate
shall be issued only to aircrafts registered under the provisions of
this Act;
(f) To issue type certificate for aircraft, aircraft engine,
propellers and appliances;
(g) To inspect, classify and rate any air navigation facilities
and aerodromes available for the use of aircraft as to its
suitability for such use and to issue a certificate for such air
navigation facility and aerodrome; and to determine the suitability
of foreign aerodromes, air navigation facilities as well as air routes
to be used prior to the operation of Philippine-registered aircraft in
foreign air transportation and from time to time thereafter as may
be required in the interest of safety in air commerce;
(h) To issue certificates of persons or civil aviation schools
giving instruction in flying, repair stations, and other air
agencies and provide for the examination and rating
thereof;
(i) To provide for the enforcement of the rules and
regulations issued under the provisions of this Act and to
conduct investigation for violations thereto. In undertaking
such investigation, to require by subpoena ad testificandum or
subpoena duces tecum, the attendance and testimony of
witnesses, the production of books, papers, documents, exhibits
matter, evidence, or the taking of depositions before any person
authorized to administer oath. Refusal to submit the reasonable
requirements of the investigation committee shall be punishable in
accordance with the provisions of this Act;
(j) To collect and disseminate information relative to civil
aeronautics and the development of air commerce and the
aeronautical industry; to exchange with foreign
22 of 107
governments, information pertaining to civil aeronautics;
and to provide for direct communication on all matters
relating to the technical or operational phase of
aeronautics with international aeronautical agencies:
(k) To acquire and operate such aircraft as may be
necessary to execute the duties and functions of the
Authority prescribed in this Act;
(l) To plan, design, acquire, establish, construct, operate,
improve, maintain, and repair necessary aerodromes and
other air navigation facilities;
(m) To collect and receive charges and fees for the
registration of aircraft and for the issuance and/or renewal
of licenses or certificates for aircraft, aircraft engines, propellers
and appliances, and airmen as provided in this Act;
(n) To impose fines and/or civil penalties in respect thereto;
(o) To participate actively with the largest possible degree
in the development of international standardization of
practices in aviation matters important to safe, expeditious,
and easy navigation, and to implement as far as practicable the
international standards, recommended practices and policies
adopted by appropriate international aeronautical
agencies;
(p) To exercise and perform its powers and duties under
this Act consistent with any obligation assumed by the
Republic of the Philippines in any treaty, convention or
agreement on civil aviation matters;
(q) To cooperate, assist and coordinate with any research
and technical agency of the government on matters
relating to research and technical studies on design,
materials, workmanship, construction, performance, maintenance
and operation of aircraft, aircraft engines, propellers, appliances,
and air navigation facilities including aircraft fuel and oil: Provided,
That nothing in this Act shall be construed to authorize the
duplication of the laboratory research, activities or technical studies
of any existing governmental agency;
(r) To designate such prohibited and danger areas, in
consonance with the requirements of the international
aeronautical agencies and national security;
(s) To issue, deny, suspend, cancel or revoke any certificate,
license pertaining to aircraft, airmen and air agencies:
Provided, That any order denying, suspending, cancelling, revoking
the certificate or license may he appealed to the Board, whose
decisions shall he final within fifteen (15) days from the date of
notification of such denial, cancellation or revocation;
(t) To grant authorization to civil aircraft or persons to carry
instruments or photographic devices to be used for aerial
photography or taking of pictures by photograph or
sketching of any part of the Philippines; and
(u) Pursuant to a board resolution, to enter into, make and
execute contracts of any kind with any person, firm, or
public or private corporation.
ii. Civil Aeronautics Board
Relevant provisions:
RA 776, Section 5. Composition of the Board. - The Civil
Aeronautics Board shall be composed of the Secretary of
Transportation and Communications or his designated
representative as Chairman, the Assistant Secretary for Air
Transporta- tion of the Department of Transportation and
Communications as Vice-Chairman, the Commanding
General of the Philippine Air Force* and two (2) members
to be appointed by the President of the Philippines. They
shall hold office at the pleasure of the President.
No member of the Board shall have any pecuniary interest
in, or own any stock or bond of, any civil aeronautics
enterprise.
RA 776, Section 10. Powers and duties of the Board. - (A)
Except as otherwise provided herein, the Board shall have the
power to regulate the economic aspect of air
transportation, and shall have the general supervision and
regulation of, the jurisdiction and control over, air carriers,
general sales agents, cargo sales agents, and airfreight
forwarders as well as their property, property rights,
equipment, facilities, and franchise, in so far as may be
necessary for the purpose of carrying out the provisions of this Act.
(B) The Board may perform such acts, conduct such
investigations, issue and amend such orders, and make and
amend such general and special rules, regulations, and
procedures as it shall deem necessary to carry out the
provisions of this Act.
(C) The Board shall have the following specific powers and
duties:
(1) In accordance with the provisions of Chapter 4 of this Act, to
issue, deny, amend, revise, alter, modify, cancel, suspend,
or revoke, in whole or in part, upon petition or complaint,
or upon its own initiative, any temporary operating permit
or Certificate of Public Convenience and Necessity; Provided,
however, That in the case of foreign air carriers, the permit shall be
issued with the approval of the President of the Republic of the
Philippines.
(2) To fix and determine reasonable individual, joint or
special rates, charges or fares, which an air carrier may
demand, collect or receive for any service in connection
with air commerce. The Board may adopt any original,
amended, or new individual, joint or special rates, charges
23 of 107
 or fares proposed by an air carrier if the proposed individual,
joint, or special rates, charges for fares are not unduly preferential
or unduly discriminatory or unreasonable. The burden of proof to
show that the proposed individual, joint or special rates, charges or
fares are just and reasonable shall be upon the air carrier
proposing the same.
In fixing rates, charges, fares under the provisions of this
Act, the Board shall take into consideration, among other
factors:
(a) The effect of such rates upon the movement of traffic;
(b) The need in the public interest of adequate and efficient transportation
of persons and property by air carriers at the lowest cost consistent with
the furnishing of such service.
(c) Such standards respecting the character and quality of service to be
rendered by air carriers as may be prescribed by or pursuant to law;
(d) The inherent advantages of transportation by aircraft; and
(e) The need of each air carrier for revenues sufficient to enable such air
carrier, under honest, economical, and efficient management, to provide
adequate and efficient air carrier service.
(3) To authorize any type of charters whether domestic or
international and special air services or flight under such
terms and conditions as in its judgment public interest requires.
Notwithstanding the existence of bilateral air agreement, the CAB is
authorized to grant any foreign airline increase in
frequencies and/or capacities on international routes when
in its judgment the national interest requires it, provided
that the utilization of the increase frequencies and capacities is not
more than thirty days. All grants of frequencies and/or capacities
shall be subject to the approval of the President.
(4) To approve or disapprove increase and/or decrease of
capital, lease, purchase, sales of aircraft of air carrier
engaged in air commerce; consolidation, merger, purchase,
lease and acquisition and control of operating contracts
between domestic foreign air carriers, or between
domestic air carriers or any person engaged in any phase of
aeronautics.
(5) To inquire into the management of the business of any
air carrier and, to the extent reasonably necessary for such
inquiry, to obtain from such carrier, and from any person
controlling, or controlled by, or under common control
with, such air carrier, full and complete reports and other
informations. Such reports shall be under oath whenever the Board
so requires.
(6) To require annual, monthly, periodical, and special
reports from any air carrier, to prescribe the manner and
form in which such reports shall be made, and to re- quire
from any air carrier specific answers to all questions upon
which the Board may deem information to be necessary.
Such reports shall be under oath whenever the Board so requires.
The Board may also require any air carrier to file with it any
contract, agreement, understanding or arrangement, or a true copy
thereof, between such air carrier and any other carrier or person, in
relation to any traffic affected by the provisions of this Act.
(7) To prescribe the forms of any and all accounts, records,
and memoranda of the movement of traffic, as well as of
the receipts and expenditures of money, and the length of
times such accounts, records and memoranda shall be
preserved: Provided, that any air carrier may keep additional
accounts, records, or memoranda if they do not impair the integrity
of the accounts, records, or memoranda prescribed or approved by
the Board and do not constitute an undue financial burden on such
air carrier.
(8) To require each officer and director of any air carrier to
transmit a report describing the shares of stock with any
persons engaged in any phase or other interest held by
such air carrier of aeronautics, and the holding of the stock
in and control of, other persons engaged in any phase of
aeronautics.
RA 776, Section 11. Nature, terms and conditions. -
Certificate of Public Convenience and Necessity is a permit
issued by the Board authorizing a person to engage in air
commerce and/or transportation, foreign and/or domestic.
No person shall engage in air commerce unless there is in
force a permit issued by the Board.
No general sales agent, cargo sales agent or airfreight forwarder
shall engage in any of the activities mentioned in Section 3
paragraphs (jj), (kk) and (ll) respectively, unless there is in force a
permit or any other form of authorization issued by the Board.
Any permit may be altered, amended, modified, suspended,
canceled or revoked by the Board in whole or in part, upon
complaints or petition or upon the Board's initiative as hereinafter
provided, whenever the Board finds such action to be in the public
interest.
There shall be attached to the exercise of the privileges
granted by the permit, or amendment thereto, such
reasonable terms, conditions, or limitations as, in the
judgment of the Board, the public interest may require.
No permit shall confer any proprietary, property, or
exclusive right in the use of any air space, civil airway,
landing area of government air navigation facility.
The permit shall, among others specify the terminal and
intermediate points, if any, between which the air carrier is
authorized to operate the service to be rendered, the time
of arrival and departure at each point, and the frequency of
flights. Provided, that no change in routes, rates, schedules or
frequency nor supplemental or additional flights to those covered
by an air commerce permit or franchise shall be affected without
24 of 107
 prior approval of the Civil Aeronautics Board. In so far as the operation of
operation is to take place within the Philippines, the permit shall domestic
designate the terminal and intermediate points only insofar as the transport
Board shall deem practicable, and otherwise shall designate only services,
the general route or routes to be followed. has
No carrier shall abandon any route, or part thereof for delegated
which a permit has been issued, unless upon findings by to the said
the Civil Aeronautics Board that such an abandonment is body the
uneconomical and is in the public interest. authority to
determine
RA 776, Section 12. Citizenship requirement. - Except as the
otherwise provided, in the Constitution and existing treaty capability
or treaties, permit authorizing a person to engage in and
domestic air commerce and/or transportation shall be competence
issued only to citizens of the Philippines. of a
prospective
Cases: domestic air
CASE FACTS HELD DOCTRINE CLASS transport
NOTE operator to
S engage in
PAL v. GrandAir applied for a CPCN with WON CAB has such.
CAB CAB. Petitioner opposed Congress, in the Kuwait Kuwait Airways and PAL entered CAB The Civil
GrandAir’s application for enacting RA authority to Airway into a Commercial Agreement representative Aeronautics
GrandAir does not possess a 776, has issue a s v. which essentially authorizes ’s assent Board has
legislative franchise authorizing it delegated the CPCN to a PAL Kuwait Airways to board could not bind not duly
to engage in air transportation authority to domestic air passengers in Kuwait and deplane PAL. exercised
service within the Philippines or authorize the transport them in Manila, as well as to its
elsewhere. Such franchise is, operation of operator, board passengers in Manila and regulatory
allegedly, a requisite for the domestic air who, deplane them in Kuwait. authority
issuance of a CPCN by the transport though not Kuwait Airways obligated itself to over a local
respondent Board, as mandated services to possessing “share with Philippine Airlines airline in
under Sec. 11, Art. XII of the the a legislative revenue earned from the uplift of order to
Constitution. GrandAir, on the respondent franchise, passengers implement
other hand, posits that a CAB, such meets all between Kuwait and Manila and or further
legislative franchise is no longer a that the other vice versa.” In 1995, delegations government
requirement based on Sec, 10 of Congressional requiremen from air policy.
RA 776, as amended by P.D. 1462 mandate for ts the Philippine and Kuwait govern What
the approval prescribed ment signed a Confidential happened
of such by Section Memorandum of Understanding instead was
authority is no 21. (CMU). The Head of the an officer of
longer Congress, Delegation and Executive Director the CAB,
necessary. by giving of the CAB signed the CMU in acting in
Yes the behalf of the Government of the behalf not
respondent Republic of the Philippines. The of the
Board the two delegations agreed that the Board but
power to unilateral operation and the of the
issue exercise of third and fourth Philippine
permits for freedom traffic rights shall not be government
the subject to any royalty payment or , had

25 of 107
 commercial arrangements. committed
to a foreign EO 125-A, Section 11. Department Regional Offices. The
nation the Department shall have three (3) Department Regional
immediate Offices in each of the administrative regions of the country:
abrogation the Department Regional Office for land Transportation, the
of PAL’s Department Regional Office for Telecommunications and
commercial the Department Regional Office for Postal Services. The
agreement present Regional Offices of the Land Transportation Commission
with Kuwait are hereby abolished and their functions are transferred to the
Airways. respective Department Regional Offices for Land Transportation.
The present Regional Offices of the Bureau of Telecommunications
are hereby abolished and their functions are transferred to the
Class Notes: respective Department Regional Offices for Telecommunications.
- CAB is more in charge of the economic aspects of air travel. The present Regional Offices of the Bureau of Posts are hereby
o CAB can’t invalidate agreements between private carriers without abolished and their functions are transferred to the corresponding
due process and sufficient grounds. Department Regional Offices for Postal Services. Each
o CAAP has jurisdiction over airports! It also handles privately-owned Department Regional Office shall be headed by a
air navigation facilities—flying schools, private airplanes, etc. Department Regional Director and assisted by a
Department Assistant Regional Director. The present Airport
b. Land Offices of the Bureau of Air Transportation are hereby abolished
i. Land Transportation Office and their functions are transferred to the Department Airport
Offices. The abolition of the herein Regional Offices and the
Relevant Provisions: transfer of their functions shall be governed by the provisions of
Section 15 (b) hereof.
EO 125-A, Section 9. Assistant Secretaries and Service Chiefs. The Department Regional Offices shall essentially be line in
The Secretary shall also be assisted by eight (8) Assistant character and shall be responsible for the delivery of all front line
Secretaries appointed by the President upon the services of the Department.
recommendation of the Secretary, each of whom shall For such purposes, the Department Regional Offices shall
respectively be responsible for the following four (4) staff have within their respective administrative regions, the
offices composed of eight (8) services and four (4) line following functions:
offices, and shall report to the respective Undersecretaries 1. Implement laws, and policies, plans, programs, projects, rules and
assigned by the Secretary, which Undersecretary shall have control regulations of the Department;
and supervision over said respective services and offices: 2. Provide efficient, and effective service to the people;
1. Office of the Assistant Secretary for Administrative and Legal Affairs; 3. Coordinate with regional offices of other departments, offices and
0 Administrative Service, and Legal Service agencies;
2. Office of the Assistant Secretary for Finance and Comptrollership; 4. Coordinate with local government units;
0 Finance and Management Service, and Comptrollership Service 5. Perform such other functions as may be provided by law.
3. Office of the Assistant Secretary for Planning and Project Development;
0 Planning Service, and Project Development Service EO 125-A, Section 13(a). Abolition/Transfer/Consolidation:
4. Office of the Assistant Secretary for Management Information Service and a. The Land Transportation Commission is hereby
Project Management; abolished and its staff functions are transferred to the
0 Management Information Service, and Project Management Service service offices of the Department Proper and its line
5. Office of the Assistant Secretary for Land Transportation; functions are transferred to the Department Regional
6. Office of the Assistant Secretary for Postal Services; Offices for Land Transportation as provided in Section 11
7. Office of the Assistant Secretary for Telecommunications; herein. Such transfer of functions is subject to the
8. Office of the Assistant Secretary for Air Transportation. provisions of Section 15 (b) hereof. The quasi-judicial
Each of the above-named services shall be headed by a service powers and functions of the Commission are
chief appointed by the President upon the recommendation of the transferred to the Department. The corresponding position
Secretary.
26 of 107
 structure and staffing pattern shall be approved and prescribed
by the Secretary pursuant to Section 16 hereof.
Administrative Code of 1987, Title XV, Section 9(1). Line Offices.—
The Department shall have the following line offices:
(1) The Office of the Assistant Secretary for Land
Transportation;
ii. Land Transportation Franchising and Regulatory Board
Relevant provisions:
EO 202, Section 1. Creation of the Land Transportation
Franchising and Regulatory Board. There is hereby created
in the Department of Transportation and Communications,
the Land Transportation Franchising and Regulatory Board
hereinafter referred to as the "Board".
EO 202, Section 2. Composition of the Board. The Board shall
be composed of a Chairman and two (2) members with the
same rank, salary and privileges of an Assistant Secretary,
all of whom shall be appointed by the President of the
Philippines upon recommendation of the Secretary of
Transportation and Communications. One (1) member of the
Board shall be a member of the Bar and shall have engaged in the
practice of law in the Philippines for at least five (5) years, another
a holder of a degree in civil engineering, and the other a holder of
a degree in economics, finance or management both with the same
number of years of experience and practice
EO 202, Section 4. Supervision and Control Over the Board.
The Secretary of Transportation and Communications,
through his duly designated Undersecretary, shall exercise
administrative supervision and control over the Land
Transportation Franchising and Regulatory Board.
EO 202, Section 5. Powers and Functions of the Land
Transportation Franchising and Regulatory Board. The Board
shall have the following powers and functions:
a. To prescribe and regulate routes of service, economically
viable capacities and zones or areas of operation of public
land transportation services provided by motorized vehicles in
accordance with the public land transportation development plans
and programs approved by the Department of Transportation and
Communications;
b. To issue, amend, revise, suspend or cancel Certificates of
Public Convenience or permits authorizing the operation of
public land transportation services provided by motorized
vehicles, and to prescribe the appropriate terms and conditions
therefor;
c. To determine, prescribe and approve and periodically
review and adjust, reasonable fares, rates and other
related charges, relative to the operation of public land
transportation services provided by motorized vehicles;
d. To issue preliminary or permanent injunction, whether
prohibitory or mandatory, in all cases in which it has
jurisdiction, and in which cases the pertinent provisions of the
Rules of Court shall apply;
e. To punish for contempt of the Board, both direct and
indirect, in accordance with the pertinent provisions of, and the
penalties prescribed by, the Rules of Court;
f. To issue subpoena and subpoena duces tecum and
summon witnesses to appear in any proceedings of the
Board, to administer oaths and affirmations;
g. To conduct investigations and hearings of complaints for
violation of the public service laws on land transportation
and of the Board's rules and regulations, orders, decisions
and/or rulings and to impose fines and/or penalties for
such violations;
h. To review motu proprio the decisions/actions of the
Regional Franchising and Regulatory Office herein created;
i. To promulgate rules and regulations governing
proceedings before the Board and the Regional Franchising
and Regulatory Office: Provided, That except with respect to
paragraphs d, e, f and g hereof, the rules of procedure and
evidence prevailing in the courts of laws should not be controlling
and it is the spirit and intention of said rules that the Board and the
Regional Franchising and Regulatory Offices shall use every and all
reasonable means to ascertain facts in its case speedily and
objectively and without regard to technicalities of law and
procedures, all in the interest of due process;
j. To fix, impose and collect, and periodically review and
adjust, reasonable fees and other related charges for
services rendered;
k. To formulate, promulgate, administer, implement and
enforce rules and regulations on land transportation public
utilities, standards of measurements and/or design, and
rules and regulations requiring operators of any public land
transportation service to equip, install and provide in their
utilities and in their stations such devices, equipment facilities and
operating procedures and techniques as may promote safety,
protection, comfort and convenience to persons and property in
their charges as well as the safety of persons and property within
their areas of operations;
l. To coordinate and cooperate with other government
agencies and entities concerned with any aspect involving
27 of 107
public land transportation services with the end in view of
effecting continuing improvement of such services; and
m. To perform such other functions and duties as may be
provided by law, or as may be necessary, or proper or
incidental to the purposes and objectives of this Executive
Order.
EO 202, Section 6. Decision of the Board; Appeals therefrom
and/or Review thereof. The Board, in the exercise of its
powers and functions, shall sit and render its decisions en
banc. Every such decision, order, or resolution of the Board
must bear the concurrence and signature of at least two
(2) members thereof.
The decision, order or resolution of the Board shall be appealable
to the Secretary within thirty (30) days from receipt of the
decision: Provided, That the Secretary may motu proprio
review any decision or action of the Board before the same
becomes final.
EO 202, Section 7. Creation of Regional Franchising and
Regulatory Offices. There shall be a Regional Franchising
and Regulatory Office in each of the administrative regions
of the country which shall be headed by a Board Regional
Manager having the rank, salary and privileges of a Department
Assistant Regional Director. The Regional Franchising and
Regulatory Offices shall hear and decide uncontested
applications/petitions for routes, within their respective
administrative regions: Provided, That applications/petitions
for routes extending their respective territorial
jurisdictions shall be heard and decided by the Board .
Administrative Code of 1987, Sections 15-22.
SECTION 15. Land Transportation Franchising and Regulatory
Board.—The quasi-judicial powers and functions with
respect to land transportation shall be exercised through
the Land Transportation and Regulatory Board, hereinafter
referred to as the “Board”.
SECTION 16. Composition of the Board.—The Board shall be
composed of a Chairman and two (2) members with the
rank, salary and privileges of an Assistant Secretary, all of
whom shall be appointed by the President of the
Philippines upon recommendation of the Secretary of
Transportation and Communications. One (1) member of the
Board shall be a member of the Bar and shall have been engaged
in the practice of law in the Philippines for at least five (5) years,
another a holder of a degree in civil engineering, and the other a
holder of a degree in economics, finance or management both with
the same number of years of experience and practice.
SECTION 17. Executive Director and Support Staff of the
Board.—The Board shall have an Executive Director who
shall also be appointed by the President of the Philippines
upon the recommendation of the Secretary of
Transportation and Communications. He shall have the rank,
salary and privileges of a Department Service Chief. He shall assist
the Board in the performance of its powers and functions.
The Board shall be supported by the Technical Evaluation Division,
Legal Division, Management Information Division, Administrative
Division and Finance Division.
SECTION 18. Supervision and Control Over the Board.—The
Secretary of Transportation and Communications, through
his duly designated Undersecretary, shall exercise
administrative supervision and control over the Land
Transportation Franchising and Regulatory Board.
SECTION 19. Powers and Functions of the Land
Transportation Franchising and Regulatory Board.—The
Board shall:
(1) Prescribe and regulate routes, economically viable
capacities, and zones or areas of operation of public land
transportation services provided by motorized vehicles in
accordance with the public land transportation development plans
and programs approved by the Department of Transportation and
Communications;
(2) Issue, amend, revise, suspend or cancel Certificates of
Public Convenience or permits authorizing the operation of
public land transportation services provided by motorized
vehicles, and prescribe the appropriate terms and conditions
therefor;
(3) Determine, prescribe, approve and periodically review
and adjust reasonable fares, rates and other related
charges, relative to the operation of public land transportation
services provided by motorized vehicles;
(4) Issue preliminary or permanent injunction, whether
prohibitory or mandatory, in all cases in which it has
jurisdiction and in which cases the pertinent provisions of the
Rules of Court shall apply;
(5) Punish for contempt of the Board, both direct and
indirect, in accordance with the pertinent provisions of, and the
penalties prescribed by, the Rules of Court;
(6) Issue subpoena and subpoena duces tecum and to
summon witnesses appear in any proceedings of the Board,
to administer oaths and affirmations, and, in appropriate
cases, to order the search and seizure of all vehicles and
documents, upon probable cause and as may be necessary
for the proper disposition of the cases before it;
(7) Conduct investigations and hearings of complaints for
violation of the public service laws on land transportation
and of the Board’s rules and regulations, orders, decisions
28 of 107
or rulings and to impose fines or penalties for such salary and privileges of a Department Assistant Regional Director.
violations; The Regional Franchising and Regulatory Offices shall hear
(8) Review motu proprio the decisions/actions of the and decide uncontested applications/petitions for routes,
Regional Franchising and Regulatory Offices; within their respective administrative regions but that
(9) Promulgate rules and regulations governing applications/petitions for routes extending beyond their
proceedings before the Board and the Regional Franchising respective territorial jurisdiction shall be heard and
and Regulatory Office. However, except with respect to decided by the Board.
paragraphs 4, 5, 6 and 7 hereof, the rules of procedure and SECTION 22. Appeals.—The decisions, orders or resolutions
evidence prevailing in the courts of law should not be controlling of the Regional Franchising and Regulatory Offices shall be
but rather the spirit and intention of said rules. The Board and the appealable to the Board within thirty (30) days from receipt of
Regional Franchising and Regulatory Offices shall use every and all the decision.
reasonable means to ascertain facts in each case speedily and
objectively and without regard to technicalities of law and Case:
procedures, all in the interest of due process; CASE FACTS HELD DOCTRINE CLASS
(10) Fix, impose and collect, and periodically review and TITLE NOTES
adjust, reasonable fees and other related charges for KMU Secretary of DOTC WON the Legislature
services rendered; Labor issued a authority given by delegated to the
(11) Formulate, promulgate, administer, implement and Center v. Memorandum respondent LTFRB defunct Public
enforce rules and regulations on land transportation public Garcia Circular allowing to provincial bus Service
utilities, standards of measurements or design, and rules provincial bus operators to set a Commission the
and regulations requiring operators of any public land operators to fare range of plus power of fixing the
transportation service to equip, install and provide in their charge passengers or minus 15%, rates of public
utilities and in their stations such devices, equipment, rates within a later increased to services. The
facilities and operating procedures and techniques as may range of 15% plus 20% and LTFRB is likewise
promote safety, protection, comfort and convenience to above and 15% minus 25%, over vested with the
persons and property in their charges as well as the safety of below the LTFRB and above the same under EO
persons and property within their areas of operation; official rate for a existing 202. motorized
(12) Coordinate and cooperate with other government period of 1 year. authorized fare vehicles." The
agencies and entities concerned with any aspect involving The LTFRB without having to LTFRB may
public land transportation services with the end in view of Chairman then file a petition for implement broad
effecting continuing improvement of such services; and submitted a the purpose, is policies laid down
(13) Perform such other functions and duties as may be memorandum to unconstitutional: in a statute by
provided by law, or as may be necessary, or proper or incidental the Secretary of Yes "filling in" the
to the purposes and objectives of the Department; DOTC, suggesting details which the
SECTION 20. Decisions of the Board; Appeals therefrom or a reevaluation of Legislature may
Review Thereof.—The Board, in the exercise of its powers the memo circular neither have time
and functions, shall sit and render its decision en banc. previously issued. or competence to
Every such decision, order, or resolution of the Board must bear The PBOAP filed provide. But it
the concurrence and signature of at least two (2) members an application for cannot, as
thereof. fare rate increase regulatory bodies,
The decision, order or resolution of the Board shall be appealable of P0.085. The delegate that
to the Secretary within thirty (30) days from receipt of the application was power to a
decision. However, the Secretary may motu proprio review opposed by the common carrier, a
any decision or action of the Board before the same Philippine transport operator,
becomes final. Consumers or other public
SECTION 21. Regional Franchising and Regulatory Offices. Foundation, Inc. service. This
—There shall be a Regional Franchising and Regulatory alleging that the consists an undue
Office in each of the administrative regions of the country proposed rates delegation of
which shall be headed by a Regional Director having the rank, were exorbitant legislative
29 of 107
 and unreasonable. authority. This transportation and communication entities are not jeopardized and do not
would leave the encourage inefficiency and distortion of traffic patronage;
riding public at the
mercy of transport 4. Develop an integrated plan for a nationwide transmission system in
operators who accordance with the national and international telecommunication service
may increase fares requirement including, among others,radio and television broadcast relaying,
every hour, every leased channel services and data transmission;
day, every month
or every year, 5. Guide government and private investment in the establishment, operation
whenever it and maintenance of an international switching system for incoming and
pleases them or outgoing telecommunication services;
whenever they
deem it 6. Encourage the development of a domestic telecommunication industry in
"necessary." coordination with the concern entities particularly, the manufacture of
communications/ electronics equipment and components to complement and
support as much as possible, the expansion, development, operation and
Class Notes: maintenance of the nationwide telecommunications network;
- LTO is mainly for private transportation. BUT LTO grants licenses to drivers. 7. Provide for a safe, reliable and efficient postal system for the country.
- LTFRB is for public utilities.
- DOTC has control and supervision over land agencies. Not the case with air RA 9295, Sections 10-11.
agencies. SEC. 10. Jurisdiction; Power; and Duties of MARINA. - The MARINA shall
o Why? Land transportation is “more sensitive” and requires more have the power and authority to:
care and caution. (1) Register vessels;
(2) Issue certificates of public convenience or any extensions or
b. Water amendments thereto, authorizing the operation of all kinds. Classes and types of
i. Maritime Industry Authority vessels in domestic shipping: Provided, That no such certificate shall be valid for a
period of more than twenty-five (25) years;
Relevant provisions: (3) Modify, suspend or revoke at any time upon notice and hearing, any
certificate, license or accreditation it may have issued to any domestic ship
EO 125-A, Section 4. Mandate. The Ministry shall be the operator;
primary policy, planning, programming, coordinating, (4) Establish and prescribe routes, zones or areas of operations of domestic
implementing, regulating, and administrative entity of ship operators;
the Executive Branch of the government in the (5) Require any domestic ship operator to provide shipping services to any
promotion, development and regulation of dependable coastal area, island or region in the country where such services are
and coordinated networks of transportation and necessary for the development of the area, to meet emergency sealift requirements,
communication system, as well as in the fast, sale, efficient or when public interest so requires;
and reliable postal, transportation and communication services. (6) Set safety standards for vessels in accordance with applicable conventions
To accomplish such mandate, the Ministry shall have the and regulations;
following objectives: (7) Require all domestic ship operators to comply with operational and
1. Promote the development of dependable and coordinated networks safety standards for vessels set by applicable conventions and regulations,
of transportation and communication systems; maintain its vessels in safe and serviceable conditions, meet the standards of safety
of life at sea and safe manning requirements, and furnish safe, adequate, efficient,
2. Guide government and private investment in the development of reliable and proper service at all times;
the country's inter- model transportation and communication systems (8) Inspect all vessels to ensure and enforce compliance with safety
in a most practical, expeditious, and orderly fashion for maximum safety, standards and other regulations;
service, and cost effectiveness; (9) Ensure that all domestic ship operators shall have the financial capacity
to provide and sustain safe, reliable, efficient and economic passenger or
3. Impose appropriate measure so that technical, economic and other cargo service, or both;
condition for the continuing economic viability of the
30 of 107
(10) Determine the impact which any new service shall have to the locality
it will serve;
(11) Adopt and enforce such rules and regulations which will ensure
compliance by every domestic ship operator with required safety standards
and other rules and regulations on vessel safety;
(12) Adopt such rules and regulations which ensure the reasonable stability
of passengers and freight rates and, if necessary, to intervene in order to protect
public interest;
(13) Hear and adjudicate any complaint made in writing involving any
violation of this law or the rules and regulations of the Authority;
(14) Impose such fines and penalties on, including the revocations of licenses of
any domestic ship operator who shall fail to maintain its vessels in safe and
serviceable condition, or who shall violate or fail to comply with safety regulations;
(15) Investigate any complaint made in writing against any domestic ship
operator, or any shipper, or any group of shippers regarding any matter
involving violations of the provisions of this Act;
(16) Upon notice and hearing, impose such fines, suspend or revoke
certificates of public convenience or other license issued, or otherwise
penalize any ship operator, shipper or group of shippers found violating the
provisions of this Act; and
(17) Issue such rules and regulations necessary to implement the
provisions of this Act: Provided, That such rules and regulations cannot change or
in any way amend or be contrary to the intent and purposes of this Act.
SEC. 11. Rates. - Every domestic ship operator shall have the right to fix its
own passenger pr cargo rates, or both.
IV. COMMON CARRIERS
A. In General
1. Definitions, essential elements
Relevant provisions:
Civil Code, Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public.
Relevant Agbayani Notes:
Transportation defined.-- a contract of transportation is one whereby a certain
person or association of persons obligate themselves to transport persons, things, or
news from one place to another for a fixed price
Classification :
1. As to object: (1) things; (2) persons; (3) news
2. As to place of travel: (1) land; (2) water; (3) air
Parties to contract of transportation:
(1) shipper or consignor.-- person to be transported; one who gives rise to the
contract of transportation by agreeing to deliver the things or news to be
transported, or to present his own person or those of other or others in the case of
transportation of passengers
(2) carrier or conductor.-- one who binds himself to transport persons, things, or
news as the case may be; one employed in or engaged in the business of carrying
goods for other for hire
(3) consignee.-- the party to whom the carrier is to deliver the things being
transported; one to whom the carrier may lawfully make delivery in accordance with
its contract of carriage (but the shipper and the consignee may be one person)
Freight defined.-- The terms has been defined as: (1) the price or compensation
paid for the transportation of goods by a carrier, at sea, from port to port. But the
term is also used to denote (2) the hire paid for the carriage of goods on land from
place to place, or on inland streams or lakes. The name is also applied to (3) the
goods or merchandise transported at sea, on land, or inland streams or lakes. Thus
the term is used in 2 senses: to designate the price for the carriage, also called
freightage, or to designate the goods carried.
Contracts through transportation agents.-- A contract of transportation is not
changed, altered or affected by the mere fact that the obligor avails of other parties
to effect the transportation agreed upon, as in the case of transportation agents.
Carriers defined.-- Persons or corporations who undertake to transport or convey
goods, property or persons, from one place to another, gratuitously or for hire, and
are classified as private or special carriers, and common or public carriers
Private carriers defined.-- Those who transport or undertake to transport in a
particular instance for hire or reward
Test for a common carrier:
(1) He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for persons generally as a business, and not a casual occupation.
(2) He must undertake to carry goods of the kind to which his business is confined.
(3) He must undertake to carry by the methods by which his business is conducted,
and over his established roads.
(4) The transportation must be for hire.
The true test is whether the given undertaking is a part of the business engaged in
by the carrier which he has held out to the general public as his occupation rather
than the quantity or extent of the business actually transacted, or the no. and
character of the conveyances used in the employment (the test is therefore the
character of the business actually carried on by the carrier.)
Case : an airplane owner is a common carrier where he undertakes for hire to carry
all persons who apply for passage indiscriminately as long as there is room and no
legal excuse for refusing; airlines engaged in the passenger service on regular
schedules on definite routes, who solicit patronage of the traveling public, advertise
schedules for routes, times of leaving and rates of fare, and make the usual
stipulation as to baggage are common carriers
Characteristics of common carriers:
31 of 107
(1) The common carrier undertakes to carry for all people indifferently; he holds ground to fear that the vessel and those on board will be exposed to unnecessary or
himself out as ready to engage in the transportation of goods for hire as a public unreasonable risks
employment and not as a casual occupation, and he undertakes to carry for all
persons indifferently, within the limits of his capacity and the sphere of the business Cases:
required of him, so that he is bound to serve all who apply and is liable for refusal, CASE FACTS HELD DOCTRINE CLASS NOTES
without sufficient reason, to do so TITLE
(2) The common carrier cannot lawfully decline to accept a particular class of goods U.S. v. Tan Piaco rented WON Tan Section 14 of Public use- Not
for carriage to the prejudice of the traffic in those goods Tan two automobile Piaco was the Public confined to
Exception : for some sufficient reason, where the discrimination in such goods is Piatco trucks for the operating a Utility Act or privilege
reasonable and necessary (substantial grounds) purpose of public utility Act No. 2307, individuals, but
(3) No monopoly is favored - the Commission has the power to say what is a carrying some for purposes of as amended by is open to the
reasonable compensation to the utility and to make reasonable rules and regulations passengers and determining section 9 of Act indefinite public.
for the convenience of the traveling public and to enforce them freight under a whether his No. 2694: "The Refers not only
(4) Public convenience - for the best interests of the public special contract in operations Public Utility the character
each case. were covered Commission or of the business
Meaning of Public use.-- It is not confined to privileged individuals, but is open to Defendants were by the Public Commissioners to be done, but
the indefinite public; there must be a right which the law compels the owner to give charged with a Utility Act: No. shall have also to the
to the general public. Public use is not synonymous with public interest. The true violation of the general proposed
criterion is whether the public may enjoy it by right or only by permission Public Utility Law supervision mode of doing
for operating a and regulation it. NOT
The law prohibits unreasonable discrimination by common carriers.-- The public utility of, jurisdiction synonymous
law requires common carriers to carry for all persons, either passengers or property, without permission and control with public
for exactly the same charge for a like or contemporaneous service in the from the Public over, all public interest
transportation of like kind of traffic under substantially similar circumstances or Utility utilities. . . .
conditions. The law prohibits common carriers (CC) from subjecting any person, etc. Commissioner. Tan The term
or locality, or any kind of traffic, to any undue or unreasonable prejudice or Piaco was found 'public utility' is
discrimination whatsoever. guilty. hereby defined
Exception: When the actual cost of handling and transporting is different, then to include
different rates may be charged every
Cases : (1) merchandise of like quantity may not be considered alike - individual,
the quantity, kind and quality may be exactly the same, and yet not be copartnership,
alike, so far as the cost of transportation is concerned association,
(2) shipments may be alike although composed of different classes of corporation or
merchandise - difference in the charge for handling and transporting joint stock
may only be made when the difference is based upon actual cost company, etc.,
etc., that now
Determination of justifiable refusal: or hereafter
This involves a consideration of the following-- may own,
(1) suitability of the vessels of the company for the transportation of such products; operate,
(2) reasonable possibility of danger or disaster, resulting from their transportation in managed, or
the form and under the conditions in which they are offered for carriage; control any
(3) the general nature of the business done by the carrier; common
(4) all the attendant circumstances which might affect the question of the reasonable carrier,
necessity for the refusal by the carrier to undertake the transportation of this class of railroad, street
merchandise railway, etc.,
Case: The mere fact that the carriage of dynamites may lead to destructive etc., engaged
explosions is not sufficient to justify refusal if it can be proven that in the condition in in the
which it is offered for carriage there is no real danger to the carrier nor reasonable transportation
of passengers,
32 of 107
 cargo, etc., Pangasinan. Only passengers
etc., for 150 cartons were or goods or
public use." delivered as the both, by land,
truck carrying the water, or air
Home Consorcio WON American Under cartons were hi- for
Insuran Pesquero del Peru Steamship is a American jacked in Tarlac. compensatio
ce Co. of South America common or a jurisprudence, De Guzman: n, offering
v. shipped jute bags private carrier: a common Cendana is a their services
Americ of Peruvian fish Private carrier common carrier to the public”
an meal through SS undertaking to and failed to No distinction
Steams Crowborough.The carry a special exercise whether
hip cargo was cargo or extraordinary principal or
consigned to San chartered to a diligence. ancillary
Miguel Brewery, special person (sideline),
Inc. and insured by only becomes a regular or
Home Insurance private carrier. occasional,
Company. The As a private catering to the
cargo arrived in carrier, a “general
Manila and was stipulation public” or only
discharged into the exempting the a narrow
lighters of Luzon owner from segment of the
Stevedoring liability for the population
Company When negligence of
the cargo was its agent is not Bascos Cipriano, entered Bascos is a COMMON
delivered to San against public v. CA into a hauling common CARRIER
Mig, there were policy, and is contract with carrier. TEST:
shortages, causing deemed valid. Jibfair Shipping "whether the
it to lay claims The Civil Code Agency Corp. given
against Luzon provisions on binding itself to undertaking is
Stevedoring, Home common deliver 2,000 a part of the
Insurance and the carriers should metric tons of soya business
American not be applied bean meal. engaged in by
Steamship where the Cipriano the carrier
Agencies, owner carrier is not subcontracted which he has
and operator of SS acting as such Bascos to transport held out to the
Crowborough. but as a 400 sacks of soya general public
private carrier. bean meal. Bascos as his
De Cendana is a junk Whether Art 1732, CC failed to deliver the occupation
Guzma dealer buying Cendana is a defines cargo. Cipriano rather than the
n v. CA scrap from common common filed a complaint quantity or
Pangasinan For carrier  Yes carriers as for a sum of extent of the
which, he uses his “persons, money for breach business
2 six-wheeler corporations, of a contract of transacted"
trucks. De Guzman firms or carriage. Notwithstandin
contracted associations g Bascos’
Cendana for the engaged in the argument that
delivery of cartons business of their business
of Liberty filled carrying or offers their
milk from Makati to transporting services only to

33 of 107
 a select group CHARTER: lease
of people, she of the whole
is still a vessel; transfer
common command and
carrier possession as
Planter PPI bought Urea Whether a The distinction CHARTER well as master
s 46% fertilizer from common between a PARTY: a and crew 
Product Mitsubishi which carrier "common or contract by carrier
s Inc. the latter shipped becomes a public carrier" which an entire becomes a
v. CA in bulk aboard M/V private carrier and a "private ship, or some private carrier
Sun Plum, a vessel by reason of a or special principal part
owned by Kyosei charter-party carrier" lies in thereof, is let by Fabre Sps. Fabre owned Whether Fabres did not
Kisen Kabushiki  It the character the owner to v. CA a Mazda minibus Fabres are have to be
Kaisha (KKKK), depends! of the another person operating as a liable as engaged in the
from USA to La KKK is a business, such for a specified school bus service common business of
Union. The report common that if the time or use; a in Manila. Word for carrier  Yes public
of the private carrier undertaking is contract of the World Christian transportation
marine cargo a single affreightment by Fellowship for the
surveyor hired by transaction, which the owner arranged with Sps. provisions of
PPI revealed a not a part of of a ship or Fabre the the Civil Code
shortage and that the general other vessel lets transportation of on common
18MT was business or the whole or a 33 members of its carriers to
contaminated with occupation, part of her to a Youth Ministry apply to them.
dirt. The carrier although merchant or P3,000. On their As common
refused to grant involving the other person for way to La Union, carriers, they
the claim. PPI filed carriage of the conveyance they had to take a are bound to
an action for goods for a of goods, on a different route as a observe
damages. KKKK: fee, the person particular bridge was under extraordinary
strict public policy or corporation voyage, in repair. It was diligence and
governing carriers offering such consideration of Cabil’s first trip to the showing of
does not apply to service is a the payment of La Union and he a diligence of a
them because they private carrier. freight was not familiar good father of
have become a CONTRACT OF with the area. a family in the
private carrier by AFFREIGHTMEN They met an selection and
reason of the T: lease of accident. supervision of
charter party. shipping space their
for goods  employees
carrier does not
remains to be excuse them
public from such
TIME CHARTER: standard of
fixed period of care as
time provided under
VOYAGE Art. 1759.
CHARTER: single
voyage only Asia Better Western Asia Lighterage Art. 1732 does
CHARTER BY Lighter White Wheat was is a common not distinguish
DEMISE OR age shipped by carrier. between an
BAREBOAT and Marubeni American entity having

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Shippin Corporation on the principal Estela did not service of goods.
g v. CA board the ship M/V business check her travel arranging and Caravan’s
NEO CYMBIDIUM activity of documents and facilitating business is
for delivery to carrying discovered that the petitioner’s making travel
General Milling persons or flight she was booking, arrangements
Corp. in Manila. goods, and one supposed to take ticketing and for its
Prudential where such already left the day accommodatio customers,
Guarantee insured carrying of before. Estela filed n in the NOT
the shipment persons and/or a complaint package tour, transporting
against loss or goods is only against Caravan as against passengers or
damage. When the ancillary; Also, for breach of the object of goods from
ship arrived in no distinction contract of a contract of one place to
Manila, the cargo between one carriage and carriage --- another. The
was transferred to offering its damages. the nature of the
Asia Lighterage services to the transportatio contractual
and Shipping Inc.’s general public, n of relation
custody. Asia or only to a passengers between two
Lighterage pulled niche. or goods. parties is
the barge to an determinative
island to shield it of the degree
from the of care
approaching required in the
typhoon. The performance of
barge either party’s
subsequently obligation
developed a “list” under the
due to a hole contract.
which was formed Loadst Loadstar received Loadstar is a The public
after the barge hit ar on its vessel M/V common character is not
something Shippin Cherokee shipment carrier. It is affected by the
underwater. It was g insured with not necessary fact that
patched. Compa private respondent that a carrier carriage of
Subsequently, the ny v. Manila Insurance be issued a goods was
barge sank CA Co. (MIC). Ship certificate of periodic,
completely after its sank. Loadstar public occasional or
“towing bits” argued that it was convenience unscheduled.
broke. The cargo a private carrier (CPC) first The above
that remained on because it was not before being definition
the barge was issued a certificate held liable as it neither makes
completely lost. of public is not a any distinction
Crisost Estela Crisostomo Caravan is not Not a common convenience, it did requisite for between the
omo v. contracted Caravan a common carrier under not have a regular incurring carriage of
CA Travel and Tours carrier. The CC 1732 if it is trip or schedule, liability under goods and
Int’l Inc.’s services object of NOT an entity and it had only one the CC persons as a
to facilitate her Estela’s engaged in the shipper for a provisions for principal
booking, ticketing, contractual business of special cargo. common business and
and relation with transporting carriers. The as an ancillary
accommodation in Caravan is either liability arises activity, nor
a European tour. Caravan’s passengers or the moment a one between

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 person or firm carriers carriers by air land occupation.
acts as a offering and water.” 2. He must
common services to the Respondents undertake to
carrier, without general public assert that carry goods of
regard to those which pipelines are not the kind to
whether or not cater to a included in the which his
such carrier narrow term “common business is
has complied segment.. carrier” confined;
with regulatory 3. He must
rules. To undertake to
exempt them carry by the
from liability method by
for not having which his
a CPC would business is
be offensive to conducted and
public policy as over his
it would established
amount to roads; and
rewarding 4. The
entities like transportation
Loadstar for must be for
failing to hire.
comply with
regulations. Class Notes:
First Petitioner is a Petitioner is a The test for o Definition is parallel to that of public utility!
Philippi grantee of a common determining o Examples of common carriers: jeepneys, buses, planes
ne pipeline carrier. whether a o Note the De Guzman tests and the Bascos tests!
Industr concession. party is a o As a common carrier, you’re liable for culpa contractual and for
ial Petitioner filed with A “common common quasi-delict and, sometimes, even for delict.
Corpor the RTC of carrier” may be carrier of
ation v. Batangas City a defined, goods is: 2. Nature of business; power of State to regulate
CA complaint for tax broadly, as one
refund. who holds 1. He must be Relevant provisions:
Respondents himself out to engaged in the
argued that the public as carrying of Civil Code, Article 1765. The Public Service Commission may, on its own
petitioner cannot engaged in the goods for motion or on petition of any interested party, after due hearing, cancel the
be exempt from business of others as a certificate of public convenience granted to any common carrier that
taxes under Sec. transporting public repeatedly fails to comply with his or its duty to observe extraordinary
133 (J) of the persons or employment, diligence as prescribed in this Section.
Local Government property from and must hold
Code as said place to place, himself out as Relevant Agbayani Notes:
exemption applied for ready to Common carriers are subject to legislative regulation.-- The business of a
only to compensation, engage in the common carrier holds such a peculiar relation to the public interest that there is
“transportation offering his transportation superinduced upon it the right of public regulation. The business of a common carrier
contractors and services to the of goods or is affected with public interest. When, therefore, one devotes his property to a use in
persons engaged public persons which the public has an interest, he, in effect, grants to the public an interest in that
in the generally. generally as a use, and must submit to be controlled by the public for the common good, to the
transportation by business and extent of the interest he had thus created.
hire and common not as a casual

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Limitation on power to regulate.-- Such regulations must not have the effect
depriving an owner of his property without due process of law, nor of confiscating,
appropriating private property without just compensation, nor of limiting
prescribing irrevocably vested rights or privileges lawfully acquired under a charter
franchise [just compensation, due process of law]
When judiciary may interfere with legislative regulation of common
carriers.-- The judiciary ought not to interfere with legislative regulations unless
they are so plainly and palpably unreasonable as to make their enforcement
equivalent to the taking of property for public use without such compensation as
under all circumstances is just both to the owner and to the public.
of Such extraordinary diligence in the vigilance over the goods is further expressed in
or articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for
or the safety of the passengers is further set forth in articles 1755 and 1756 .
or
Relevant Agbayani Notes:
Extraordinary diligence required of common carriers.-- The law requires CC to
exercise extra- ordinary diligence which means that they must render service with the
greatest skill and utmost foresight. The extra-ordinary diligence required of carriers in
the handling of the goods of the shippers and consignees last from the time the
cargoes are loaded in the vessels until they are discharged and delivered to the
consignees.

Case: Reasons for requiring extra-ordinary diligence.-- The nature of the business of
CASE FACTS HELD DOCTRINE CLASS common carriers and the exigencies of public policy demand that they observe extra-
TITLE NOTES ordinary diligence; the business of CC is impressed with a special public duty and
Pantranco PANTRANCO filed with State’s Common carrier therefore subject to control and regulation by the state. The public must of necessity
v. PSC the Public Service regulation is business’ relation to rely on the care and skill of CC in the vigilance over the goods and safety of the
Commission an justified and the public interest passengers.
application to operate has basis. justifies the right of
ten new trucks. The public regulation. Rigorous law on common carriers not applicable to special employment as
Public Service Private property carrier.-- The laws applicable to CC are rigorous and should not be extended to a
Commission granted devoted to a use person who has neither expressly assumed that character, nor by his conduct and
PANTRANCO’s imbued with public from the nature of his business justified the belief on the part of the public that he
application, subject to interest grants the intended to assume it.
2 conditions: That the public an interest in
certificates of public that use and must Registered owner primarily and solidarily liable with driver, under the
convenience and the submit to be "kabit system."-- Registered owner is primarily and solidarily liable for the damage
authorization granted controlled by the caused by the vehicle registered in his name, even if the said vehicle had already
it shall only be valid for public for the been sold, leased or transferred to another person who was, at the time of the
25 years from the date common good to accident, actually operating the vehicle. The operator of record continues to be the
of enactment of PSC’s the extent of operator of the vehicle in contemplation of law, as regards the public and third
decision granting interest he has persons, and as such is responsible for the consequences incident to its operation;
PANTRANCO’s created. (Right of such owner/operator of record is held in contemplation of law as the employer of the
application, and that the state to exercise driver.
the Philippine Gov’t or legislative control
any of its agencies over public utilities) Kabit system.-- One whereby a person who has been granted a certificate of public
may acquire i. convenience allows other persons who own vehicles to operate them under such
PANTRANCO at any license, for a fee or percentage of the earnings. This is contrary to public policy, and
time. therefore, void and inexistent; "this is a pernicious system that cannot be too
severely condemned; it constitutes an imposition upon the good faith of the govt."
3. Nature and Basis of Liability
Reason for holding registered owner liable.-- The law does not relieve the
Relevant provisions: registered owner directly of the responsibility that the law fixes and places upon him
as an incident or consequence of registration -- where a registered owner allowed to
Civil Code, Article 1733. Common carriers, from the nature of their business evade responsibility by proving who the supposed transferee or owner is, it would be
and for reasons of public policy, are bound to observe extraordinary easy for him by collusion with others or otherwise, to escape said responsibility and
diligence in the vigilance over the goods and for the safety of the transfer the same to an indefinite person or to one who possesses no property with
passengers transported by them, according to all the circumstances of each which to respond financially for the damage or injury done; in case of an accident,
case.
37 of 107
the registered owner should not be allowed to disprove his ownership to the in avoiding the ordinary exert
prejudice of the person injured or to be relieved from responsibility collision which diligence in the extraordinary
resulted in the vigilance over diligence
Cases: injury caused the goods and according to all
CASE FACTS HELD DOCTRINE CLASS NOTES to the plaintiff. for the safety circumstances
TITLE YES. of the of each case;
Cangco Jose Cangco came The Article 1903 Cangco case: passengers (2) a carrier is
v. MRR in by train daily to contractual (old civil code) Decided in transported by obliged to carry
the Manila Railroad obligation of makes the 1918 so the CC them according its passenger
Company. One Manila distinction provisions were to all the with the
evening, he got off Railroad to between not yet in circumstances utmost
the train expecting transport private effect so it was of each case. diligence of a
to land at the plaintiff also individuals and not decided ART. 1755. A very cautious
concrete platform carried with public based on such common person, having
where people it the duty to enterprise in provisions. carrier is due regard for
safely alight but transport that wrt to the Also, the bound to carry all the
his foot/feet came him safely liability of a Court’s analogy the passengers circumstances;
into contact with a and to master for the on culpa safely as far as (3) a carrier is
sack of provide safe negligent acts contractual and human care presumed to
watermelons, means for of his servants culpa aquiliana and foresight be at fault or
causing him to fall the plaintiff in the case of having a can provide, to have acted
onto the platform, to enter and public relationship like using the negligently in
and his body to roll leave its enterprises, that of a utmost case of death
from the platform trains, based the law creates concentric diligence of of, or injury to,
and become drawn on OCC 1258. a rebuttable circle = not very cautious passengers, it
under the moving Proof of fault presumption of accurate coz persons, with a being its duty
car (right arm imputable to negligence in one does not due regard for to prove that it
badly lacerated). Manila the selection or really fully all the exercised
Railroad’s direction of the subsume the circumstances. extraordinary
servants DOES said servants. other. ART. 1756. In diligence; and
NOT EXCUSE This, even if case of death (4) the carrier
Manila Railroad the action was of or injuries to is not an
from being based on the passengers, insurer against
liable to the contract of common all risks of
plaintiff. transportation carriers are travel.
presumed to
Isaac v. Isaac paid and WON L. Rules Principles have been at
A.L. boarded Bus No. Ammen governing this governing the fault or to have
Ammen 31 of A.L. Ammen. Transpo Co. jurisdiction: liability of a acted
The bus collided has observed ART. 1733. common negligently,
with a motor extraordinary Common carrier: unless they
vehicle. Isaac’s left diligence or the carriers, from (1) the liability prove that they
arm was utmost the nature of of a carrier is observed
completely diligence of their business contractual and extraordinary
severed. every cautious and for arises upon diligence as
person, having reasons of breach of its prescribed in
due regard for public policy, obligation. articles 1733
all are bound to There is breach and 1755.
circumstances, observe extra if it fails to Fores v. Miranda was one WON Miranda General rule: EXCEPTIONS

38 of 107
Miranda of the passengers is entitled to Moral damages TO THE stepped on the breach of the and this
on a jeepney. The moral are not GENERAL brake, as a result contract of disputable
driver lost control. damages? NO. recoverable in RULE: of which, the carriage. presumption
Jeepney was found damage -The resulting jeepney which was The contract of may only be
to be registered in actions in the death of then running on carriage is overcome by
the name of Paz predicted on a a passenger, in the eastern lane between the evidence that
Fores (operator). breach of the which case (its right of way) carrier and the he had
Fores however contract of Article 1764 made a U-turn, passenger, and observed
claims that a day transportation. makes the invading and in the event of extra-ordinary
before the accident In case of common eventually contractual diligence as
happened, she breach of carrier stopping on the liability, the prescribed in
allegedly sold the contract expressly western lane of carrier is Articles 1733,
passenger jeep to (including one subject to the the road in such a exclusively 1755 and 1756
Sackerman so she of rule of Art. manner that the responsible of the New
claims that she is transportation) 2206, that jeepney's front therefore to Civil Code 2 or
no longer liable for proof of bad entitles the faced the south the passenger that the death
what happened to faith or fraud deceased (from where it or injury of the
Fores. (dolus), i.e., passenger to came) and its rear passenger was
wanton or "demand moral faced the north due to a
deliberately damages for (towards where it fortuitous
injurious mental anguish was going). A bus event ; In an
conduct, is by reason of bumped from action for
essential to the death of behind the right damages
justify an the deceased" rear portion of the against the
award of moral -Where the jeepney. carrier for his
damages. injured failure to safely
passenger does carry his
not die, moral passenger to
damages are his destination,
not recoverable an accident
unless it is caused either
proved that the by defects in
carrier was the automobile
guilty of malice or through the
or bad faith negligence of
based also on its driver, is
1764 not a caso
fortuito which
Phil. Respondents Mangune and In culpa would avoid
Rabbit v. boarded the Carreon are contractual, the carriers
IAC jeepney. They paid not jointly and the moment a liability for
Manalo P24.00 for severally liable passenger dies damages ; The
the trip. The right with Manalo. or is injured, driver cannot
rear wheel of the The driver the carrier is be held jointly
jeepney was cannot be held presumed to and severally
detached, so it jointly and have been at liable with the
was running in an severally liable fault or to have carrier in case
unbalanced with the carrier acted of breach of
position. Manalo in case of negligently, the contract of

39 of 107
 carriage. o Advantage of using breach of contract as ground: Even if CC used due diligence
in hiring employees, still liable. Also, CCs have to observe extraordinary diligence
LRTA v. Navidad, then Only LRTA is The law  higher bar.
Natividad drunk, was liable for the requires o Advantage of using quasi-delict as cause of action: No need to prove contractual
standing on the death of common relation  good if that relationship is in doubt. Also, you can go after practically
platform near the Navidad. carriers to anyone involved. Also, no need to establish bad faith to get moral damages!
LRT tracks. carry
Escartin, the passengers 4. Classes of Common Carriers
security guard safely using
assigned to the the utmost Relevant provisions:
area approached diligence of
Navidad. A very cautious Civil Code, Article 1732. Common carriers are persons, corporations, firms or
misunderstanding persons with associations engaged in the business of carrying or transporting
or an altercation due regard for passengers or goods or both, by land, water, or air, for compensation,
between the two all offering their services to the public.
apparently ensued circumstances.
that led to a fist CC is Civil Code, Article 1733. Common carriers, from the nature of their business
fight. Navidad fell liable for death and for reasons of public policy, are bound to observe extraordinary
on the LRT tracks. of or injury to diligence in the vigilance over the goods and for the safety of the
At the exact passengers (a)
passengers transported by them, according to all the circumstances of each case.
moment that through the
Navidad fell, an negligence or Such extraordinary diligence in the vigilance over the goods is further expressed in
LRT train, wilful acts of articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for
operated by its employees the safety of the passengers is further set forth in articles 1755 and 1756.
Roman, was or b) on
coming in. account of Civil Code, Article 1755. A common carrier is bound to carry the passengers
wilful acts or safely as far as human care and foresight can provide, using the utmost
negligence of diligence of very cautious persons, with a due regard for all the
other circumstances.
passengers or
of strangers if 5. Law Applicable
the common
carrier’s Relevant provisions:
employees
through the Civil Code, Article 1766. In all matters not regulated by this Code, the rights
exercise of due and obligations of common carriers shall be governed by the Code of
diligence could Commerce and by special laws.
have prevented
or stopped the Civil Code, Article 1753. The law of the country to which the goods are to be
act or transported shall govern the liability of the common carrier for their loss,
omission. destruction or deterioration.

Class Notes: Relevant Agbayani Notes:

o CCs may still be subsidiarily liable for delict even if acting through agents.
o Civil Code provisions might be the basis of liability but the nature of the liability is
still contractual because the Civil Code provisions govern contracts and thus,
presupposes, on the part of common carriers, that a contract exists.
 Remember that contracts need not be in writing. They may even be implied.
New Civil Code primarily governs common carriers.-- The Provisions of the
Civil Code [1732- 1766] primarily govern common carriers and the provisions of the
Code of Commerce [OverlandTransportation and Maritime Commerce] and special
laws [Carriage of Goods by Sea Act; Salvage Act] have only subsidiary application to
common carriers.

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B.Common Carriage of Goods
1.Liability and Presumption of Negligence
Relevant Provisions:
Civil Code, Article 1733. Common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for
the safety of the passengers is further set forth in articles 1755 and 175
Civil Code, Article 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same is due to any of
the following causes only:
(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.
Civil Code, Article 1735. In all cases other than those mentioned in Nos. 1, 2,
3, 4, and 5 of the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed extraordinary
diligence as required in article 1733.
Relevant Agabayani Notes:
Responsibility of common carriers.--In general, CC are responsible for the loss,
destruction, or deterioration of the goods carried by them. This responsibility arises
from contract, as the relation between a carrier and its patrons is of a contractual
nature. A failure on the carrier to use extra-ordinary care in carrying goods or
passengers safely is a breach of contract and constitutes culpa contractual not culpa
aquiliana. While the liability of a carrier as an insurer is not recognized in this
jurisdiction, a carrier is liable for damages suffered by goods carried if such damages
arise from its negligence. The carrier is also liable even in those cases where the
cause of the lossor damage is unknown.
Due extraordinary diligence required, carriers given wide discretion in
selection and supervision of persons to handle goods.-- The law requires CC
to exercise extra-o diligence which means that they must render service with the
greatest skill and utmost foresight. The extra-o diligence required of CC in the
handling of the goods of the shipper and the consignees lasts from the time the
cargoes are loaded in the vessels until they are discharged and delivered to the
consignees. To comply with this obligation, CC should be afforded the right of having
a wide discretion in the selection and supervision of persons who will handle the
goods.
Air carrier can terminate services of pilot for serious misconduct and
drunkenness, because of its duty of extraordinary dilignece.-- The CC can
terminate the services of its drivers, pilots and EEs for serious misconduct and
drunkenness because of its duty of extra-ordinary diligence. Whenever a passenger
dies or is injured the presumption is that the CC is at fault notwithstanding the fact
that it has exercised due diligence of a good father of a family in the selection and
supervision of its EEs. Thus, extra- ordinary measures and diligence should be
exercised by it for the safety of its passengers and their belongings. A CC can
terminate an EE whose continued service is inimical to its interests and the safety of
the passengers.
Carrier has duty to keep and care for goods carried.-- It is the duty of the CC
to properly and carefully handle, carry, keep and care for the goods carried and to
exercise due care to ascertain and consider the nature of the goods offered for
shipment and to use such methods for their care during the voyage as their nature
requires. The carrier is liable for injury to, or loss of, cargo resulting from the failure
to properly care for and handle the cargo en route; and it is required to provide
adequate ventilation for the safe carriage of the cargo, and provide reasonable and
ordinary inspection and care in and about the transportation of cargo. A vessel should
not accept cargo unless it can be given the type of storage that its character requires,
for placing of conditions in a bill of lading does not relieve the vessels of obligation to
take appropriate care of the cargo.
Duty of carrier to deliver cargo in good condition as when loaded.-- There is
no absolute obligation for a CC to accept cargo. It should not be accepted unless it
can be given the type of storage that its character requires. Where a vessel accepts a
cargo for shipment for valuable consideration, it takes the risk of delivering it in good
condition as when it was loaded. And if the fact of improper packing is known to the
carrier or his servants, or apparent upon ordinary observation, but it accepts the
goods notwithstanding such condition, it is not relieved of liability for loss or injury
resulting therefrom.
In the exercise of extra-ordinary diligence required by law, the CC must give due
regard to all circumstances and take all steps necessary to insure the safety of the
passengers and the goods given the circumstances.
Presumption of negligence.-- Under Art. 1735, if the goods are proved to have
been lost, destroyed or deteriorated, CC are presumed to have been at fault or to
have acted negligently, unless they prove that they have observed the extra-o
diligence required by law.
The plaintiff needs only to prove that the goods he transported have been lost,
destroyed or deteriorated. CC must then prove that he has exercised extra-ordinary
diligence required by law or that the loss, etc. was due to accident or some other
circumstances inconsistent with its liability
Mere proof of delivery of goods in order to a carrier, and of their arrival at the place
of destination in bad order makes out a prima facie case against the CC
41 of 107
Defenses available to CC: with its liability.
1. Art. 1734
2. Art. 1735 (exercise of extra-ordinary diligence required by law) Mirasol v. Mirasol is the Dollar is The fact that The defendant
3. Natural disaster: The CC is exempt from liability if he proves that the loss or Dollar owner of 2 liable. the cases were having
destruction of the merchandise was due to accident and force majeure and not to book cases damaged by admitted that
fraud, fault or negligence on the part of the EEs and owners of the CC. shipped on "sea water," the boxes were
CC cannot interpose the defense that it exercised due diligence in the selection and board Dollar's standing alone, damaged while
supervision of EEs. The liability of the CC arises from breach of the contract of ship. The two is NOT evidence in transit and
carriage and not from culpa aquiliana. It is however the duty of CC to teach their cases arrived that they were in its
drivers not to overload vehicles, not to exceed safe and legal speed limits, and other in Manila in damaged by possession, the
safety precautions. bad order. force majeure. burden of
Defendant has Where the peril proof then
Carrier not insurer.-- CC are not required to exercise all the care, skill and refused to is the proximate shifted, and it
diligence of which the human mind can conceive nor such as will free the pay, giving as cause of the devolved upon
ransportation of passengers from all possible perils. A CC is not an insurer of the its reason that loss, the the defendant
safety of the passengers and is not absolutely and at all events to carry them safely the damage in shipowner is to both allege
and without injury. question "was excused. and prove that
caused by sea the damage
Cases: water”. Dollar was caused by
CASE TITLE FACTS HELD DOCTRINE CLASS NOTES alleges that reason of some
Ynchausti Ynchausti Petitioner is The mere proof the bill of fact which
Steamship Co. acted as the liable for loss. of delivery of lading exempted it
v. Dexter common goods in good indicates that from liability.
carrier for 2 order to a he shall not be As to how the
mineral oils. carrier, and of liable for boxes were
When the their arrival at damages damaged,
goods were the place of caused by when or
delivered by destination in "Acts of God" where, was a
the shipper to bad order, or "perils of matter
the carrier, makes out a the sea” such peculiarly and
they were prima facie case as seawater. exclusively
received in against the within the
good carrier, so that knowledge of
condition. if no the defendant
However, explanation is and in the very
when they given as to how nature of
were received the injury things could
by the occurred, the not be in the
consignee, carrier must be knowledge of
they were held the plaintiff.
allegedly responsible. It
received in a is incumbent 2.Exemption from liability
bad condition. upon the carrier a.Natural Disaster
to prove that
the loss was Relevant provisions:
due to accident
or some other Civil Code, Article 1734 (1 ). Common carriers are responsible for the loss,
circumstance destruction, or deterioration of the goods, unless the same is due to any of
inconsistent the following causes only:

42 of 107
(1) Flood, storm, earthquake, lightning, or other natural disaster or Accident due to defects of carrier not caso fortuito.-- Accidents caused either
calamity; by defects in the carrier or through the negligence of the carrier is not caso fortuito.
The passenger or shipper has every right to presume that the carrier is perfectly in
Civil Code, Article 1739. In order that the common carrier may be exempted good condition and could transport him safely and securely to his destination
from responsibility, the natural disaster must have been the proximate and
only cause of the loss. However, the common carrier must exercise due Cases:
diligence to prevent or minimize loss before, during and after the CASE TITLE FACTS HELD DOCTRINE CLASS
occurrence of flood, storm or other natural disaster in order that the common NOTES
carrier may be exempted from liability for the loss, destruction, or deterioration of the Tan Chiong v. Tan Chiong Defendant According to
goods. The same duty is incumbent upon the common carrier in case of an act of the Inchausti claims that the company not Article 361 of
public enemy referred to in article 1734, No. 2. defendant liable. the Code of
company is Defendant, his Commerce,
Code of Commerce, Article 361. Merchandise shall be transported at the risk and liable to him for agents and the merchandise
venture of the shipper, if the contrary has not been expressly stipulated. As a the loss of the patron did take shall be
consequence, all the losses and deteriorations which the goods may suffer goods allegedly the measures transported at
during the transportation by reason of fortuitous event, force majeure or belonging to which they the risk and
the inherent nature and defect of the goods, shall be for the account and him which he deemed venture of the
risk of the shipper. Proof of these accidents is incumbent upon the carrier. delivered to the necessary and shipper, unless
latter to be proper in order the contrary be
Relevant Agbayani Notes: shipped to Ong to save the expressly
Effect of New Civil Code.-- Transportation of the merchandise "at the risk and Bieng Sip in lorcha and its stipulated. No
venture of the shipper" means that the shipper will suffer losses and deterioration Catarman. cargo from the such stipulation
arising from fortuitous event, force majeure, or inherent nature and defects of the However, in the impending appears of
goods. It does not mean that the carrier is free from liability for losses and contact or the danger; record,
deterioration arising from his negligence or fault, w/c is presumed. Thus construed, bill of lading, accordingly, therefore, all
par. 1 of Art. 361 is not inconsistent with Art. 1735 of the NCC. nothing was the patron, as damages and
said that the soon as he impairment
Requisites for defense of natural disaster: goods will first was informed suffered by the
1. Art. 1739 -- natural disaster must have been the proximate and only cause of the be shipped by that a storm goods in
loss Sorsogon and was transportation,
2. The CC must exercise due diligence to prevent or minimize the loss before, during that transferred approaching, by reason of
and after the occurrence of flood, storm, or other natural disaster. If the CC does not to a lorcha. proceeded to accident, force
exercise due diligence in minimizing the loss, he may yet be held liable Nevertheless, it clear the boat majeure, or by
notwithstanding the fact that the loss, destruction or deterioration of the goods arose was found that of all gear virtue of the
out of natural disaster. the shipper which might nature or defect
3. Art. 1740 -- the CC must not be in delay. If the CC incurs in delay, a natural KNEW of this offer resistance of the articles,
disaster shall not free it from responsibility. Under Art. 1165 par. 3, if the obligor transfer. Before to the wind, are for the
incurs delay, he shall be responsible for any fortuitous event until he has effected the said lorcha dropped the 4 account and risk
delivery. could leave for anchors he of the shipper.
However, if between the delay or refusal of the CC to transport the goods and the its destination, had, and even
loss of the goods due to an act of God there intervened the shipper's negligence, thus the lorcha was procured an
causing a break in the chain of causation between the act of God which caused their dragged and extra anchor
loss and the CC's fault, the act of God is the proximate cause of the loss and the driven, by the from the land,
carrier's delay or refusal to transport the goods, is merely the remote cause. In such force of a together with
cases, the shipper is not even entitled to set up the claim of contributory negligence. storm, upon the a new cable,
It is then necessary that it be established that the CC was guilty of a willful or shore. and cast it
negligent act and that between this willful or negligent act and the act of God, no into the water,
negligence on the part of the shipper intervened. thereby
adding, in so
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 far as cargoes, each their business Article 1735 of
possible, to insured. M/S and for reasons the Civil Code
the stability Asiatica caught of public policy, provides that all
and security of fire and sank. are bound to cases than those
the craft. This resulted to observe mention in
Martini v. Martini shipped Macondray The carrier is the loss of the extraordinary Article 1734, the
Macondray on board the cannot be held responsible for ship and its diligence in the common carrier
steamship liable for the the safe and cargoes. The vigilance over shall be
Eastern 219 damages proper storage respective goods, presumed to
cases of sustained. of the cargo, Insurers paid according to all have been at
chemicals . Ship In this case, and there is no the the fault or to have
is owned by Martini as the doubt that by corresponding circumstances acted
Eastern and shipper the general marine of each case. negligently,
Australian consented to maritime law he insurance unless it proves
Steamship the conditions is bound to values. that it has
Company of the carriage, secure the cargo Petitioner observed the
whose agent in it had the safely under contends that it extraordinary
the Philippines burden of proof deck. If he is not liable on deligence
was defendant of showing that carries the the ground that required by law.
Macondray. the damage goods on deck the loss was
Shipment was was due to the without the due to an
damaged by fault of consent of the extraordinary
rain and Macondray. It shipper and the fortuitous
seawater. was apparent goods are event.
Martini’s that the damaged or lost
arguments:it damage here as a b. Act of public enemy
never gave its was caused by consequence of
consent for the rain and sea being exposed, Relevant provisions:
goods to be water (the risk the carrier
carried on deck. of which is cannot protect Civil Code, Article 1734 (2). Common carriers are responsible for the loss,
inherently himself by destruction, or deterioration of the goods, unless the same is due to any of
incident to showing that the following causes only:
carriage on they were (2)Act of the public enemy in war, whether international or civil;
deck). damages or lost
by the dangers Civil Code, Article 1739. In order that the common carrier may be exempted
of the sea. from responsibility, the natural disaster must have been the proximate and
However, when only cause of the loss. However, the common carrier must exercise due
the shipper diligence to prevent or minimize loss before, during and after the
consents to his occurrence of flood, storm or other natural disaster in order that the common
goods being carrier may be exempted from liability for the loss, destruction, or deterioration of the
carried on deck, goods. The same duty is incumbent upon the common carrier in case of an act of the
he takes the risk public enemy referred to in article 1734, No. 2.
upon himself.
Eastern A vessel Petitioner is As the peril of Relevant Agbayani Notes:
Shipping v. operated by liable. Under the fire is not Acts of public enemy.-- This defense is not absolute. Under 1739, in order for the
IAC petitioner the Civil Code, comprehended CC to be exempted from liability, (1) the act of the public enemy must have been the
Eastern common within the proximate and only cause; and (2) the CC must have exercised due diligence to
Shipping Lines carriers, from exception in prevent or minimize the loss before, during and after the act of the public enemy
loaded different the nature of Article 1734, causing the loss, destruction or deterioration of the goods.

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 Government The tiles were Defendant Under the provisions
c. Act or omission of shipper v. Ynchausti delivered by the not liable. of article 361 the
Relevant provisions: defendant to the Each bill of defendant, in order to
consignee of the lading is a free itself from
Civil Code, Article 1734(3). Common carriers are responsible for the loss, plaintiff at Iloilo. contract and liability, was only
destruction, or deterioration of the goods, unless the same is due to any of Upon delivery it the parties obliged to prove that
the following causes only: was found that thereto are the damages suffered
(3) Act or omission of the shipper or owner of the goods; some of the tiles bound by its by the goods were
had been terms. "by virtue of the
Civil Code, Article 1741. If the shipper or owner merely contributed to the damaged. The Finding that nature or defect of
loss, destruction or deterioration of the goods, the proximate cause thereof defendant proved the tiles in the articles." Under
being the negligence of the common carrier, the latter shall be liable in that the roofing question the provisions of
damages, which however, shall be equitably reduced. tiles in question were shipped article 362 the
were of a brittle at the plaintiff, in order to
Relevant Agbayani Notes: and fragile owner's risk, hold the defendant
Act or omission of the shipper-- The act or omission of the shipper must be the nature; that they under the liable, was obliged to
proximate cause of the loss, destruction or deterioration of the goods. If the shipper were delivered by law in this prove that the
merely contributed to the loss,etc. and the proximate cause is still the negligence of the plaintiff to the jurisdiction, damages to the
the CC, the CC shall still be liable for damages although the damages shall be defendant in the carrier is goods by virtue of
equitably reduced. bundles of ten only liable their nature, occurred
each, tied with where the on account of its
bejuco [rattan], evidence negligence or
d.Character of goods without any shows that because the
packing or he was guilty defendant did not
Relevant provisions: protective of some take the precaution
covering. negligence usually adopted by
Civil Code, Article 1734(4). Common carriers are responsible for the loss, and that the careful persons.
destruction, or deterioration of the goods, unless the same is due to any of damages
the following causes only: claimed were
(4) The character of the goods or defects in the packing or in the the result of
containers; such
negligence.
Civil Code, Article 1742. Even if the loss, destruction, or deterioration of the Southern City of Iloilo SL liable. Under the Code of
goods should be caused by the character of the goods, or the faulty nature Lines v. CA requisitioned rice Southern Commerce Art. 361,
of the packing or of the containers, the common carrier must exercise due from NARIC in Lines denies defendant-carrier in
diligence to forestall or lessen the loss. Manila. NARIC liability by order to free itself
shipped 1,726 saying that from liability, was
Relevant Agbayani Notes: sacks of rice on the shortage only obliged to prove
Claims for damages must be made at the time the goods are delivered unless the board SS General was due to that the damages
indications of the damage cannot be ascertained from the exterior of the package, in Wright owned by the suffered by the goods
which case such written claims must be made w/in 24 hours from delivery petitioner shrinkage, were “by virtue of the
Rule: As long as the damage to the goods was due purely to the inherent nature or Southern Lines. leakage, nature or defect of
defect of the goods or of the containers thereof, the CC cannot be held responsible. City of Iloilo spillage of the articles.”
However, under 1742, the CC must exercise due diligence to forestall or lessen the received the the rice on Under Art. 362, the
loss for it to completely escape liability. shipment and account of plaintiff, in order to
paid the shipment the bad hold the defendant-
Cases: cost. However, condition of carrier liable, was
CASE TITLE FACTS HELD DOCTRINE CLASS they indicated in the sacks. obliged to prove that
NOTES the bill of lading The court the damages to the

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 that the shipment disagreed goods by virtue of Basilio Rub, ordered
was short. because it their nature, occurred captain Niza to dump the
nevertheless on account of the scrap iron into the sea.
accepted the defendant-carrier’s
shipment negligence or
with because the 3.Duration of Extraordinary Responsibility
knowledge of defendant did not
the alleged take the precaution Relevant provisions:
bad adopted by careful Civil Code, Article 1736. The extraordinary responsibility of the common
condition of persons. carrier lasts from the time the goods are unconditionally placed in the
the sacks. possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or
e.Order of competent authority to the person who has a right to receive them, without prejudice to the
Relevant provisions: provisions of article 1738.
Civil Code, Article 1734(5). Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same is due to any of Civil Code, Article 1737. The common carrier's duty to observe extraordinary
the following causes only: diligence over the goods remains in full force and effect even when they
(5) Order or act of competent public authority. are temporarily unloaded or stored in transit, unless the shipper or owner
has made use of the right of stoppage in transitu .
Civil Code, Article 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible, provided said Civil Code, Article 1738. The extraordinary liability of the common carrier
public authority had power to issue the order . 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
Relevant Agbayani Notes: advised of the arrival of the goods and has had reasonable opportunity
Order or act of competent authority-- Under 1743, the CC is not responsible for thereafter to remove them or otherwise dispose of them.
the loss, etc. of the goods if the public authority had power to issue the order. Where
the officer acts without legal process, the CC will be held liable. Relevant Agbayani Notes:
When carrier's responsibility begins-- Under Art.1738, the extra-ordinary
Cases: responsibility of the CC begins from the time the goods are delivered to the carrier.
CASE FACTS HELD DOCTRINE CLASS The delivery to the CC must place the goods to be transported unconditionally in the
TITLE NOTES possession of the CC and the CC must receive them. Otherwise, the extra-ordinary
Ganzon Tumambing contracted Acting It must be shown responsibility of the CC will not commence.
v. Court the services of Mauro Mayor’s that the person had
of Ganzon to haul 305 tons order was the power to issue When carrier's responsibility terminates-- Under 1738, the extra-ordinary
Appeals of scrap iron on board the not one by the disputed order, responsibility of the CC is terminated at the time the goods are delivered to the
lighter LCT "Batman". a or that it was consignee or the person who has a right to receive them (actual or constructive
When about half of the competent lawful, or that it delivery).
scrap iron was already authority. was issued under Constructive delivery: Notice by the CC that the cargo had already arrived, placing
loaded, Mayor Jose legal process of them at the disposal of the shipper or consignee releases CC from extra-ordinary
Advincula of Mariveles authority responsibility. From such moment the consignee or shipper should exercise over the
arrived and demanded cargo the ordinary control pertinent to ownership (should unload cargo from the CC)
P5,000.00 from
Tumambing. Tumambing Shipper bound to observe all diligence in obtaining delivery of goods-- The
resisted the shakedown shipper is bound to observe all diligence in obtaining delivery of the goods. Once the
and after a heated goods are delivered, the extra- ordinary responsibility of the CC ceases.
argument between them,
Mayor Advincula drew his Liability of shipper for delay in obtaining delivery of goods, demurrage--
gun and fired at The shipper is liable for lost earnings occasioned by the unnecessary delay in the use
Tumambing Acting Mayor of the vehicles belonging to the carrier, due in turn to the failure of the former, upon

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receipt of notice of the arrival of the goods at the place of destination, to unload Binamira Company of New carrier cargo to the
forthwith and take away the cargo from the vehicles. This is a charge for demurrage. York shipped on responsible consignee (or person
board the M/S for the loss who has a right to
Effect of storing in transit-- Under 1737, the temporary unloading or storage of "FERNSIDE" at New considering receive them) is what
the goods during the time that they are being transported does not interrupt the York, 6 cases of films that the is contemplated in
extra-ordinary responsibility of the CC and/or photographic same Art. 1736, when
Exception: Where the shipper or owner exercises its right of stoppage in transitu (the supplies consigned to occurred goods are still in the
act by which the unpaid vendor of goods stops their progress and resumes the order of I. V. after the hands of the
possession of them, while they are in the course of transit from him to the purchaser, Binamira. Lu Do, as shipment Government wherein
and not yet actually delivered to the latter. This is exercised when the buyer is or agent of the carrier, was the owner cannot
becomes insolvent.) hired the Cebu discharged exercise dominion,
Stevedoring from the parties may agree to
Responsibility of carrier when right exercised--The extra-ordinary responsibility Company, Inc. to ship and limit the liability of
of the CC ceases when the goods being transported are temporarily unloaded or unload its cargo. All placed in the carrier
stored in transit be reason of the exercise of the right of stoppage in transitu by the the cargo unloaded the considering that the
unpaid seller. The CC holds the goods in the capacity of an ordinary bailee or was received at the possession goods still have to go
warehouseman upon the theory that the exercise of the right of stoppage in transitu pier by the arrastre and through the
terminates the contract of carriage (ordinary diligence is required) operator of the port. custody of inspection of the
The terminal the customs authorities
Effect of storage in warehouse of carrier.-- Under 1738, the extra-ordinary company had its own customs before they are
responsibility of the CC does not cease notwithstanding the fact that the goods being checker who also authorities? actually turned over
transported are stored in the warehouse of the CC at the place of destination. Extra- recorded and noted NO. to the consignee. This
ordinary responsibility ceases only after the consignee has been advised of the arrival down the good cargo is a situation where
of the goods and has had reasonable opportunity to remove them or otherwise from the bad one.The we the carrier losses
dispose of them. shipment in question, control of the goods
Liability as a warehouseman (ordinary diligence) arises only when the consignee has was not included in because of a custom
been advised of the arrival of the goods and has had reasonable opportunity to the report of bad regulation. It is unfair
remove them or otherwise dispose of them order cargo of both that it be made
checkers. He responsible for what
Cases: discovered that the may happen during
CASE FACTS HELD DOCTRINE CLASS cases showed signs the interregnum.
TITLE NOTES of pilferage and he
Compania Macleod contracted CM is liable. The liability and hired marine
Maritima the services of the responsibility of the surveyors to examine
v. Compañia Maritima carrier under a them.
Insurance for shipment of 2,645 contract for the APL v Klepper shipped on Shipper is
Company bales of hemp.LCT carriage of goods Keppler board the S. S. liable.
No. 1025 sank, commence on President Cleveland
resulting in the their actual delivery at Yokohama, Japan
damage. Macleod to, or receipt by, the one lift van. While the
filed a claim for the carrier or an lift van was being
loss it suffered with authorized agent. ... unloaded, it fell on
the insurance and delivery to a the pier and its
company. lighter in charge of a contents were spilled
vessel for shipment and scattered.
on the vessel, where Samar Samar Mining NL is liable. CC 1736 is the
it is the custom to Mining v. Company imported 1 The extent applicable provision.
deliver in that way. Nordeutsc crate of Optima if Actual delivery has
Lu Do v. Delta Photo Supply Is the While delivery of the her Lloyd welded wedge wire Nordeutrsc been defined as the

47 of 107
 sieves from Germany her’s ceding of corporeal (3) That the common carrier need not observe any diligence in the custody of
through a vessel liability in possession by the the goods;
owned by the seller, and the actual (4) That the common carrier shall exercise a degree of diligence less than
Nordeutrscher Lloyd. transshipm apprehension of that of a good father of a family, or of a man of ordinary prudence in the
Upon arrival of the ent is corporeal possession vigilance over the movables transported;
vessel at the port of embodied by the buyer or by (5) That the common carrier shall not be responsible for the acts or omission
Manila, the is provided some person of his or its employees;
importation was for in the authorized by him to (6) That the common carrier's liability for acts committed by thieves, or of
unloaded and same bill of receive the goods as robbers who do not act with grave or irresistible threat, violence or force,
delivered in good lading.The his representative for is dispensed with or diminished;
order and condition to SC in this the purpose of (7) That the common carrier is not responsible for the loss, destruction, or
the bonded case upheld custody or disposal. deterioration of goods on account of the defective condition of the car,
warehouse of AMCYL. the validity vehicle, ship, airplane or other equipment used in the contract of carriage.
The goods were of
however never stipulations Civil Code, Article 1751. The fact that the common carrier has no competitor
delivered to, nor in bills of along the line or route, or a part thereof, to which the contract refers shall
received by, the lading be taken into consideration on the question of whether or not a stipulation
consignee at Davao, exempting limiting the common carrier's liability is reasonable, just and in consonance
its port of destination. the carrier with public policy.
from
liability for b. As to amount of liability
loss or
damage to Relevant provisions:
the goods
when the Civil Code, Article 1749. A stipulation that the common carrier's liability is
same are limited to the value of the goods appearing in the bill of lading, unless the
not in its shipper or owner declares a greater value, is binding.
actual
custody. Civil Code, 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
4.Agreement Limiting Liability is valid, if it is reasonable and just under the circumstances, and has been
a. As to the diligence required fairly and freely agreed upon.

Relevant provisions: Cases:

Civil Code, Article 1744. A stipulation between the common carrier and the CASE FACTS HELD DOCTRINE CLASS
shipper or owner limiting the liability of the former for the loss, TITLE NOTES
destruction, or deterioration of the goods to a degree less than Heacock v. Plaintiff caused to be Carrier may Three kinds of
extraordinary diligence shall be valid, provided it be: Macondray delivered four cases of limit liability stipulations often
(1) In writing, signed by the shipper or owner; merchandise on board by made in a bill of
(2) Supported by a valuable consideration other than the service rendered of steamship Bolton stipulation lading: (1)
by the common carrier; and Castle. One of the exempting the
(3) Reasonable, just and not contrary to public policy. cases contained 12 8- carrier from any
day Edmond clocks, and all liability for
Civil Code, Article 1745. Any of the following or similar stipulations shall be boxed and marked for loss or damage
considered unreasonable, unjust and contrary to public policy: transportation to occasioned by its
(1) That the goods are transported at the risk of the owner or shipper; Manila. The freight own negligence, (2)
(2) That the common carrier will not be liable for any loss, destruction, or was paid in advance. providing for an
deterioration of the goods; The steamship arrived unqualified
in the port of Manila, limitation of such
48 of 107
 consigned to the liability to an suitcase arrived in common conditions as
defendant. Neither the agreed valuation, Manila, he was carrier may, printed at the back
master of said vessel and (3) limiting the informed by the acting by contract, of the ticket stub.
nor the defendant liability of the station agent of the be limited to The fact that those
delivered to the carrier to an agreed Manila airport of the a fixed conditions are
plaintiff the Edmond valuation unless arrival of his suitcase, amount. printed at the back
clocks, although the shipper but minus his However, it of the ticket stub in
demand was made for declares a higher Transistor Radio 7 and is required letters so small that
their delivery.The bill value and pays a the Rollflex that the they are hard to
of lading issued and higher rate of Camera.Appellant: its contract read would not
delivered to the freight. According liability should be must be warrant the
plaintiff by the master to an almost limited to the amount "reasonable presumption that
of the steamship uniform weight of stated in the and just the appellee was
contained that:1. It is authority, the first conditions of carriage under the aware of those
mutually agreed that and second kinds printed at the back of circumstance conditions such
the value of the goods of stipulations, the plane ticket stub s and has that he had "fairly
receipted for above which either which was issued to been fairly and freely agreed"
does not exceed $500 exempt the carrier the appellee, which and freely to those conditions.
per freight ton, or, in from liability for conditions are agreed
proportion for any part loss or damage embodied in Domestic upon."
of a ton, unless the occasioned by its Tariff Regulations No.
value be expressly negligence, or 2 which was filed with
stated herein and ad provide for an the Civil Aeronautics
valorem freight paid unqualified Board.
thereon. Also, that in limitation of such Ong Yiu v. Petitioner was a The liability While it may be
the event of claims for liability to an Court of passenger of PAL. He of PAL for true that petitioner
short delivery of, or agreed valuation, Appeals was scheduled to the loss, in had not signed the
damage to, cargo are invalid as being attend a trial.He accordance plane ticket, he is
being made, the contrary to public checked in one piece with the nevertheless bound
carrier shall not be policy. The third, of luggage for which stipulation by the provisions
liable for more than however, is valid he was issued Claim written on thereof. It is what
the net invoice price and enforceable. Check No. 2106-R. the back of is known as a
plus freight and The present case Upon arrival, petitioner the ticket is contract of
insurance less all falls within the third claimed his luggage, limited to "adhesion", in
charges saved, and stipulation. but it could not be P100.00 per regards which it
any loss or damage for found. It was only baggage, has been said that
which the carrier may after reacting plaintiff not contracts of
be liable shall be indignantly to the loss having adhesion wherein
adjusted pro rata on that the matter was declared a one party imposes
the said basis. attended to by the greater a ready made form
Shewaram Parmanand Shewaram Liability is The requirements porter clerk. Petitioner value, and of contract on the
v. PAL was a passenger on not of said article have was worried about the not having other, as the plane
defendant's aircraft, restricted to not been met. It missing luggage called the ticket in the case at
He checked in 3 pieces the amount cannot be said that because it contained attention of bar, are contracts
of baggages . The on the back the appellee had vital documents the not entirely
suitcase was of the stub. actually entered needed for trial the defendant prohibited. The one
mistagged by The into a contract with next day. Dagorro then on its true who adheres to the
defendant's personnel. pecuniary the appellant, delivered the "maleta" value and contract is in reality
When the plaintiff's liability of a embodying the to petitioner, with the paid the free to reject it

49 of 107
 information that the tariff entirely; if he the preparation of the that the passenger
lock was open. Upon therefor. adheres, he gives requisite promotional was aware of the
inspection, petitioner The validity his consent. handbills and still conditions and that
found that a folder of this pictures. Pangan in his he had freely and
containing certain stipulation is two luggages, for fairly agreed
exhibits, transcripts not which he was given thereto. Therefore,
and private documents questioned baggage claim tickets.
iwere missing, aside by the his two luggages did
from two gift items for plaintiff. not arrive with his
his parents-in-law. They are flight, as a
printed in consequence of which
reasonably his agreements with
and fairly big Slutchnick and
letters, and Quesada for the
are easily exhibition of the films
readable. in Guam and in the
Moreover, United States were
plaintiff had cancelled.
been a Cathay Tomas Alcantara was a CATHAY The Warsaw
frequent Pacific v. first-class passenger of argues that Convention does
passenger of CA Cathay Pacific. He was the extent of not operate as an
PAL from on his to meet with the its liability exclusive
Cebu to Director General of should be enumeration of the
Butuan City Trade of Indonesia in limited to instances for
and back, his capacity as an that set forth declaring a carrier
and he, official in the Philippine in the liable for breach of
being a cement industry. He Warsaw contract of carriage
lawyer and checked in his luggage Convention or as an absolute
businessman which he later  NO! limit of the extent
, must be discovered was of its liability, It
fully aware missing.The CATHAY does not preclude
of these rep said to him, “What the operation of
conditions. can we do, the the Civil Code and
baggage is missing. I other laws, and
Pan Am v. Rene V. Pangan, Carrier’s The ruling in cannot do anything… does not regulate
IAC president and general liability is Shewaram v. Anyhow you can buy the carrier from
manager of the limited. Philippine Air Lines anything you need,” liability for
plaintiffs Sotang petitioner's finds no application and was offered damages for
Bastos and Archer liability for in the instant case. $20.00 as violating the rights
Production and Primo the lost The ruling in said “inconvenience of passengers,
Quesada of Prime baggage is case was premised money”. especially for wilful
Films, San Francisco, limited to on the finding that misconduct of its
California, entered into $20.00 per the conditions agents.
an agreement. The kilo or printed at the back
former bound himself $600.00, as of the ticket were c. As to delay in delivery
to supply the latter stipulated at so small and hard
with three films for the back of to read that they Cases:
exhibition in the United the ticket. would not warrant CASE TITLE FACTS HELD DOCTRINE CLASS
States. Pangan caused the presumption NOTES
50 of 107
Maersk Line Maersk Line is Carrier is liable. While it is true
v. CA engaged in the In the case that common Civil Code, Article, 1747. If the common carrier, without just cause, delays the
transportation of before us, we carriers are not transportation of the goods or changes the stipulated or usual route, the
goods by find that a delay obligated by contract limiting the common carrier's liability cannot be availed of in case
sea.Efren in the delivery of law to carry of the loss, destruction, or deterioration of the goods.
Castillo, ordered the goods and to deliver
from Eli Lilly. spanning a merchandise, Civil Code, Article 1748. An agreement limiting the common carrier's liability
Inc. of Puerto period of two (2) and persons are for delay on account of strikes or riots is valid.
Rico 600,000 months and not vested with
empty gelatin seven (7) days the right to Civil Code, Article 1751. The fact that the common carrier has no competitor
capsules for the falls was beyond prompt along the line or route, or a part thereof, to which the contract refers shall be
manufacture of the realm of delivery, unless taken into consideration on the question of whether or not a stipulation
his reasonableness. such common limiting the common carrier's liability is reasonable, just and in consonance
pharmaceutical carriers with public policy.
products. For previously
reasons assume the Civil Code, Article 1752. Even when there is an agreement limiting the liability
unknown, said obligation to of the common carrier in the vigilance over the goods, the common carrier
cargo of deliver at a is disputably presumed to have been negligent in case of their loss, destruction
capsules were given date or or deterioration.
mishipped and time, delivery
diverted to of shipment or Relevant Agbayani Notes:
Richmond, cargo should at Kinds of stipulation limiting liability.-- The following stipulations are often made
Virginia, USA least be made in a bill of lading bill of lading:
and then within a 1. stipulation exempting the CC from any and all liability for loss or
transported back reasonable damage occasioned by its own negligence - VOID
Oakland, time. 2. stipulation providing for an unqualified limitation of such liability
Califorilia. The When a to an agreed stipulation - VOID
goods finally common carrier 3. stipulation limiting the liability of the CC to an agreed valuation
arrived in the undertakes to unless the shipper declares a higher value and pays a higher rate of
Philippines on convey goods, freight -- VALID and ENFORCEABLE
June 10, 1977 or the law implies
after two (2) a contract that When stipulation limiting liability valid.-- Under 1744, the shipper or owner and
months from the they shall be the CC may stipulate to limit the liability of the CC for the loss, destruction or
date specified in delivered at deterioration of goods to a degree less than extra- ordinary diligence :
the destination 1. the stipulation must be in writing and signed by both parties;
memorandum. within a 2. the stipulation must be supported by valuable consideration
reasonable other than the service rendered by the CC;
time, in the 3. the stipulation must be reasonable, just and not contrary to
absence, of any public policy. This applies only when the CC is acting as such but
agreement as not when it acts as a private carrier [in Home Insurance vs
to the time of American Steamship Co., the SC held that the Civil Code provisions
delivery. on CC should not be applied where the CC is not acting as such but
as a private carrier; such policy has no force where the public at
large is not involved]
d. Factors affecting agreement The parties may stipulate that the diligence to be exercised by the
Relevant provisions: CC be less than extra-ordinary diligence, provided that the
Civil Code, Article 1746. An agreement limiting the common carrier's liability requirements under Article 1744 are complied with. However, the
may be annulled by the shipper or owner if the common carrier refused to parties cannot reduce the diligence to less than that of a good
carry the goods unless the former agreed to such stipulation.

51 of 107
 father of a family. Art. 1745 provides for 7 stipulations which shall
be considered unreasonable, unjust and contrary to public policy.
Construction of stipulations limiting common carrier's liability.-- An
exemption in general words not expressly relating to negligence, even though the
words are wide enough to include loss by negligence or default of CC's servants,
must be construed as limiting the liability of the CC as assurer, and not as relieving
him from the duty of exercising reasonable skill and care
Effect of lack of competitor to common carrier.--Under 1751, the lack of
competition of the CC shall be considered in determining WON a stipulation limiting
CC's liability is reasonable, just and in consonance with public policy.
Examples of valid stipulations:
1. 1748 - an agreement limiting the CC's liability for delay on
account of strikes or riots
2. 1749, Heacock vs Macondray - a stipulation that the CC's liability
is limited to the value of the goods appearing in bill of lading unless
the shipper or owner declares a greater value
3. 1750 - a contract fixing the sum that may be recovered by the
owner or shipper for the loss, destruction or deterioration of the
goods, if it is reasonable and just under the circumstances, and has
been fairly and freely agreed upon
Under 1746, an agreement limiting the CC's liability may be
annulled by the shipper or owner if the CC refused to carry the
goods unless the former agreed to such stipulation. The effect of
the shipper's consent obtained by means of refusal on the part of
the carrier to carry the goods is to make the agreement limiting the
CC's liability voidable at the instance of the shipper
Principles : [St. Paul Insurance vs Macondray, 70 SCRA 122]
1. A stipulation in the bill of lading limiting the CC's liability to the
value of the goods appearing in the bill, unless the shipper or
owner declares a greater value, is valid and binding.
2. The insurer who pays the insured on his claim for damage is
merely subrogated to the rights of the insured; therefore, said
insurer cannot collect from the CC more than what the insured can
collect from the CC.
3. The obligation to pay the damage begins from the date it fails to
deliver the shipment in good condition to the consignee (on the
basis of the rate of exchange on that date).
Effect of delay in transportation, etc.-- Under 1747, the CC cannot avail of the
contract limiting his liability in these cases : (1) where the CC delays the
transportation of the goods; (2) where the CC changes the stipulated or usual route
[in both cases, the delay or change of route must be without just cause]
Presumption as to negligence in case of limited liability.-- Under 1752, the
presumption continues even when there is an agreement limiting the liability of the
CC in the vigilance of the goods. This presumption is disputable or rebuttable by
evidence that the CC exercised extra-ordinary diligence.
5.Applicable law in foreign trade
Relevant provisions:
Civil Code, 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.
Relevant Agbayani Notes:
The Civil Code governs the liability of the CC in case of loss, damage or deterioration.
Under 1766, in all matters not regulated by the Civil Code, the rights and obligations
of CC shall be governed by the Code of Commerce and by special laws which are
suppletory to the provisions of the Civil Code.
6.Rules on passenger baggage
Relevant provisions:
Civil Code, 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.
Civil Code, Article 1998. The deposit of effects made by travellers in hotels or
inns shall also be regarded as necessary. The keepers of hotels or inns shall
be responsible for them as depositaries, provided that notice was given to
them, or to their employees, of the effects brought by the guests and that, on the
part of the latter, they take the precautions which said hotel-keepers or their
substitutes advised relative to the care and vigilance of their effects. (1783)
Civil Code, Article 2000. The responsibility referred to in the two preceding
articles shall include the loss of, or injury to the personal property of the
guests caused by the servants or employees of the keepers of hotels or
inns as well as strangers; but not that which may proceed from any force
majeure. The fact that travellers are constrained to rely on the vigilance of the
keeper of the hotels or inns shall be considered in determining the degree of care
required of him. (1784a)
Civil Code, Article 2001. The act of a thief or robber, who has entered the hotel is
not deemed force majeure, unless it is done with the use of arms or
through an irresistible force. (n)
Civil Code, Article 2002. The hotel-keeper is not liable for compensation if the
loss is due to the acts of the guest, his family, servants or visitors, or if the
loss arises from the character of the things brought into the hotel. (n)
Civil Code, Article 2003. The hotel-keeper cannot free himself from
responsibility by posting notices to the effect that he is not liable for the
articles brought by the guest. Any stipulation between the hotel-keeper and the
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guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is
suppressed or diminished shall be void. (n) Relevant provisions:
Relevant Agbayani Notes: Civil Code, Article 1733. Common carriers, from the nature of their business
Classes of baggage of passengers.-- The law makes a distinction between (1) and for reasons of public policy, are bound to observe extraordinary
baggage in the custody of the passengers or their EEs; and (2) baggage not in such diligence in the vigilance over the goods and for the safety of the passengers
custody but in that of the CC. transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
Liability for baggage in custody of passenger.--Art. 1754 refers to Arts. 1998, articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for
2000- 2003 concerning the responsibility of hotel keepers. Under 1998, the baggage the safety of the passengers is further set forth in articles 1755 and 1756.
of passengers in their personal custody or in that of their EEs while being transported
shall be regarded as necessary deposits. The CC shall be responsible for such Civil Code,Article 1755. A common carrier is bound to carry the passengers
baggage as depositaries, provided that (1) notice was given to them or to their EEs, safely as far as human care and foresight can provide, using the utmost
of the baggage brought by their passengers, and that (2) the passengers take the diligence of very cautious persons, with a due regard for all the
precautions which said CCs advised relative to the care and vigilance of their circumstances.
baggage.
Relevant Agbayani Notes:
Responsibility for acts of EEs, thieves.--Under 2000, a CC is responsible as a Common carriers must exercise extraordinary diligence in carrying
depositary for the loss of or injury to the baggage in the personal custody of passengers.-- Art. 1755 shows clearly the high degree of care and extra-o diligence
passengers, caused by the CC's servants or EEs but not those caused by force required of a CC with respect to its passengers.
majeure. Carrier's duty of extraordinary diligence extends also to crew members.--
Under 2001, the act of a thief or robber, who has entered the CC's vehicle is not The duty to exercise the utmost diligence on the part of CCs is for the safety of
deemed force majeure, unless it is done with the use of arms or through irresistible passengers as well as for the members of the crew or the complement operating the
force. carrier. This must be so for any omission, lapse or neglect thereof will certainly result
Under 2002, the CC is not liable if the loss of the baggage in the personal custody of to the damage, prejudice, injuries or even death to all aboard the plane.
the passenger is due to the acts of the passengers, his family, servants or visitors, OR
if the loss arises from the character of the baggage. Cases:
CASE FACTS HELD DOCTRINE CLASS NOTES
Stipulations limiting liability.-- Under 2003, a CC cannot free himself from TITLE
responsibility by posting notices to the effect that he is not liable for the baggage Isaac v. Isaac paid and WON L. Ammen Rules governing Principles
brought by the passengers. Any stipulation diminishing the responsibility required Al Amnen boarded Bus Transpo Co. has this jurisdiction: governing the
under 1998 to 2001 shall be void. Transport No. 31 of A.L. observed ART. 1733. liability of a
Ammen. The extraordinary Common common
Liability for baggage not in custody of passenger.-- This refers to baggage bus collided diligence or the carriers, from carrier:
delivered to the custody of the CC and received by him, to be carried in the same with a motor utmost diligence the nature of (1) the liability
manner as other goods being transported by him. As the CC has custody of such vehicle. Isaac’s of every cautious their business of a carrier is
baggage and are carried like any other goods, the provisions on carriage of goods left arm was person, having and for reasons contractual and
shall apply (extra-ordinary diligence in the vigilance over the goods). completely due regard for all of public policy, arises upon
The moment the effects of a passenger are unconditionally placed in the possession severed. circumstances, in are bound to breach of its
of and received by a carrier for conveyance, the law immediately imposes on the CC avoiding the observe extra obligation.
extra-ordinary responsibility for the loss thereof which lasts until the actual or collision which ordinary There is breach
constructive delivery of the effects to the passenger as the person who has the right resulted in the diligence in the if it fails to
to receive them (presumption of negligence exists but may be rebutted by proof of injury caused to vigilance over exert
exercise of extraordinary diligence or causes under 1734). the plaintiff. YES. the goods and extraordinary
A CC is liable for the loss of baggage although not declared and the charges not paid, for the safety of diligence
if it accepted them for transportation the passengers according to all
transported by circumstances
them according of each case;
C.Common Carriage of Passengers to all the (2) a carrier is
1.Nature and extent of responsibility circumstances obliged to carry
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 of each case. its passenger breaking of mountainous, passenger has
ART. 1755. A with the utmost metal below circuitous and neither the
common carrier diligence of a the floor of the ascending roads. choice nor
is bound to very cautious bus was heard, Thus the entire control over the
carry the person, having and the bus bus, including its carrier in the
passengers due regard for abruptly mechanical parts, selection and
safely as far as all the stopped, would naturally use of the
human care circumstances; rolling back a be taxed more equipment and
and foresight (3) a carrier is few moments heavily than it appliances in
can provide, presumed to be later. Leonila would be under use by the
using the at fault or to and Estrella ordinary carrier." When
utmost have acted were not circumstances. a passenger
diligence of negligently in thrown out of The mere fact dies or is
very cautious case of death the bus, but that the bus was injured, the
persons, with a of, or injury to, they panicked inspected only presumption is
due regard for passengers, it and jumped recently and that the
all the being its duty out. found to be in common carrier
circumstances. to prove that it order would not is at fault or
ART. 1756. In exercised exempt the that it acted
case of death of extraordinary carrier from negligently
or injuries to diligence; and liability unless it (Article 1756).
passengers, (4) the carrier is shown that the This
common is not an particular presumption is
carriers are insurer against circumstances only rebutted
presumed to all risks of under which the by proof on the
have been at travel. bus would travel carrier's part
fault or to have were also that it observed
acted considered. the
negligently, "extraordinary
unless they diligence"
prove that they required in
observed Article 1733
extraordinary and the
diligence as "utmost
prescribed in diligence of
articles 1733 very cautious
and 1755. persons"
Landingin Leonila WON Pantranco In Lasam vs. required in
v. Landingin and is guilty of Smith, it was Article 1755
Pantranco Estrella breach of held that an (Article 1756).
Garciawere contract of accident caused
among the carriage. (YES) by defects in Necessito Necesito, The Court is of The rule on the
passengers in The bus in which the automobile v. Paras together with the opinion that liability of
the bus owned the deceased is not his mother, the carrier did carriers for
and operated were riding was acasofortuito. boarded a not exercise the defects of
by defendant heavily laden The rationale of passenger bus. “utmost equipment is
PANTRANCO. with passengers, the carrier's The driver lost diligence” that thus expressed:
A sudden and it would be liability is the control. The the law requires, “The
snapping or traversing fact that "the carrier pleaded hence it (the preponderance

54 of 107
 that the carrier) must be of authority is and ALC for passenger of the stevedores
accident was liable for in favor of the the transport Sulpicio Lines, sent by ALC on
due to “engine indemnity to doctrine that a of the latter's still the latter is board the barge
or mechanical plaintiffs. It is passenger is timber. Several liable as a of Sulpicio was
trouble” clear that the entitled to stevedores of common carrier called for by
independent or carrier is not an recover CBL (hired by for his death. the contract of
beyond the insurer of the damages from ALC) boarded carriage.
control of the passengers’ a carrier for an the "Solid VI" Furthermore,
carrier or of its safety. His injury resulting and opened its Sulpicio knew
driver. liability rests from a defect in storeroom. -> of the presence
upon negligence, an appliance The stevedores and role of the
his failure to purchased from were warned stevedores in
exercise the a manufacturer, of the gas and its barge and
“utmost” whenever it heat generated thus consented
degree of appears that by the copra to their
diligence that the defect stored in the presence. ->
the law requires, would have holds of the Hence,
and by Art. 1756, been ship. Without petitioner was
in case of a discovered by heeding the responsible for
passenger's the carrier if it warning, a their safety
death or injury had exercised stevedore while on board
the carrier bears the degree of entered the the barge.
the burden of care which storeroom and
satisfying the under the fell
court that he has circumstances unconscious.
duly discharged was incumbent
the duty of upon it, with
prudence regard to 2.Duration of responsibility
required. inspection and
application of Relevant provisions:
the necessary
tests. For the Civil Code, Article 1736. The extraordinary responsibility of the common
purposes of this carrier lasts from the time the goods are unconditionally placed in the
doctrine, the possession of, and received by the carrier for transportation until the same
manufacturer is are delivered, actually or constructively, by the carrier to the consignee, or
considered as to the person who has a right to receive them, without prejudice to the
being in law the provisions of article 1738.
agent or
servant of the Relevant Agbayani Notes:
carrier, as far When relationship of carrier and passenger terminates.-- The relation of CC
as regards the and passenger does not cease at the moment that the passenger alights from the
work of CC's vehicle at a place selected by the CC at the point of destination, but continues
constructing the until the passenger had reasonable time or a reasonable opportunity to leave the CC's
appliance. “ premises. What is a reasonable time or a reasonable delay within this rule is to be
Sulpicio A contract of The court agreed ALC had a determined from all the circumstances.
v. Court carriage was with the CA that contract of
of entered into although carriage with Cases:
Appeals between Pamalaran was Sulpicio Lines. CASE FACTS HELD DOCTRINE CLASS
Sulpicio Lines never a The presence of TITLE NOTES
55 of 107
Cangco Jose Cangco came in Proof of fault The contractual before the plaintiff's
v. MRR by train daily to the imputable to obligation of position had become
Manila Railroad Manila Manila Railroad to secure, and even
Company. One Railroad’s transport plaintiff before his raised right
evening, he got off servants DOES also carried with it foot had reached the
the train expecting to NOT EXCUSE the duty to platform, the
land at the concrete Manila Railroad transport him motorman applied
platform where from being safely and to power, with the result
people safely alight liable to the provide safe that the car gave a
but his foot/feet plaintiff. means for the slight lurch forward.
came into contact plaintiff to enter This caused the
with a sack of and leave its plaintiff's foot to slip,
watermelons, causing trains, based on and his hand was
him to fall onto the OCC 1258. jerked loose from the
platform, and his handpost.
body to roll from the La Plaintiffs, husband Carrier is liable. It has been
platform and become Mallorc and wife, together Although it is recognized as a rule
drawn under the a v. with their minor true that that the relation of
moving car (right arm Court daughters boarded respondent carrier and passenger
badly lacerated). of the Pambusco Bus. Mariano does not cease at the
Del After the street car Meralco should The relation between Appeal After arriving, Beltran’s family moment the
Prado had stopped at its be liable. a carrier of s Mariano led his family had alighted passenger alights
v. appointed place for Although the passengers for hire to a shaded spot on from the bus at from the carrier's
Meralc taking on and letting motorman of and its patrons is of a the left pedestrian a place vehicle at a place
o off passengers, it this car was contractual nature. side of the road. He designated for selected by the
resumed its course at not bound to Failure on the part of returned to the bus to disembarking carrier at the point of
a moderate speed. stop to let the the carrier to use due get his other bayong, or unloading of destination, but
The car had plaintiff on, it care in carrying its which he had left passengers, the continues until the
proceeded only a was his duty to passengers safely is a behind. Raquel father had to passenger has had a
short distance, do no act that breach of duty (culpa followed him without return to the reasonable time or a
however, when would have the contructual) under him noticing. While vehicle (which reasonable
Ignacio del Prado ran effect of articles 1101, 1103 said Mariano Beltran was still at a opportunity to leave
across the street to increasing the and 1104 of the Civil was on the running stop) to get the carrier's
catch the car. plaintiff's peril Code. Furthermore, board of the bus one of his bags premises. And, what
Plaintiff, upon while he was the duty that the waiting for the The relation of is a reasonable time
approaching the car, attempting to carrier of conductor to hand carrier and or a reasonable delay
raised his hand as an board the car. passengers owes him his bayong which passenger does within this rule is to
indication to the The premature to its patrons he left under one of not necessarily be determined from
motorman of his acceleration of extends to persons its seats near the cease where all the circumstances.
desire to board the the car was, in boarding the cars door, the bus, whose the latter, after
car. The motorman our opinion, a as well as to those motor was not shut alighting from
eased up a little, breach of this alighting off while unloading, the car, aids
without stopping. The duty. therefrom. suddenly started the carrier's
plaintiff seized the moving forward, servant or
front perpendicular notwithstanding the employee in
handpost, at the fact that the removing his
same time placing his conductor has not baggage from
left foot upon the given the driver the the car.
platform. However, customary signal to

56 of 107
 start because he was for his departure.
getting Mariano’s PAL v. Mr. Zapatos was Carrier is liable. Part of the failure to
bayong. CA onboard PR477 flight PAL's diversion comply with the
Batacla Bus no. 30 of the Carrier is liable. A satisfactory which route was of its flight due obligation of common
n v. Medina There was definition of Cebu-Ozamis- to inclement carrier to deliver its
Medina Transportation left negligence on proximate cause is Cotabato. Mr. weather was a passengers safely to
the town of Amadeo, the part of the found in Volume 38, Zapatos was fortuitous their destination lay
Cavite. Among the defendant, pages 695-696 of supposed to event. in the defendant's
passengers was Juan through his American disembark in Ozamiz Nonetheless, failure to provide
Bataclan. While the agent, the jurisprudence, cited but the plane could such comfort and
bus was running one driver Saylon. by plaintiffs- not land due to bad occurrence convenience to its
of the front tires There is appellants in their weather. They were did not stranded
burst and the vehicle evidence to brief: “…that cause, instructed by the terminate passengers using
began to zig-zag until show that at which, in natural and airport to go straight PAL's extraordinary
it fell into a canal on the time of the continuous sequence, ahead to Cotabato.He contract with diligence, the cause
the right side of the blow out, the unbroken by any claims he was left its of non-fulfillment
road and turned bus was efficient intervening alone in the airport passengers. is not solely and
turtle. Some of the speeding. cause, produces the and was denied Being in the exclusively due to
passengers managed injury, and without transportation when business of air fortuitous event,
to leave the bus. Calls which the result he asked some PAL carriage and but due to something
or shouts for help would not have staff for a ride. He the sole one to which defendant
were made to the occurred.” lost his personal operate in the airline could have
houses in the belongings when it country, PAL is prevented, defendant
neighborhood. After was not offloaded deemed becomes liable to
half an hour came from the plane. equipped to plaintiff.
about ten men, one deal with
of them carrying a situations as in
lighted torch made of the case at bar
bamboo fueled with
petroleum. A fierce 3.Presumption of Negligence
fire started, burning
the bus. Relevant provisions:
Aboitiz Anacleto Viana Carrier is liable. All persons who Civil Code, Article 1756. In case of death of or injuries to passengers, common
v. boarded Aboitiz’s M/V remain on the carriers are presumed to have been at fault or to have acted negligently,
Court Antonia for Manila. premises a unless they prove that they observed extraordinary diligence as prescribed in
of After they reasonable time articles 1733 and 1755.
Appeal disembarked, Mr. after leaving the
s Viana went back to conveyance are to be Relevant Agbayani Notes:
the vessel because he deemed passengers, Presumption of negligence.-- CCs are presumed to have been at fault or to have
remembered that he and what is a acted negligently in case of death or injuries to passengers. This disputable
still had cargoes reasonable time or presumption may only be overcome by superior evidence that he had observed
inside. He was a reasonable delay extraordinary diligence prescribed in 1733, 1755, 1756
pointing to his within this rule is Where death or injury results to the passenger because of the negligence of the CC's
cargoes when he was to be determined employees, the CC is liable, notwithstanding the fact that he had exercised all the
hit by the crane. from all the diligence of a good father of a family, in the selection and supervision of his
circumstances, and employees.
includes a reasonable Consequently, in an action for damages, the issue is not WON the party seeking
time to see after his damages has adduced sufficient evidence to show the negligence of the CC but WON
baggage and prepare the carrier has presented the required quantum of proof to overcome the

57 of 107
presumption that it has been at fault or that it acted negligently in the performance CASE FACTS HELD DOCTRINE CLASS
of its duty. TITLE NOTES
In the exercise of extraordinary diligence, the CC must give due regard for all Bachelor Bachelor Express’ Carrier is liable. A Force Majeure
circumstances in connection with the transport of passengers. Express v. bus driven by Under Article presents the
Court of Cresencio Rivera 1756 of the Civil following essential
How presumption of negligence overcome.-- To overcome such presumption, it Appeals was the site of a Code, petitioner characteristics:
must be shown that the CC had observed the required extraordinary diligence or that stampede which Bachelor (1) The cause of the
the accident was caused by fortuituos event. In order to constitute caso fortuito that killed Ornominio Express, Inc. is unforeseen and
would exempt a person from responsibility, it is necessary that : Beter and presumed to unexpected
1. The event must be independent of human will; Narcisa Rautraut. have acted occurrence, or of
2. The occurrence must render it impossible for the obligor to fulfill his obligation in a The commotion negligently the failure of the
normal manner; started when a unless it can debtor to comply
3. The obligor must be free of a concurrent or contributory fault or negligence. passenger at one prove that it had with his obligation,
of the rear seats observed must be
Carrier not precluded from proving negligence of other carrier involved in stabbed a PC extraordinary independent of
collision.-- While the plaintiff-passenger does not need to prove the negligence of soldier. The diligence in the human will.
the CC, he may not preclude the CC from proving the legal defense of negligence of passengers accordance with (2) It must be
the other vehicle involved in the collision ( CC may file a third-party complaint against panicked and Articles 1733 impossible to
the other vehicle for reimbursement) tried to get out and 1755. In foresee the event
of the bus. They order that a which constitutes
"Last clear chance" rule not applicable to contracts of carriage.-- The say that Beter common carrier the force majeure,
principle of last clear chance applies only in a suit between the owners and drivers of and Rautraut may be absolved or if it can be
two colliding vehicles; it does not apply where a passenger demands responsibility jumped off the from liability in foreseen, it must
from the CC to enforce its contractual obligation; it would be iniquitous to exempt the bus through the case of force be impossible to
driver and his ER on the ground that the other driver was also negligent window without majeure, it is avoid.
the former’s not enough (3) The occurrence
Court need not make express finding of carrier's fault or negligence.-- The consent, that the must be such as to
court need not make an express finding of fault or negligence on the part of the CC in therefore the accident was render it
order to hold it responsible to pay the damages sought by the passenger. By the company and the caused by impossible for the
contract of carriage, the CC assumes the express obligation to observe extraordinary driver could not force majeure. debtor to fulfill
diligence in transporting the passenger This is an exception to general rule that be at fault. The common his obligation in a
negligence must be proved. carrier must normal manner.
still prove that (4) The obligor
Carriers not ordinarily liable for injuries to passengers due to fires or it was not (debtor) must be
explosions caused by articles brought into conveyance by other negligent in free from any
passengers.-- CC is not ordinarily liable for injuries to passengers due to fires or causing the participation in
explosions caused by articles brought into conveyance by other passengers. Fairness injuries the aggravation
demands that in measuring the CC's duty towards its passengers, allowance should resulting from of the injury
be given to the reliance that should be reposed on the sense of responsibility of all such accident. resulting to the
the passengers in regard to their common safety (that the passenger will not take creditor.
with him anything dangerous to his co-passengers.) For the carrier to be liable, he
must be aware, through his EEs of the nature of the article or must have had some Yobido v. Tito and Leny Whether the The common carrier
reason to anticipate danger therefrom (Circumstances must show that there are CA Tumboy, with explosion of a may not be
causes for apprehension that the passenger's baggage is dangerous and that the CC their 2 children, newly installed absolved from
fails to act in the fact of such evidence) boarded a Yobido tire of a liability in case of
Liner bus. The passenger force majeure alone.
4.Force Majeure left front tire of vehicle is a The common carrier
the bus fortuitous event must still prove that
Cases: exploded. that exempts it was not negligent

58 of 107
 Affirmative the carrier from in causing the death transportation of the passenger from the place of departure to the place of
defense: caso liability for the or injury resulting destination which are stated in the ticket.
fortuito: The bus death of a from an accident.
conductor passenger  Passenger bound notwithstanding his failure to sign ticket containing
testified that the NO! The fact stipulation limiting liability.-- Even if the passenger failed to sign the ticket, he is
bus was not full that the tire was nevertheless bound by the provisions thereof. Such provisions are part of the contract
of passengers; new did not of carriage, regardless of the passenger's lack of knowledge or assent to the
that the tire imply that it was regulation. It is what is known as a contract of adhesion which is not entirely
which exploded entirely free prohibited by law. The one who adheres to the contract is in reality free to reject it
was a brand new from entirely; if he adheres, he gives his consent . Accordingly, where the CC incurred
Goodyear tire manufacturing delay, it is liable only for the amount printed in the ticket the passenger not having
which he defects or that it declared a higher value for his luggage nor paid addtl. charges.
mounted only 5 was properly
days before the mounted on the Dispensing with or limiting liability.-- General rule: Under 1757, the
incident. vehicle. Neither extraordinary diligence required under 1733 and 1755 for the carriage of passengers
may the fact cannot be dispensed with or lessened (1) by stipulation, (2) by the posting of notices,
that the tire (3) by statements on tickets, or (4) otherwise
bought and used What cannot be stipulated in a carriage of passengers :
in the vehicle is (1) absolutely exempting the CC from liability from the passenger's death or injuries;
of a brand name (2) lessening the extraordinary diligence required by law to the diligence of a good
noted for father of a family
quality, resulting Exception: Effect of gratuitous carriage.-- Under 1758, the CC and the passenger may
in the conclusion validly stipulate limiting the CC's liability for negligence where the passenger is
that it could not carried gratuitously (but the parties cannot stipulate to entirely eliminate liability of
explode within CC)
five days’ use.
Effect of reduction of fares.-- Under 1758 (2), the reduction of fare does not
justify any limitation of the CC's liability -- the law requires gratuitous passage.
5.Limitation of liability; validity of stipulations The law is much stricter with respect to carriage of passengers as compared with
carriage of goods: a stipulation limiting the CC's liability in writing, signed by the
Relevant provisions: parties, supported by sufficient consideration, not contrary to law will still be void
Civil Code, Article 1757. The responsibility of a common carrier for the safety where the passenger is not carried gratuitously.
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 Liability of owner of CC to accommodation passengers or invited guests.—
tickets, or otherwise. An owner of an automobile owes a guest the duty to exercise ordinary or reasonable
care to avoid injuring him; since one riding in an automobile is no less a guest
Civil Code, Article 1758. When a passenger is carried gratuitously, a stipulation because he asked for the privilege of doing so, the same obligation of care is imposed
limiting the common carrier's liability for negligence is valid, but not for upon the driver and owner as in the case of one expressly invited to ride
wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's
liability. 6.Responsibility for acts of employees

Relevant Agbayani Notes: Relevant provisions:

Ticket given to a passenger is a written contract.-- Ticket given to passenger is
a written contract with the ff. elements: (1) the consent of the contracting parties
manifested by the fact that the passenger boards the ship and the shipper consents
or accepts him in the ship for transportation; (2) cause or consideration which is the
fare paid by the passenger as stated in the ticket; (3) object, which is the
Civil Code, 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.

59 of 107
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.
Civil Code, 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.
When relationship of carrier and passenger terminates.-- The relation of CC
and passenger does not cease at the moment that the passenger alights from the
CC's vehicle at a place selected by the CC at the point of destination, but continues
until the passenger had reasonable time or a reasonable opportunity to leave the CC's
premises. What is a reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances

Relevant Agbayani Notes: Elimination or limitation of carrier's liability.--Under 1760, the CC's liability for
Liability for negligence or willful acts of employees.-- Under 1759, CC are held the negligence or willful acts of his EEs which cause death of or injury to passengers
liable for the death or injuries to passengers caused by the negligence or the willful cannot be eliminated or limited by (1) stipulation, (2) by the posting of notice, (3) by
acts of their EEs, although such EEs may have acted beyond the scope of their statements on the tickets, or (4) otherwise
authority or in violation of the orders of the CC. The CC cannot escape liability by
interposing the defense that its EEs have acted without any authority or against the Cases:
orders of the CC. CASE FACTS HELD DOCTRINE CLASS
The passenger is entitled to protection from personal violence by the CC or its agents TITLE NOTES
or EEs since the contract of transportation obligates the CC to transport a passenger De Cornelia’s husband, MRC is not Based on the case of
safely to his destination and a CC is responsible for the misconduct of its EEs Gillaco Tomas Gillaco, was a liable. IN THIS Lasam vs. Smith,
v. MRR passenger of the CASE, the act while the rule is that
Cardenas vs Fernando: (1) Extraordinary diligence required of CC: calculated to morning train of of guard the carrier would be
protect the passengers as demanded by the preciousness of human life and by the Manila Railroad Devesa of liable for damages
consideration that every person must in every way be safeguarded against all injury; Company. Devesa shooting for not complying
(2) Liability for injury of passenger is based on a breach of contract of carriage for had a long standing passenger with the contract of
failure to bring the passenger safely to his destination personal grudge Gillaco because carriage, the carrier
against Gillaco so of a personal may be exempt from
Reason for making the CC liable for the misconduct of its EEs in their own when he saw the grudge liability if it proves
interest.-- The servant is clothed with delegated authority and charged with the latter inside the train nurtured that the failure to
duty by the CC, to execute his undertaking to carry the passenger safely; when the coach, he shot against the fulfill his obligation
EE mistreats the passenger, he violates the contractual obligation of the CC for which Gillaco with the latter since the was due to
he represents the CC. carbine furnished to Japanese fortuitous events or
him by MRC. Gillaco occupation was acts which cannot
Liability of CC for defects of its equipment.-- A passenger is entitled to recover died. MRC argued unforeseeable be foreseen, or if
damages from a CC for an injury resulting from a defect in an appliance purchased that: It is not by the MRC. foreseen, are
from a manufacturer, whenever it appears that the defect would have been responsible The latter had inevitable.
discovered by the CC if it had exercised the degree of care which under the subsidiary ex delicto no means to
circumstances was incumbent upon it, with regard to inspection and application of because the crime ascertain or
the necessary tests; for the purposes of this doctrine, the manufacturer is considered was not committed anticipate that
as being in law the agent or servant of the CC, as far as regards the work of while the slayer was the two would
constructing the appliance. in the actual meet, nor could
performance of his it reasonably
Common carrier is exempt from acts of EE not done in line of duty.-- The CC ordinary duties and foresee every
is exempt from liability where the EE was never in a position in which it became his service. personal rancor
duty to his ER to represent him in discharging any duty of the CC towards the that might exist
passenger; the EE is deemed as a stranger or co-passenger since his act was not between each
done in the line of duty. one of its many
employees and
Defense of diligence in selection, etc., of employees.-- CC cannot escape any one of the
liability by interposing defense that he exercised due diligence in the selection and thousands of
supervision of his EEs; his liability is based on culpa contractual. eventual
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 passengers the security guard utmost diligence of
riding in its assigned to the area very cautious
trains approached Navidad. persons with due
A misunderstanding regard for all
Maranan Rogelio Corachea Carrier is liable. The SC made or an altercation circumstances. CC is
v. Perez (Maranan’s son) was It is enough several distinctions between the two liable for death of or
a passenger in a that the assault between Gillaco and apparently ensued injury to passengers
taxicab owned and happens within this case: that led to a fist (a) through the
operated by Pascual the course of 1.In Gillaco, the fight. Navidad fell on negligence or wilful
Perez when he was the employee's employee was not the LRT tracks. At acts of its employees
stabbed and killed by duty. The yet on duty. IN THIS the exact moment or b) on account of
the cab driver, carrier's liability CASE: the killing that Navidad fell, an wilful acts or
Simeon Valenzuela. is absolute in was perpetrated by LRT train, operated negligence of other
Perez claimed that the sense that the driver of the by Roman, was passengers or of
the death was a caso it practically very cab coming in. strangers if the
fortuito for which the secures the transporting the common carrier’s
carrier was not liable. passengers passenger, in whose employees through
from assaults hands the carrier the exercise of due
committed by had entrusted the diligence could have
its own duty of executing prevented or
employees the contract of stopped the act or
carriage omission.
2.Gillaco was
decided under the 7.Responsibility for acts of strangers and co-passengers
provisions of the Relevant provisions:
Civil Code of 1889 Civil Code, Article 1763. A common carrier is responsible for injuries suffered
which, unlike the by a passenger on account of the wilful acts or negligence of other
present Civil Code, passengers or of strangers, if the common carrier's employees through the
did not impose upon exercise of the diligence of a good father of a family could have prevented
common carriers or stopped the act or omission.
absolute liability.
While the provision Relevant Agbayani Notes:
on fortuitous events The CC is responsible for such willful acts or negligence of other passengers or of
has been strangers, provided that the CC's EEs could have prevented or stopped the act or
substantially omission through the exercise of ordinary diligence. If the injury could not have been
reproduced in Art. avoided by the exercise of ordinary diligence on the part of the EEs of the CC, the CC
1174 of the New is not liable
Civil Code, Art. 1759 Notice that the law speaks of injuries suffered by the passenger but not his death.
expressly makes the However, there appears to be no reason why the common carrier should not be held
common carrier liable under such circumstances. The word "injuries" should be interpreted to include
liable for intentional "death."
assaults committed
by its employees Cases:
upon its passengers CASE FACTS HELD DOCTRINE CLASS
TITLE NOTES
LRTA v. Navidad, then drunk, Only LRTA is The law requires Pilapil v. Jose Pilapil is a W/N the bus While a common
Navidad was standing on the liable for the common carriers to CA passenger who company carrier is engaged in
platform near the death of carry passengers boarded should be the business of
LRT tracks. Escartin, Navidad. safely using the defedendant Alatco’s liable for the transporting
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 bus. An unidentified stone passengers and Civil Code, Article 1761. The passenger must observe the diligence of a good
man along said throwing goods, it does not father of a family to avoid injury to himself.
highway, hurled a incident? NO give its consent to
stone at the left side become an insurer of Civil Code, Article 1762. The contributory negligence of the passenger does
of the bus, which hit any and all risks to not bar recovery of damages for his death or injuries, if the proximate cause
petitioner in the eye. passengers and thereof is the negligence of the common carrier, but the amount of damages
goods even despite shall be equitably reduced.
the requirement that
it observe utmost Cases:
diligence. A common CASE FACTS HELD DOCTRINE CLASS
carrier merely TITLE NOTES
undertakes to Cangco v. Jose Cangco came Cangco’s step Contributory
perform certain duties MRR in by train daily to was not negligence serves to
to the public as the the Manila Railroad uncertain (it negate or distribute
law imposes, and Company. One was measured) the liability of the
holds itself liable for evening, he got off as he was used defendant. It can be
any breach thereof the train expecting to riding the determined by taking
to land at the trains and thus, into consideration the
Bachelor Bachelor Express’ Carrier is The common carrier concrete platform his act of age, sex, and
Express bus driven by liable. . It is responsible for where people stepping off the physical condition of
Inc. v. Cresencio Rivera was found that injuries suffered by a safely alight but his train was not the passenger or
CA the site of a the there is passenger on account foot/feet came into attended by person in question.
stampede which no reason to of the wilful acts or contact with a sack imprudence; The applicable test in
killed Ornominio believe that negligence of other of watermelons, thus, he is not determining his guilt
Beter and Narcisa the deceased passengers or of causing him to fall guilty of or innocence with
Rautraut. The passengers strangers, if the onto the platform, contributory respect to
commotion started jumped from common carrier's and his body to roll negligence contributory
when a passenger at the window employees through from the platform negligence is the test
one of the rear seats when it was the exercise of the and become drawn of ordinary or
stabbed a PC soldier. entirely diligence of a good under the moving reasonable care.
The passengers possible for father of a family car (right arm
panicked and tried to them to have could have prevented badly lacerated).
get out of the bus. alighted or stopped the act or Isaac v. Isaac paid and Isaac is guilty It is the prevailing
They say that Beter through the omission. A.L. boarded Bus No. of contributory rule that it is
and Rautraut jumped door. It also Ammen 31 of A.L. Ammen. negligence. negligence per se for
off the bus through found that The bus collided Isaac seated a passenger on a
the window without the bus driver with a motor himself on the railroad voluntarily or
the former’s consent, did not vehicle. Isaac’s left left side thereof inadvertently to
therefore the immediately arm was resting his left protrude his arm,
company and the stop the bus completely arm on the hand, elbow, or any
driver could not be when the severed. window sill but other part of his body
at fault. commotion with his left through the window
started. elbow outside of a moving car
the window, beyond the outer
this being his edge of the window
8.Duty of passenger; effect of contributory negligence position in the or outer surface of
bus when the the car, so as to
Relevant provisions: collision took come in contact with
place. Had he objects or obstacles
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 not placed his near the track, and actual, Moral damages Code.
left arm on the that no recovery can compensatory, were not
window sill with be had for an injury moral and granted.
a portion which but for such exemplary
thereof negligence would not damages was
protruding have been filed.
outside, sustained.This Pan Am Pangan sued Pan Special In order to hold the
perhaps the contributory v. IAC Am for the delay damages on carrier liable for special
injury would negligence cannot in the delivery of account of the damages (damages other
have been relieve the driver of his luggage, cancellation of than those naturally and
avoided as is its liability but will causing the Pangan’s directly arising from the
the case with only entitle it to a cancellation of his agreements breach), such special
the other reduction of the prior agreements. were not damages must have been
passenger. amount of damage granted. brought within the
caused (Article 1762, contemplation of the
new Civil Code). parties as a probable
result of the breach at
D.Damages Recoverable from Common Carriers the time of contracting.
Villa- A bus hit a The Formula for life
1.In general Rey v. bullcart, resulting determination expectancy:
2.Actual or compensatory CA in the death of of the amount 2/3 x (80-present age)
one of the bus’ of damages to
Relevant provisions: passengers. An be awarded
Civil Code, Article 2199. Except as provided by law or by stipulation, one is action for varies in every
entitled to an adequate compensation only for such pecuniary loss suffered damages was case. Here, the
by him as he has duly proved. Such compensation is referred to as actual or filed. life expectancy
compensatory damages. of the victim
was taken into
Civil Code, Article 2201. In contracts and quasi-contracts, the damages for account.
which the obligor who acted in good faith is liable shall be those that are PAL v. Padilla died as a Damages were The award of damages
the natural and probable consequences of the breach of the obligation, and CA result of a plane computed for death is to computed
which the parties have foreseen or could have reasonably foreseen at the crash. His mom based on the based on the life
time the obligation was constituted. sued for actual, life expectancy expectancy of the
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be compensatory, of the deceased, and not of the
responsible for all damages which may be reasonably attributed to the and exemplary deceased, not beneficiaries.
non-performance of the obligation. (1107a) damages. his mom.
Victory A bus fell into a The award for GR: Documentary
Cases: Liner v. ravine, causing compensatory evidence should be
CASE FACTS HELD DOCTRINE CLASS Gamma the death of one damages was adduced to substantiate
TITLE NOTES d of its passengers. deleted for a claim for compensatory
Cariaga A bus collided with Compensatory All circumstances are to Actual damages, lack of basis. damages. Exc: (1)
v. LTB a train, causing damages were be taken into account in death indemnity, Only the deceased is self-
Co. the death of the increased computing for and compensatory testimony of employed earning less
bus driver and considering the compensatory damages, damages, among the husband of than the minimum wage;
injuries to several effects of the such as earning capacity others, was the deceased (2) deceased is a daily
passengers accident on the and life expectancy. sought for by the was offered to wage worker earning less
including a 4th student (esp. Moral damages may only heirs of the victim. support its than the minimum wage.
year med student. permanent be awarded in instances claim for the
A case more disabilities). enumerated in the Civil said damages.
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 CASE FACTS HELD DOCTRINE CLASS
TITLE NOTES
3. Moral Fores v. A jeepney hit the Moral damages GR: If no death
Miranda bridge wall, should not be arises, no moral
Relevant Provisions: causing injuries awarded. GR: If no damages may be
to one of its death arises, no recovered.
CIVIL CODE, Art. 2216. No proof of pecuniary loss is necessary in order that passengers. moral damages Exc: bad faith or
moral, nominal, temperate, liquidated or exemplary damages, may be may be recovered. malice on the part
adjudicated. The assessment of such damages, except liquidated ones, is Exc: bad faith or of the carrier.
left to the discretion of the court, according to the circumstances of each case. malice on the part
of the carrier. In
Civil Code,Art. 2217. Moral damages include physical suffering, mental this case, bad
anguish, fright, serious anxiety, besmirched reputation, wounded feelings, faith/malice on the
moral shock, social humiliation, and similar injury. Though incapable of part of the jeepney
pecuniary computation, moral damages may be recovered if they are the driver was not
proximate result of the defendant's wrongful act or omission. proven.
Air France Carrascoso sued Moral damages A breach of
Civil Code,Article 2219. Moral damages may be recovered in the following and v. Air France for were awarded. contract attended
analogous cases: Carrascoso moral damages, There was a breach by bad faith
arising from the of contract, amounts to a
(1) A criminal offense resulting in physical injuries; act of Air France attended by bad quasi-delict,
(2) Quasi-delicts causing physical injuries; of depriving him faith on the part of entitling the
(3) Seduction, abduction, rape, or other lascivious acts; of his first-class Air France. aggrieved party to
(4) Adultery or concubinage; seat in favor of a moral damages.
(5) Illegal or arbitrary detention or arrest; white man.
(6) Illegal search; Lopez v. Plaintiffs sued Moral damages Bad faith means a
(7) Libel, slander or any other form of defamation; Pan Am Pan Am for moral were properly breach of a known
(8) Malicious prosecution; damages, due to awarded. There duty through
(9) Acts mentioned in Article 309; the latter’s was a breach of some motive of
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, unilateral contract, attended interest or ill will.
and 35. cancellation of a by bad faith on the
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 confirmed part of Pan Am to
of this article, may also recover moral damages. reservation for further its own
The spouse, descendants, ascendants, and brothers and sisters may bring the action first-class seats interest.
mentioned in No. 9 of this article, in the order named. made by the
plaintiffs.
Civil Code,Art. 2220. Willful injury to property may be a legal ground for Ortigas v. Ortigas sued Moral damages are Inattention and
awarding moral damages if the court should find that, under the circumstances, Lufthansa Lufthansa for proper. Bad faith lack of care on the
such damages are justly due. The same rule applies to breaches of contract moral damages, attended the part of the carrier
where the defendant acted fraudulently or in bad faith. arising from his breach of contract resulting in the
being deprived of by Lufthansa. failure of the
Civil Code,Art. 2206. The amount of damages for death caused by a crime or a first-class seat passenger to be
quasi-delict shall be at least three thousand pesos, even though there may in favor of a accommodated in
have been mitigating circumstances. In addition: Belgian. the class
(3) The spouse, legitimate and illegitimate descendants and ascendants of contracted for
the deceased may demand moral damages for mental anguish by reason of amounts to bad
the death of the deceased. faith, making an
award for moral
Cases: damages proper.
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PAL v. Miano sued PAL Moral damages Moral damages Civil Code,Art. 2232. In contracts and quasi-contracts, the court may award
Miano for the delay in should not be are only proper in exemplary damages if the defendant acted in a wanton, fraudulent,
the delivery of awarded. PAL was case of a breach reckless, oppressive, or malevolent manner.
his suitcase. not in bad faith in of contract when
failing to deliver the there is bad faith Civil Code,Art. 2233. Exemplary damages cannot be recovered as a matter of
suitcase on time. or fraud. right; the court will decide whether or not they should be adjudicated.
United Fontanilla sued Fontanilla is not An air carrier may
Airlines v. United Airlines entitled to moral overbook provided CASE FACTS HELD DOCTRINE CLASS
CA for damages for damages. Checking the same does not TITLE NOTES
denying them in is required, as exceed 10% of Mecenas Two vessels Exemplary Exemplary
boarding. indicated in the the seating v. CA collided damages should damages are
boarding pass, in capacity of the resulting in the be awarded. considered an
order to be allowed aircraft. death of Defendants instrument to
boarding. This hundreds of its were negligent, serve the ends of
Fontanilla failed to passengers. A executing law and public
do. There was no case for maneuvers policy by
bad faith on the damages was inadequately reshaping socially
part of United filed. and belatedly. deleterious
Airlines. behaviors,
Cathay Vasquez sued Moral damages are If no death arises, specifically to
Pacific v. Cathay Pacific for proper. The bad faith or fraud compel common
Vasquez moral damages, privilege may be need not be carriers to control
for forcing them waived. By insisting proved in order their employees,
to take the on the upgrade, that moral to tame their
privilege granted Cathay breached its damages may be reckless instincts,
them for being contract. properly awarded. and to force them
Gold Card to take adequate
members of the care of human
Marco Polo Club beings and their
(upgrade from property.
business class to
first class). 5.Nominal, Temperate, and Liquidated
Air France Gillego sued Air Moral damages Entitlement to
v. Gillego France for the were properly moral damages Relevant Provisions:
latter’s failure to awarded. Air arises from the
deliver his France acted in bad attendance of bad Civil Code,Art. 2221. Nominal damages are adjudicated in order that a right of
luggage and act faith in repeatedly faith in: (1) the plaintiff, which has been violated or invaded by the defendant, may be
of ignoring his ignoring Gillego’s securing the vindicated or recognized, and not for the purpose of indemnifying the
follow-up calls. follow-up calls. contract; (2) plaintiff for any loss suffered by him.
execution thereof.
Civil Code,Art. 2224. Temperate or moderate damages, which are more than
4.Exemplary nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount can
Relevant Provisions: not, from the nature of the case, be provided with certainty.

CIVIL CODE, Art. 2229. Exemplary or corrective damages are imposed, by Civil Code,Art. 2226. Liquidated damages are those agreed upon by the
way of example or correction for the public good, in addition to the moral, parties to a contract, to be paid in case of breach thereof.
temperate, liquidated or compensatory damages.
CASE FACTS HELD DOCTRINE CLASS

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 TITLE NOTES arrangement
Alitalia v. Pablo sued Alitalia Nominal Nominal damages are to s to
IAC for damages, damages adjudicated in order transport the
arising from the may be that a right of the passengers
11-month delay in properly plaintiff, which has been in the next
the delivery of her awarded. violated or invaded by available
luggage, which the defendant, may be connecting
caused him to be vindicated and flight to
unable to attend to recognized, and not for Manila.
his appointments, the purpose of Savellano Savellano sued NW Savellano is Nominal damages are
conference, etc. indemnifying the v. for damages, entitled to recoverable if no actual,
plaintiff for any loss Northwest arising from the nominal substantial or specific
suffered. unilateral changing damages. He damages were shown to
Saludo v. Saludo caused the Saludo is Nominal damages are of stopping places and others have resulted from the
CA shipment of the entitled to recoverable when: (1) and connecting suffered breach. The amount is
body of her mother nominal some injury has been cities. inconvenienc subject to the sound
from Chicago to damages. done, but (2) the es. The discretion of the court.
the Philippines. Saludo has a amount of which the Court also
The body was right to be evidence fails to show. considered
switched with treated with The determination of their social
another en route due courtesy the amount is left to the status.
to a different in court’s discretion. Victory A bus fell into a The fact of Temperate or moderate
destination. The accordance Liner v. ravine, causing the loss having damages, which are
body arrived in the with the due Gammad death of one of its been more than nominal but
Philippines one day diligence passengers. Actual established, less than compensatory,
late. Saludo sued required by damages, death temperate may be recovered when
PAL and TWA for law to be indemnity, and damages the court finds some
damages, arising exercised by compensatory should be pecuniary loss has been
from the delay and every damages, among awarded. suffered but its amount
the improper common others, was sought cannot, from the nature
behavior shown by carrier. for by the heirs of of the case, be proved
the employees. the victim. with certainty.
JAL v. CA The flight to Manila Nominal The court may award
was cancelled due damages nominal damages in 6.Attorney’s Fees and Interest
to the eruption of should be every obligation arising
Mt. Pinatubo. JAL awarded. from any source (Article Relevant Provisions:
assumed the hotel Although JAL 1157), or in any case
expenses for an is not where any property Civil Code,Art. 2208. In the absence of stipulation, attorney's fees and
overnight stay in a obliged to right has been invaded. expenses of litigation, other than judicial costs, cannot be recovered,
hotel, but not defray the except:
those for the accommodati (1) When exemplary damages are awarded;
subsequent days. on expenses (2) When the defendant's act or omission has compelled the plaintiff to
The passengers for the entire litigate with third persons or to incur expenses to protect his interest;
sued JAL for stay of the (3) In criminal cases of malicious prosecution against the plaintiff;
allegedly failing to passengers (4) In case of a clearly unfounded civil action or proceeding against the
provide care and in Japan, it is plaintiff;
comfort to its duty-bound (5) Where the defendant acted in gross and evident bad faith in refusing to
stranded to make the satisfy the plaintiff's plainly valid, just and demandable claim;
passengers. necessary (6) In actions for legal support;

66 of 107
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmen's compensation and
employer's liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
Civil Code, Art. 2210. Interest may, in the discretion of the court, be allowed
upon damages awarded for breach of contract.
Relevant Agbayani Notes:
Damages arising from death; factors to be considered--
1. number of years on the basis of which the damages shall be computed
2. the rate at which the losses sustained should be fixed. In the determination of the
losses or damages sustained by dependents and heirs of the deceased, said damages
consist not of the full amount of his earnings, but of the support they received or
would have received from him had he not died in consequence of the negligence of
defendant.
In fixing the amount of support, only net earnings are to be considered-- total
earnings less expenses necessary in the creation of such earnings less living and
incidental expenses.
Damages recoverable when death occurs due to commission of crime.-- (1)
indemnity for the death of victim (P 50T); (2) indemnity for loss of earning capacity
of the deceased; (3) moral damages; (4) exemplary damages; (5) attorney's fees and
expenses of litigation; and (6) interest. Indemnity arising from the fact of death is
fixed whereas the others are still subject to the determination of the court based on
evidence presented; indemnity for death is distinct and separate from the other forms
of indemnity
Common carrier not liable for moral damages to passenger injured due to
negligence of driver.-- A CC's bad faith is not to be lightly inferred from a mere
finding that the contract was breached through negligence of the CC's employees.
Extent of liability of air carrier for death of passenger:
(1) where there was no satisfactory explanation on the part of PAL as to how and
why the accident occurred, the presumption is that it was at fault, under Art. 1756
(2) liability for lost earnings are the deceased passenger's net earnings during his
expected length of life based on accepted mortality tables (compensatory damages)
(3) PAL is not liable for exemplary damages where it was not proven that it acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner
Damages caused by CC on third persons.--Negligence refers to the failure to
observe for the protection of the interests of another person that degree of care,
precaution, and vigilance which the circumstances justify demand, whereby such
other person suffers injury.
Common carrier is liable only for damages that are natural and probable
consequence of breach of contract.-- Where the CC is guilty of a breach of
contract, but acted in GF, it is liable only for the natural and probable consequences
of the breach and which the parties had foreseen or could have reasonably foreseen
at the time the obligation was constituted (includes medical, hospital expenses)
Actual damages.-- (1) lost income.-- includes income to be earned by the injured
passenger or deceased passenger had he finished his course (could have been
foreseen)
(2) sum being carried by the deceased passenger which was lost
(3) funeral expenses
(4) attorney's fees
(5) loss of merchandise carried by the deceased(6) loss of baggage and personal
belongings
Exception to rule that CC is not liable for moral damages in breach of
contract:
(1) where the mishap results in death of the passenger
(2) where it is proved that the CC was guilty of fraud or BF, even if death does not
result Ex.where because of the BF of the CC, the passenger suffered social
humiliation, wounded feelings, serious anxiety and mental anguish
Under 2206, the heirs of the deceased passenger may demand moral damages in an
amount commensurate with the mental anguish suffered by them.
In a case where the passenger suffers physical injuries because of the CC's injuries,
he cannot recover moral damages for such breach of contract since it does not fall
under any of the cases where moral damages are recoverable under Art. 2219.
In determining the amount of moral damages, the trial court may consider the nature
and extent of the injuries and the suffering occasioned by them and the duration
thereof. The appellate court should not interfere unless such is palpably and
scandalously excessive so as to indicate that it was the result of passion, prejudice or
corruption on the part of the trial court.
CC is subsidiarily liable for moral damages in actions ex delicto or where the action is
based upon its liability arising from a crime.
CC is not ordinarily liable for exemplary or corrective damages based upon the
wrongful act of its EE or driver where it did not have anything to do with the wrongful
act or had not previously authorized or subsequently ratified such act (Art. 2332) This
cannot be presumed but must be proven by evidence; exemplary damages cannot be
recovered as a matter of right.
Where the CC has incurred in delay in the delivery of the luggage of the offended
party, but it had not acted in bad faith nor been guilty of gross negligence, the
offended party is not entitled to moral nor exemplary damages but only to the limited
amount printed in the plane ticket where the offended party had not declared a
higher value nor paid addtl. transpo charges.
Liability of air carriers for moral and exemplary damages.--(1) Under the pool
arrangement among different airlines of the IATA agreement of which Alitalia and
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Lufthansa are signatories, both airlines are constituted as agents of each other in the
issuing of tickets and other matters pertaining to their relations with those who would
need their services.
(2) When it comes to contracts of common carriage, inattention and lack of care on
the part of the CC resulting in the failure of the passenger to be accommodated in
the class contracted for amounts to BF or fraud which entitles the passenger to the
award of moral damages. Where the passenger's seat was given to a white
passenger, there is willful breach giving rise to an action for moral damages.
(3) Exemplary damages were awarded. Defendant as an airline should be made to
pay an amount that can really serve as a deterrent against a seeming pattern of
indifference and unconcern, and discrimination for racial reasons, discernible in the
treatment of air passengers.
(Lore Agliam)
IV. Code of Commerce Provisions on Overland Transportation
(Unless otherwise indicated, reference is to Code of Commerce)
A. Scope of Overload Transportation
Note: There is no distinction between a transportation contract of a common carrier
under the Civil Code and a transportation contract under the Code of Commerce. But,
the Civil Code does not expressly repeal the provisions of the Code of Commerce on
overland transportation. Instead, it makes such provisions suppletory to the
provisions of the Civil Code on common carriers.
B. Nature of Contract
Article 349. A contract of transportation by land or water ways of any kind shall be
considered commercial:
1. When it has for its object merchandise or any article of commerce.
2. When, whatever its object may be, the carrier is a merchant or is habitually
engaged in transportation for the public.
C. Effect of Civil Code
Article 1766, Civil Code. In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of Commerce and by
special laws.
Article 2270, Civil Code. The following laws and regulations are hereby repealed:
(1) Those parts and provisions of the Civil Code of 1889 which are in force on the
date when this new Civil Code becomes effective:
(2) The provisions of the Code of Commerce governing sales, partnership, agency,
loan, deposit and guaranty;
(3) The provisions of the Code of Civil Procedure on prescription as far as inconsistent
with this Code; and
(4) All laws, Acts, parts of Acts, rules of court, executive orders, and administrative
regulations which are inconsistent with this Code.
D. Contract of Carriage
1. Bill of Lading
(a) Definition, Subject Matter
Article 352. The bills of lading, or tickets in cases of transportation of passengers,
may be diverse, some for persons and others for baggage; but all of them shall bear
the name of the carrier, the date of shipment, the points of departure and arrival, the
cost, and, with respect to the baggage, the number and weight of the packages, with
such other manifestations which may be considered necessary for their easy
identification.
(b) Form, Contents
Article 350. The shipper as well as the carrier of merchandise or goods may mutually
demand that a bill of lading be made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to whose order the
goods are to be sent or whether they are to be delivered to the bearer of said bill.
4. The description of the goods, with a statement of their kind, of their weight, and of
the external marks or signs of the packages in which they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be made.
9. The indemnity to be paid by the carrier in case of delay, if there should be any
agreement on this matter.
Article 351. In transportation made by railroads or other enterprises subject to
regulation rate and time schedules, it shall be sufficient for the bills of lading or the
declaration of shipment furnished by the shipper to refer, with respect to the cost,
time and special conditions of the carriage, to the schedules and regulations the
application of which he requests; and if the shipper does not determine the schedule,
the carrier must apply the rate of those which appear to be the lowest, with the
conditions inherent thereto, always including a statement or reference to in the bill of
lading which he delivers to the shipper.
(c) Function
Article 353. The legal evidence of the contract between the shipper and the carrier
shall be the bills of lading, by the contents of which the disputes which may arise
regarding their execution and performance shall be decided, no exceptions being
admissible other than those of falsity and material error in the drafting.
After the contract has been complied with, the bill of lading which the carrier has
issued shall be returned to him, and by virtue of the exchange of this title with the
thing transported, the respective obligations and actions shall be considered
cancelled, unless in the same act the claim which the parties may wish to reserve be
reduced to writing, with the exception of that provided for in Article 366.
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In case the consignee, upon receiving the goods, cannot return the bill of lading
subscribed by the carrier, because of its loss or of any other cause, he must give the
latter a receipt for the goods delivered, this receipt producing the same effects as the
return of the bill of lading.
2. Refusal to Transport
Article 356. Carriers may refuse packages which appear unfit for transportation; and
if thecarriage is to be made by railway, and the shipment is insisted upon, the
company shall transport them, being exempt from all responsibility if its objections, is
made to appear in the bill of lading.
3. Doubtful declaration of contents
Article 357. If by reason of well-founded suspicion of falsity in the declaration as to
the contents of a package the carrier should decide to examine it, he shall proceed
with his investigation in the presence of witnesses, with the shipper or consignee in
attendance.
If the shipper or consignee who has to be cited does not attend, the examination
shall be made before a notary, who shall prepare a memorandum of the result of the
investigation, for such purposes as may be proper.
If the declaration of the shipper should be true, the expense occasioned by the
examination and that of carefully repacking the packages shall be for the account of
the carrier and in a contrary case for the account of the shipper.
4. No Bill of Lading
Article 354. In the absence of a bill of lading, disputes shall be determined by the
legal proofs which the parties may present in support of their respective claims,
according to the general provisions established in this Code for commercial contracts.
Article 51. Commercial contracts shall be valid and shall give rise to obligations and
causes of action in suits, whatever the form and language in which they may be
executed, the class to which they may belong, and the amount they may involve,
provided their existence is shown by any means established by the civil law.
However, the testimony of witness alone shall not be sufficient to prove the existence
of a contract which involves an amount exceeding 1,500 pesetas unless supported by
some other evidence.
E. Responsibility of the Carrier
1. When it commences
Article 355. The responsibility of the carrier shall commence from the moment he
receivesthe merchandise, personally or through a person charged for the purpose, at
the place indicated for receiving them.
2. Route
Article 359. If there is an agreement between the shipper and the carrier as to the
road over which the conveyance is to be made, the carrier may not change the route,
unless it be by reason of force majeure; and should he do so without this cause, he
shall be liable for all the losses which the goods he transports may suffer from any
other cause, beside paying the sum which may have been stipulated for such case.
When on account of said cause of force majeure, the carrier had to take another
route which produced an increase in transportation charges, he shall be reimbursed
for such increase upon formal proof thereof.
3. Care of Goods
Article 361. The merchandise shall be transported at the risk and venture of the
shipper, if the contrary has not been expressly stipulated.
As a consequence, all the losses and deteriorations which the goods may suffer
during the transportation by reason of fortuitous event, force majeure, or the
inherent nature and defect of the goods, shall be for the account and risk of the
shipper. Proof of these accidents is incumbent upon the carrier.
Article 362. Nevertheless, the carrier shall be liable for the losses and damages
resulting from the causes mentioned in the preceding article if it is proved, as against
him, that they arose through his negligence or by reason of his having failed to take
the precautions which usage has established among careful persons, unless the
shipper has committed fraud in the bill of lading, representing the goods to be of a
kind or quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported
run the risk of being lost, on account of their nature or by reason of unavoidable
accident, there being no time for their owners to dispose of them, the carrier may
proceed to sell them, placing them for this purpose at the disposal of the judicial
authority or of the officials designated by special provisions.
Article 1734, 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.
Article 1735, Civil Code. In all cases other than those mentioned in Nos. 1, 2, 3, 4,
and 5 of the preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as required in Article
1733.
4. Delivery
(a) Condition of Goods
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Article 363. Outside of the cases mentioned in the second paragraph of Article 361,
the carrier shall be obliged to deliver the goods shipped in the same condition in
which, according to the bill of lading, they were found at the time they were received,
without any damage or impairment, and failing to do so, to pay the value which those
not delivered may have at the point and at the time at which their delivery should
have been made.
If those not delivered form part of the goods transported, the consignee may refuse
to receive the latter, when he proves that he cannot make use of them independently
of the others.
Article 364. If the effect of the damage referred to in Article 361 is merely a
diminution in the value of the goods, the obligation of the carrier shall be reduced to
the payment of the amount which, in the judgment of experts, constitutes such
difference in value.
Article 365. If, in consequence of the damage, the goods are rendered useless for
sale and consumption for the purposes for which they are properly destined, the
consignee shall not be bound to receive them, and he may have them in the hands of
the carrier, demanding of the latter their value at the current price on that day.
If among the damaged goods there should be some pieces in good condition and
without any defect, the foregoing provision shall be applicable with respect to those
damaged and the consignee shall receive those which are sound, this segregation to
be made by distinct and separate pieces and without dividing a single object, unless
the consignee proves the impossibility of conveniently making use of them in this
form.
The same rule shall be applied to merchandise in bales or packages, separating those
parcels which appear sound.
Article 366. Within the twenty-four hours following the receipt of the merchandise,
the claim against the carrier for damage or average be found therein upon opening
the packages, may be made, provided that the indications of the damage or average
which gives rise to the claim cannot be ascertained from the outside part of such
packages, in which case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been
paid, no claim shall be admitted against the carrier with regard to the condition in
which the goods transported were delivered.
Notes:
 Art 366 is applicable to maritime shipments/transportation.
 The purpose of stipulation requiring presentation of claims within short period of
time is to afford the carrier/depositary a reasonable opportunity and facilities to
check the validity of the claims while the facts are still fresh in the minds of the
persons who took part in the transaction and the document are still available
Article 367. If doubts and disputes should arise between the consignee and the
carrier with respect to the condition of the goods transported at the time their
delivery to the former is made, the goods shall be examined by experts appointed by
the parties, and, in case of disagreement, by a third one appointed by the judicial
authority, the results to be reduced to writing; and if the interested parties should not
agree with the expert opinion and they do not settle their differences, the
merchandise shall be deposited in a safe warehouse by order of the judicial authority,
and they shall exercise their rights in the manner that may be proper.
(b) To Whom Delivery Made
Article 368. The carrier must deliver to the consignee, without any delay or
obstruction, thegoods which he may have received, by the mere fact of being named
in the bill of lading to receivethem; and if he does not do so, he shall be liable for the
damages which may be caused thereby.
Note: A provision in the bill of lading establishing a condition precedent in case of
non-delivery does not apply to a case of misdelivery.
(c) When to be made
Article 370. If a period has been fixed for the delivery of the goods, it must be made
within such time, and, for failure to do so, the carrier shall pay the indemnity
stipulated in the bill of lading, neither the shipper nor the consignee being entitled to
anything else.
If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of
lading, the carrier shall be liable for the damages which the delay may have caused.
Article 358. If there is no period fixed for the delivery of the goods the carrier shall be
bound to forward them in the first shipment of the same or similar goods which he
may make point where he must deliver them; and should he not do so, the damages
caused by the delay should be for his account.
F. Rights and Obligations or Shipper and/or Consignee
1. Right to damages
(a) Condition imposed on right
Article 366. Within the twenty-four hours following the receipt of the merchandise,
the claim against the carrier for damage or average be found therein upon opening
the packages, may be made, provided that the indications of the damage or average
which gives rise to the claim cannot be ascertained from the outside part of such
packages, in which case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been
paid, no claim shall be admitted against the carrier with regard to the condition in
which the goods transported were delivered.
Article 357. If by reason of well-founded suspicion of falsity in the declaration as to
the contents of a package the carrier should decide to examine it, he shall proceed
with his investigation in the presence of witnesses, with the shipper or consignee in
attendance.
If the shipper or consignee who has to be cited does not attend, the examination
shall be made before a notary, who shall prepare a memorandum of the result of the
investigation, for such purposes as may be proper.
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If the declaration of the shipper should be true, the expense occasioned by the
examination and that of carefully repacking the packages shall be for the account of
the carrier and in a contrary case for the account of the shipper.
(b) Amount of damages for loss
Article 732. Lenders on bottomry or respondentia shall suffer, in proportion to their
respective interest, the general average which may take place in the goods on which
the loan is made.
In particular averages, in the absence of an express agreement between the
contracting parties, the lender on bottomry or respondentia shall also contribute in
proportion to his respective interest, should it not belong to the kind of risks excepted
in the foregoing article.
Article 1744, Civil Code. A stipulation between the common carrier and the shipper or
owner limiting the liability of the former for the loss, destruction, or deterioration of
the goods to a degree less than extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the
common carrier; and
(3) Reasonable, just and not contrary to public policy.
(c) Amount of Damages for delay
Article 371 (3). If the abandonment is not made, the indemnification for losses and
damages by reason of the delay cannot exceed the current price which the goods
transported would have had on the day and at the place in which they should have
been delivered; this same rule is to be observed in all other cases in which this
indemnity may be due.
2. Right to abandon, Arts. 371, 360, 365, 363
Article 371. In case of delay through the fault of the carrier, referred to in the
preceding articles, the consignee may leave the goods transported in the hands of
the former, advising him thereof in writing before their arrival at the point of
destination.
When this abandonment takes place, the carrier shall pay the full value of the goods
as if they had been lost or mislaid.
If the abandonment is not made, the indemnification for losses and damages by
reason of the delay cannot exceed the current price which the goods transported
would have had on the day and at the place in which they should have been
delivered; this same rule is to be observed in all other cases in which this indemnity
may be due.
Article 360. The shipper, without changing the place where the delivery is to be
made, may change the consignment of the goods which he delivered to the carrier,
provided that at the time of ordering the change of consignee the bill of lading signed
by the carrier, if one has been issued, be returned to him, in exchange for another
wherein the novation of the contract appears.
The expenses which this change of consignment occasions shall be for the account of
the shipper.
Article 365. If, in consequence of the damage, the goods are rendered useless for
sale and consumption for the purposes for which they are properly destined, the
consignee shall not be bound to receive them, and he may have them in the hands of
the carrier, demanding of the latter their value at the current price on that day.
If among the damaged goods there should be some pieces in good condition and
without any defect, the foregoing provision shall be applicable with respect to those
damaged and the consignee shall receive those which are sound, this segregation to
be made by distinct and separate pieces and without dividing a single object, unless
the consignee proves the impossibility of conveniently making use of them in this
form.
The same rule shall be applied to merchandise in bales or packages, separating those
parcels which appear sound.
Article 363. Outside of the cases mentioned in the second paragraph of Article 361,
the carrier shall be obliged to deliver the goods shipped in the same condition in
which, according to the bill of lading, they were found at the time they were received,
without any damage or impairment, and failing to do so, to pay the value which those
not delivered may have at the point and at the time at which their delivery should
have been made.
If those not delivered form part of the goods transported, the consignee may refuse
to receive the latter, when he proves that he cannot make use of them independently
of the others.
Notes:
Instances where consignee may abandon goods:
1. Art 336, partial non-delivery
2. Art 365, goods are rendered useless for sale and consumption
3. Art 371, delay through carrier’s fault
3. Right to change consignment
Article 360. The shipper, without changing the place where the delivery is to be
made, may change the consignment of the goods which he delivered to the carrier,
provided that at the time of ordering the change of consignee the bill of lading signed
by the carrier, if one has been issued, be returned to him, in exchange for another
wherein the novation of the contract appears.
The expenses which this change of consignment occasions shall be for the account of
the shipper.
4. Obligation to pay transportation charges
Article 376. The preference of the carrier to the payment of what is owed him for the
transportation and expenses of the goods delivered to the consignee shall not be cut
off by the bankruptcy of the latter, provided it is claimed within the eight days
mentioned in the preceding article.
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Article 2241. With reference to specific movable property of the debtor, the following
claims or liens shall be preferred:
(9) Credits for transportation, upon the goods carried, for the price of the contract
and incidental expenses, until their delivery and for thirty days thereafter.
5. Obligation to return bill of lading
Article 353 (2). After the contract has been complied with, the bill of lading which the
carrier has issued shall be returned to him, and by virtue of the exchange of this title
with the thing transported, the respective obligations and actions shall be considered
cancelled, unless in the same act the claim which the parties may wish to reserve be
reduced to writing, with the exception of that provided for in Article 366.
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate
and intestate, including the grant of provisional remedies in proper cases, where
the value of the personal property, estate, or amount of the demand does not
exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where
such personal property, estate, or amount of the demand does not exceed Two
hundred thousand pesos (P200,000.00) exclusive of interest damages of
whatever kind, attorney's fees, litigation expenses, and costs, the amount of
which must be specifically alleged: Provided, That where there are several
claims or causes of action between the same or different parties, embodied in
the same complaint, the amount of the demand shall be the totality of the
claims in all the causes of action, irrespective of whether the causes of action
arose out of the same or different transactions;

G. Applicability of Provisions
RA 7691, Section 5. After five (5) years from
Article 379. The provisions contained in Articles 349 and following shall be
the effectivity of this Act, the jurisdictional
understood as equally applicable to those who, although they do not personally effect amounts mentioned in Sec. 19(3), (4), and
the transportation of the merchandise, contract to do so through others, either as
contractors for a particular and definite operation, or as agents for transportations (8); and Sec. 33(1) of Batas Pambansa Blg.
and conveyances.
In either case they shall be subrogated in the place of the carriers themselves, with
129 as amended by this Act, shall be
respect to the obligations and responsibility of the latter, as well as with regard to adjusted to Two hundred thousand pesos
their rights.
(P200,000.00). Five (5) years thereafter,
V. ADMIRALTY AND MARITIME COMMERCE
(Unless otherwise indicated, reference is to Code of Commerce) such jurisdictional amounts shall be
A. Concept of Admiralty; Jurisdiction over admiralty cases
adjusted further to Three hundred
thousand pesos (P300,000.00): Provided,
BP 129, Sec. 19 (3), Sec. 33(1), as amended by R.A. 7691
however, That in the case of Metro Manila,
Section 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive
original jurisdiction: the abovementioned jurisdictional
(3) In all actions in admiralty and maritime jurisdiction where he demand or
claim exceeds One hundred thousand pesos (P100,000.00) or , in Metro Manila,
amounts shall be adjusted after five (5)
where such demand or claim exceeds Two hundred thousand pesos (200,000.00); years from the effectivity of this Act to Four
Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and hundred thousand pesos (P400,000.00).
Municipal Circuit Trial Courts in civil cases. – Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts shall exercise:
CASE FACTS HELD DOCTRINE CLASS NOTES
International Shipper filed MTC has no The The amount of
Harvester v. for recovery of jurisdiction jurisdiction of demand or
Aragon the amount of over admiralty admiralty in claim
its undelivered matters but matters of determines the
cargo against the CFI contract jurisdiction.
the vessel’s depends upon
agent before the subject-
MTC on the matter.
ground of
negligence 72 of 107
 In the absence of any of these requisites, continuous possession for ten years shall
B. Vessels be necessary in order to acquire ownership.
1. Meaning A captain may not acquire by prescription the vessel of which he is in command.

Notes: “Vessels” governed by the Code of Commerce are licensed to engage in
maritime commerce or commerce by sea, whether in foreign or coastwise trade.
e.g. merchant ships, launches, lifeboats, boat, banca, those which are engaged in the
transportation of passengers and freight from one port/place to another.
Not vessels: warships or patrol vessels, pleasure craft, yachts, pontoons, health
service and harbor police vessels, floating storehouses, coast guard vessels, fishing
vessels, towboats
“Vessels” for purposes of registration under Revised Admin Code include “every sort
of boat, craft, or other artificial contrivance used, or capable of being used, as a
means of transportation on water.”
Note: Art. 573 (2) & (4) govern acquisition of vessel by prescription. All the
requisites of par. 2 must be complied with. Means of acquiring vessels: sale,
prescription, capture, construction, donation, succession, barter
Article 574. Builders of vessels may employ the materials and follow, with respect to
their construction and rigging, the systems most suitable to their interests. Ship
owners and seamen shall be subject to what the laws and regulations of the public
administration on navigation, customs, health, safety of vessels, and other similar
matters.
Article 585. For all purposes of law not modified or restricted by the provisions of this
Code, vessels shall continue to be considered as personal property.

CASE FACTS HELD/RATIO DOCTRINE CLASS Note: Under Art. 585, vessels are considered personal/movable property. But
NOTES whether moved by steam or sail, they partake to a certain extent, of the nature and
Lopez v. Passenger A boat Vessels of a minor conditions of real property, on account of their value and importance in the world of
Duruelo seeks to passenger is not nature not engaged commerce.
recover required to in maritime Article 712, Civil Code. Ownership is acquired by occupation and by intellectual
damages for make protest as commerce, such as creation.
the injuries he a condition river boats and those Ownership and other real rights over property are acquired and transmitted by law,
sustained precedent to his carrying passengers by donation, by estate and intestate succession, and in consequence of certain
while aboard a right of action from ship to shore, contracts, by tradition.
motor boat; for the injury must be governed, They may also be acquired by means of prescription.
passenger did suffered by him as to their liability to
not protest since the boat is passengers, by the B. Registration; certificates issued; distinctions
within 24 not licensed to provisions of the Civil RA 9295, Section 10(1): Jurisdiction; Power; and Duties of MARINA.
hours of the engage in Code or other The MARINA shall have the power and authority to:
accident maritime appropriate special (1) Register vessels
commerce, provisions of law.
whether in Note: Registration is necessary and indispensable in order that a purchaser’s rights
foreign or may be maintained against a claim filed by a 3rd person. Thus a registered sale at a
coastwise trade, public auction shall prevail over a prior unregistered sale.
as regulated by
the Code of 4. Significance of registration of transactions affecting vessels
Commerce.
CASE FACTS HELD/RATIO DOCTRINE CLASS
A. Nature and acquisition of NOTES
Arroyo The subject vessels Although there It is essential that a
Article 573. Merchant vessels constitute property which may be acquired and v. Yu were mortgaged in was delay in record of documents
transferred by any of the means recognized by law. The acquisition of a vessel must favor of PNB. registration of affecting the title of
appear in a written instrument, which shall not produce any effect with respect to Thereafter, the the mortgage a vessel be entered
third persons if not inscribed in the registry of vessels. subject vessels before the in the office of the
were later attached Customs, it was collector of customs,
The ownership of a vessel shall likewise be acquired by possession in good faith, by the owner’s not PNB’s fault. at a port of entry to
continued for three years, with a just title duly recorded. judgment creditor. The Court bind third persons.

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 deemed it as goods which he loaded on the vessel; but he may exempt himself therefrom by
constructive abandoning the vessel with all her equipments and the freight it may have earned
registration so during the voyage.
PNB has the
superior right Article 588. Neither the shipowner nor the ship agent shall be liable for the
over the obligations contracted by the captain, if the latter exceeds the powers and privileges
judgment pertaining to him by reason of his position or conferred upon him by the former.
creditor. Nevertheless, if the amounts claimed were invested for the benefit of the vessel, the
Rubiso Rivera purchased It was Rubiso The acquisition of a responsibility therefor shall devolve upon its owner or agent
v. from the owner the who first vessel must be
Rivera subject vessel registered his included in a written Article 589. If two or more persons should be part owners of a merchant vessel, an
through a private acquisition of the instrument which association shall be presumed as established by the part owners.
sale. Thereafter, vessel so he is shall not produce This association shall be governed by the resolutions of a majority of the members.
Rubiso bought the the one entitled any effect with A majority shall be the relative majority of the voting members.
same vessel to enjoy the regard to third If there should be only two part owners, in case of disagreement the vote of the
through a public protection of the persons if not member having the largest interest shall be decisive. If the interests are equal, it
auction. Rubiso was law, which recorded in the shall be decided by lot.
the first one who considers him commercial registry. The representation of the smallest part in the ownership shall have one vote; and
registered it before the absolute proportionately the other part owners as many votes as they have parts equal to the
the collector of owner of the smallest one.
customs. purchased boat. A vessel cannot be detained, attached or levied upon execution in her entirety for the
private debts of a part owner, but the proceedings shall be limited to the interest the
debtor may have in the vessel, without interfering with her navigation.
1. Persons Participating in Maritime Commerce
Article 590. The co-owners of a vessel shall be civilly liable in the proportion of their
Notes: Persons who participate: (1) shipowner, (2) ship agent, (3) captain/master, interests in the common fund, for the results of the acts of the captain, referred to in
(4) other officers i.e., sailing/1st mate, quartermaster/2nd mate and engineer, (5) Article 587.
seamen, and (6) other persons who make up the complement of the vessel (including Each co-owner may exempt himself from this liability by the abandonment, before a
the stokers & supercargo) notary, of the par tof the vessel belonging to him.
Shipagent = appointed to manage and operate the vessels of the shipowner, bound
to “provisions and victual” them, and to render reports on the operations of the Article 591. All the part owners shall be liable, in proportion to their respective
vessels, authorized to appoint sub-agents remaining responsible to the shipowner ownership, for the expenses of repairs to the vessel, and for other expenses which
Complement = all the persons on board, from the captain to the cabin boy, necessary are incurred by virtue of a resolution of the majority.
for the management, maneuvers and service. They shall likewise be liable in the same proportion for the expenses of maintenance,
Complement includes crews (i.e., sailing mates, engineers, stokers and other equipment, and provisioning of the vessel, necessary for navigation.
employees on board not having specific designations); but not includes passengers or
persons who, the vessel is transporting Article 592. The resolutions of the majority with regard to the repair, equipment, and
provisioning of the vessel in the port of departure shall bind the majority unless the
Relevant provisions: partners in the minority renounce their participation therein, which must be acquired
by the other part owners after a judicial appraisement of the value of the portion or
Article 586. The shipowner and the ship agent shall be civilly liable for the acts of the portions assigned.
captain and for the obligations contracted by the latter to repair, equip, and provision The resolutions of the majority relating to the dissolution of the association and sale
the vessel, provided the creditor proves that the amount claimed was invested for the of the vessel shall also be binding on the minority.
benefit of the same. The sale of the vessel must take place at a public auction, subject to the provisions of
By ship agent is understood the person entrusted with provisioning or representing the law of civil procedure unless the part owners unanimously agree otherwise, the
the vessel in the port in which it may be found. right of option to purchase and to withdraw mentioned in Article 575 being always
reserved in favor of said part owners.
Article 587. The ship agent shall also be civilly liable for the indemnities in favor of
third persons which may arise from the conduct of the captain in the care of the

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Article 593. The owners of a vessel shall have preference in her charter to other
persons, offering equal conditions and price. If two or more of the former should
claim said right the one having greater interest shall be preferred, and should they
have an equal interest it shall be decided by lot.
Article 594. The co-owners shall elect the manager who is to represent them in the
capacity of ship agent.
The appointment of director or ship agent shall be revocable at the will of the
members.
Article 595. The agent, be he at the same time an owner of a vessel or a manager for
an owner or for an association of co-owners, must be qualified to trade and must be
recorded in the merchant's registry of the province.
The agent shall represent the ownership of the vessel, and may in his own name and
in such capacity take judicial and extrajudicial steps in all that relates to commerce.
Article 596. The agent may discharge the duties of captain of the vessel, subject, in
every case, to the provisions contained in Article 609.
If two or more co-owners request the position of captain, the disagreement shall be
decided by a vote of the members; and if the vote should result in a tie, the position
shall be given to the part owner having the larger interest in the vessel.
If the interest of the petitioners should be the same, and there should be a tie, the
matter shall be decided by lot.
Article 597. The agent shall select and come to an agreement with the captain, and
shall contract in the name of the owners, who shall be bound in all that refers to
repairs, details of equipment, armament, provisions, fuel, and freight of the vessel,
and, in general, in all that relates to the requirements of navigation.
Article 598. The agent cannot order a new voyage, nor make contracts for a new
charter, nor insure the vessel, without the authority of her owner or by virtue of a
resolution of the majority of the co-owners, unless these privileges were granted him
in the certificate of his appointment.
If he should insure the vessel without authority therefor he shall be secondarily liable
for the solvency of the underwriter.
Article 599. The managing agent of an association, shall give his co-owners an
account of the results of each voyage of the vessel, without prejudice to always
having the books and correspondence relating to the vessel and to its voyages at the
disposal of the same.
Article 600. After the account of the managing agent has been approved by a relative
majority, the co-owners shall satisfy the expenses in proportion to their interest,
without prejudice to the civil or criminal actions which the minority may deem fit to
institute afterwards.
In order to enforce the payment, the managing agent shall have a right of action to
secure execution, which shall be instituted by virtue of a resolution of the majority,
and without further proceedings than the acknowledgment of the signatures of the
persons who voted the resolution.
Article 601. Should there be any profits, the co-owners may demand of the managing
agent the amount due them, by means of an executory action without further
requisites than the acknowledgment of the signatures of the instrument approving
the account.
Article 602. The agent shall indemnify the captain for all the expenses he may have
incurred from his own funds or from those of other persons, for the benefit of the
vessel.
Article 603. Before a vessel goes out to sea the agent shall have at his discretion, a
right to discharge the captain and members of the crew whose contract did not state
a definite period nor a definite voyage, paying them the salaries earned according to
their contracts, and without any indemnity whatsoever, unless there is a special and
specific agreement in respect thereto.
Article 604. If the captain or any other member of the crew should be discharged
during the voyage, they shall receive their salary until the return to the place where
the contract was made, unless there are good reasons for the discharge, all in
accordance with Articles 636 et seq. of this code.
Article 605. If the contracts of the captain and members of the crew with the agent
should be for a definite period or voyage, they cannot be discharged until the
fulfillment of their contracts, except for reasons of insubordination in serious matters,
robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo
by malice or manifest or proven negligence.
Article 606. If the captain should be a co-owner of the vessel, he may not be
discharged unless the ship agent returns to him the amount of his interest therein,
which, in the absence of agreement between the parties, shall be appraised by
experts appointed in the manner established in the law of civil procedure.
Article 607. If the captain who is a co-owner should have obtained the command of
the vessel by virtue of a special agreement contained in the articles of association, he
may not be deprived of his office except for the causes mentioned in Article 605.
Article 608. In case of the voluntary sale of the vessel, all contracts between the
agent and captain shall terminate, the right to proper indemnity being reserved in
favor of the captain, according to the agreements made with the agent.
The vessel sold shall remain subject to the security of the payment of said indemnity
if, after the action against the vendor has been instituted, the latter should be
insolvent.
Article 618. The captain shall be civilly liable to the agent, and the latter to the third
persons who may have made contracts with the former;
1. For all the damages suffered by the vessel and his cargo by reason of want
of skill or negligence on his part. If a misdemeanor or crime has been
committed he shall be liable in accordance with the Penal Code.
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 2. For all the thefts committed by the crew, reserving his right of action against crew are voyage. Any owner of the cargo.
the guilty parties. supplied and person whose ship, leaving
3. For the losses, fines, and confiscations imposed an account of violation of controlled by property may him to obtain
the laws and regulations of customs, police, health, and navigation. the owner have been cast recourse, as it
4. For the losses and damages caused by mutinies on board the vessel, or by Castelo. overboard by is very easy to
reason of faults committed by the crew in the service and defense of the Petroleum was the captain’s do, from other
same, if he does not prove that he made full use of his authority to prevent placed upon order should individuals
or avoid them. the ship’s deck have a right of who have
5. For those arising by reason of an undue use of powers and non-fulfillment of and due to the action directly been drawn
the obligations which are his in accordance with Articles 610 and 612. typhoon, the against the into the
6. For those arising by reason of his going out of his course or taking a course captain was shipowner for venture as
which he should not have taken without sufficient cause, in the opinion of compelled to the breach of shippers.
the officers of the vessel, at a meeting with the shippers or supercargoes jettison the any duty which
who may be on board. No exception whatsoever shall exempt him from this entire the law may
obligation. consignment of have imposed
7. For those arising by reason of his voluntarily entering a port other than his petroleum. on the captain
destination, with the exception of the cases or without the formalities with respect to
referred to in Article 612. such cargo.
8. For those arising by reason of the non-observance of the provisions
contained in the regulations for lights and evolutions for the purpose of (a) Responsibilities and liabilities
preventing collisions.
CASE FACTS HELD/RATIO DOCTRINE CLASS
Notes: NOTES
The shipowner and the ship agent are primarily liable for the ff: Yu Con v. Ipil Yu Con The master The shipowner
(1) Acts of the captain (Art 587) chartered and may not be
(2) Contracts entered into by the captain to repair, equip, and provision the Lauron’s supercargo not held
vessel, provided that the amount claimed was invested for the benefit of the banca for the were the criminally
vessel (Art 587) transportation depositaries of liable for such
(3) Indemnities in favor of 3rd persons which may arise from the captain’s of his P450 and crimes or
conduct in the care of the goods and safety of the passengers (Art 587) merchandise; having failed quasi crimes
(4) Damages to 3rd persons for tort and quasi-delict committed by the captain, he also gave to exercise for but he cannot
except collision with another vessel (Art 2180, Civil Code) his money its safe- be excused
(5) Damages in case of collision due to the fault, negligence, or want of skill of worth P450 to keeping the from liability
the captain, sailing mate, or any other member of the complement (Art 826) master Ipil diligence for the
and required by damage and
CASE FACTS HELD/RATIO DOCTRINE CLASS NOTES supercargo the nature of harm which, in
Standard Oil Standard Oil The shipowner, The primary Important to Solano for the obligation consequence
v. Castelo delivered in the person of liability is remember delivery to his assumed by of those acts,
petroleum to be the captain, has placed upon that the shop. But his them and by may be
conveyed by complete and the person shipowner money the suffered by
the charterer exclusive who has actual ordinarily has disappeared in circumstance the third
Chumbuque control of the control over vastly more transit. of the time parties who
(which crew and of the the conduct of capital and place, contracted
executed a navigation of the voyage embarked they are liable with the
lease the ship, as well and who has upon a for its loss or captain, in his
agreement w/ as of the most capital voyage than misplacement. double
shipowner disposition of embarked in has any The shipowner capacity of
Castelo). The the cargo at the the venture, individual is also held agent and
officers and end of the namely, the shipper of liable. subordinate of

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 the shipowner latter’s failure be civilly liable usage and
himself. to pay for the for the acts of understanding
Manila M/L Consuelo, Both the To admit the Direct goods. the captain of the
Steamship v. laden with shipowners of defense of due responsibility Admiral Line and for the business the
Abdulhaman cargoes and colliding diligence in of the counters that obligations agent only is
passengers - vessels are the selection shipowner is it cannot be contracted by held; or (3)
among were solidarily liable and vigilance recognized in held liable the latter unless the
Abdulhaman, to of the officers Art. 618 since the to repair, special
his wife and Abdulhaman. and crew as where the contract of equip, circumstances
kids - collided The exempting the captain shall agency with and provision of the case
with M/S shipowners shipowner be civilly respect to the vessel, show that only
Bowline Knot and ship from any liable to the Bark provided the the agent was
resulting to agents are liability for ship agent, Monongahela creditor proves intended to be
the death of civilly liable for their faults, and the ship had already that the bound and the
his kids and the captain’s would render agent is the ceased. amount seller knew it
loss of acts (Code of nugatory the one liable to claimed was or was
personal Commerce, solidary 3rd persons. invested chargeable
properties. Art. 586) and liability therein” (Art. with
for the established by 586 Code of knowledge of
indemnities Art. 827 of the Commerce). it.
due the third Code of
persons (Art. Commerce for Note: Even though the agent may not be the owner of the vessel, he is liable to the
587). This the greater shippers and owners of the cargo transported by it, for losses and damages
direct liability protection of occasioned to such cargo without prejudice to his right against the shipowners, to the
has been injured extent of the vessel’s value, its equipment, and the freight.
declared to parties.
exist, not only (b) The doctrine of limited liability
in case of Article 587. The agent shall also be civilly liable for the indemnities in favor of third
breached persons which arise from the conduct of the captain in the care of the goods which
contracts, but the vessel carried; but he may exempt himself therefrom by abandoning the vessel
also in cases with all her equipments and the freight he may have earned during the voyage.
of tortious Notes: Limited liability is the evidence of maritime law’s real and hypothecary nature
negligence. which distinguishes it from the civil law and mercantile law in general.
Wing Kee Wing Kee sold The bills were When the Instances when limited liability is not applicable:
Compradoring and delivered presented agents buy in 1. No abandonment of the vessel is made. The most fundamental effect of
Co. v. Bark to Bark goods when Admiral their own abandonment is the cessation of the owner’s responsibility (Yangco v
“Monongahela” thru bills Line was still names, but Laserna)
which were the agent it really for the 2. Shipowner is at fault (Mla Steamship v Abdulhaman)
made out can be held account of 3. Workmen’s Compensation Act (Abueg v San Diego)
against Bark’s liable for the their principal, 4. Liabilities for repairs of and provisioning the vessel effected before the loss
agent, Admiral expenses its the seller has of the vessel (Gov’t v Insular Maritime)
Line. Wing principal an option to 5. Vessel is insured (Chua Yek Hong v IAC)
Kee now incurred look to either
seeks to during the for payment, 3 cases where the vessel’s loss extinguishes the shipowner’s liability:
recover a sum lifetime of the unless (1) he 1. Liabilities arising from the captain’s conduct in the care of the goods and
of money agency since trusted the safety of the passengers, and liabilities arising from the captain’s negligent
from Admiral “the owner of agent or illicit acts, Art 587
Line on a vessel and exclusively; or 2. Liability for the wages of the captain & crew and for advances made by the
account of the the agent shall (2) by the shipagent of the vessel is lost by shipwreck or capture, Art 643

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 3. Liability for collision, Art 837 San Diego owner of the favor of the has no room in
motor ships widows were the application of
CASE FACTS HELD/RATIO DOCTRINE CLASS which were granted since it is the Workmen’s
NOTES caught by a a liability created Compensation Act
Manila M/L Consuelo, M/L Consuelo’s The right of typhoon, were by a statute to which seeks to
Steamship v. laden with owner Lim Hong abandonment of sunk and totally compensate improve, and
Abdulhaman, cargoes and To is not exempt vessels, as a legal lost. As a result, employees and aims at the
supra passengers - from liability to limitation of a its machinists laborers in cases amelioration of
among were Abdulhaman shipowner’s and captain of injury received the condition of
Abdulhaman, his despite total loss liability does not perished. Their by or inflicted laborers and
wife and kids - of his sunk vessel apply to cases widows filed suit upon them, while employees.
collided with M/S because both his where the injury for compensation engaged in the
Bowline Knot ship’s master & or the average is provided for in performance of
resulting to the engineer were due to the Workmen’s their work or
death of his kids not duly licensed shipowner’s fault. Compensation employment, or
and loss of as such. By Act. Owner the heirs and
personal operating with an invoked limited dependents and
properties. unlicensed liability. laborers and
master, Lim Hong employees in the
To deliberately event of death
increased the risk caused by their
to which the employment.
passengers and Aboitiz MV Aboitiz sank Limited liability The rights of a
shippers of cargo Shipping v. on a voyage applies in favor vessel owner
aboard the vessel Gen. from HK to the of Aboitiz. The under the Limited
would be Accident Fire Phils. As a result, real and Liability Rule are
subjected. & Life Gen. Accident as hypothecary akin to those of
Yangco v. SS Negros Yangco may not If the shipowner Assurance subrogee of nature of the rights of
Laserna owned by be held liable in or agent may be Corp several cargo maritime law shareholders to
Yangco left for damages for the held civilly liable consignees means that the limited liability
Manila despite its consequent at all for injury to whose respective liability of a under our
captain being death of its or death of cargo sank with carrier in corporation law.
advised that a passengers due passengers the vessel seeks connection with Both are
typhoon signal to the total loss arising from to recover. losses related to privileges granted
no. 2 was up. of his vessel as a negligence of the maritime by statute. And
The boat was result of captain in cases contracts is while not
also overloaded negligence of its of collisions or confined to the absolute, cannot
so against the captain. Art 587 shipwrecks, his vessel, which is be swept aside
bad weather, the accords a liability is merely hypothecated for unless the most
captain’s attempt shipowner or co-extensive with such obligations compelling of
to return to the agent the right of the interest in the or which stands reasons warrant
port was futile. abandonment vessel such that a as a guaranty for so.
The boat sank and so his liability total loss thereof their settlement.
resulting to dead is confined to results in its
passengers that which he is extinction. (c) Specific rights and prerogatives
among which entitled to
were the heirs of abandon. Article 575. Co-owners of vessels shall have the right of repurchase and redemption
Laserna. in sales made to strangers, but they may exercise the same only within the nine days
Abueg v. San Diego is the Compensation in Limited liability

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following the inscription of the sale in the registry, and by depositing the price at the
same time.
Article 593. The owners of a vessel shall have preference in her charter to other
persons, offering equal conditions and price. If two or more of the former should
claim said right the one having greater interest shall be preferred, and should they
have an equal interest it shall be decided by lot.
Article 594. The co-owners shall elect the manager who is to represent them in the
capacity of agent.
The appointment of director or agent shall be revocable at the will of the members.
Article 596. The agent may discharge the duties of captain of the vessel, subject, in
every case, to the provisions contained in Article 609.
If two or more co-owners request the position of captain, the disagreement shall be
decided by a vote of the members; and if the vote should result in a tie, the position
shall be given to the part owner having the larger interest in the vessel.
If the interest of the petitioners should be the same, and there should be a tie, the
matter shall be decided by lot.
Article 601. Should there be any profits, the co-owners may demand of the managing
agent the amount due them, by means of an executory action without further
requisites than the acknowledgment of the signatures of the instrument approving
the account.
2. Captains and Master
Notes:
Captain = governs vessels that navigate the high seas or ships of large dimensions
and importance, although they be engaged in the coastwise trade.
Master = commands smaller ships engaged exclusively in the coastwise trade.
For the purposes of maritime commerce, ‘captain’ and ‘master’ have the same
meaning; both being the chiefs or commanders of ships.
(a) Qualifications and licensing
RA 5173 (An Act Creating a Philippine Coast Guard, Prescribing Its Powers and
Functions, Appropriating the Necessary Funds Therefor, and for Other Purposes),
Section 3: Specific Functions.
The Philippine Coast Guard shall perform the following functions:
(a) To prevent and suppress illegal entry, smuggling, other customs frauds and
violations of other maritime laws that may be committed within the waters
subject to the jurisdiction of the Republic of the Philippines, and for the
purpose surveillance by the Philippine Coast Guard may be made on vessels
entering and/or leaving the Philippine territory;
(b) To assist in the suppression of fishing by means of dynamite, explosives or
toxic substances or other methods as may be declared destructive by proper
authorities;
(c) To promulgate and enforce rules for lights, signals, speed, steering, sailing,
passing, anchorage, movement and towlines of vessels and lights and
signals on bridges;
(d) To approve plans for the construction, repair, or alteration of vessels;
approve materials, equipment and appliances of vessels; approved the
classification of vessels; inspect vessels and their equipment and appliances;
register all types of motorized watercraft plying in Philippine waters; issue
certificates of inspection and of permits indicating the approval of vessels for
operation; issue certificates of Philippine registry of vessels; administer load
line requirements; promulgate and enforce other provisions for the safety of
life and property on vessels; and determine the numbering of
undocumented vessels: Provided, That certification and approval of any
plans, equipment and any vessel by internationally known classification
societies which are recognized by the Philippine Government shall be
deemed to have complied with this section;
(e) To issue licenses and certificates to officers, pilots, major and minor
patrons and seamen, as well as suspend and revoke such licenses and
certificates;
(f) To investigate marine casualties and disasters including those arising from
marine protests filed with the Bureau of Customs relative to the liability of
shipowners and officers;
(g) To enforce laws, rules and regulations governing manning, citizenship and
mustering and drilling of crews requirements, control of logbooks, shipment,
discharge, protection, and welfare merchant seamen;
(h) To enforce laws requiring the performance of duties of shipowners and
officers after accidents;
(i) To prescribe and enforce regulations for outfitting and operation of
motorboats and the licensing of motorboat operators;
(j) To regulate regattas and marine parades;
(k) To render aid to distressed persons or vessels on the high seas and on
waters subject to the jurisdiction of the Philippines, and, in this connection,
the Philippine Coast Guard may perform any and all acts necessary to rescue
and aid persons; furnish clothing, food, lodging, medicine and other
necessary supplies and services to persons succored; protect, save, and take
charge of all property saved from marine disasters until such property is
delivered to persons authorized to receive it or is otherwise disposed of in
accordance with law or applicable regulations; and collect and take charge
of bodies of those who may perish in such disasters;
(l) To develop, establish, maintain, and operate aids to maritime navigation. In
the performance of these functions, the Philippine Coast Guard is authorized
to destroy or tow in port sunken of floating dangers to navigation;
(m) To supervise nautical schools with reference to activities relative to
navigation, seamanship, marine engineering and other allied matters, in
coordination with the Department of Education;
(n) To perform functions pertaining to maritime communications which are not
specifically delegated to some other office or department; and
(o) To assist, within its capabilities and upon request of the appropriate
authorities, other Government agencies in the performance of their
functions, within the waters subject to the jurisdiction of the Philippines,
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 relating to matters and activities not specifically mentioned in this
section: Provided, That in the exercise of these functions, personnel of the
Philippine Coast Guard shall be deemed to be acting as agents of the
particular departments, bureau, office, agency or instrumentality charged
with the enforcement and administration of the particular law. Members of
the Philippine Coast Guard are peace officers for all purposes of this Act and
shall be, and shall act, as law enforcement agents of the Bureau of Customs,
and the Bureau of Immigration, the Bureau of Internal Revenue, the
Fisheries Commission, and such other departments, bureaus or offices in the
enforcement of pertinent laws, rules and regulations.
Article 609. Captains, masters or patrons of vessels must be Filipinos, have legal
capacity to contract in accordance with this code, and prove the skill, capacity, and
qualifications necessary to command and direct the vessel, as established by marine
or navigation laws, ordinances, or regulations, and must not be disqualified according
to the same for the discharge of the duties of the position.
If the owner of a vessel desires to be the captain thereof and does not have the legal
qualifications therefor, he shall limit himself to the financial administration of the
vessel, and shall intrust her navigation to a person possessing the qualifications
required by said ordinances and regulations.
(b) Powers and Duties
Article 610. The following powers are inherent in the position of captain or master of
a vessel:
1. To appoint or make contracts with the crew in the absence of the agent and
propose said crew, should said agent be present; but the agent shall not be
permitted to employ any member against the captain's express refusal.
2. To command the crew and direct the vessel to the port of its destination, in
accordance with the instructions he may have received from the agent.
3. To impose, in accordance with the agreements and the laws and regulations
of the merchants marine, on board the vessel, correctional punishment upon
those who do not comply with his orders or who conduct themselves against
discipline, holding a preliminary investigation on the crimes committed on
board the vessel on the high seas, which shall be turned over to the
authorities, who are to take cognizance thereof, at the first port touched.
4. To make contracts for the charter of the vessel in the absence of the agent
or of her consignee, acting in accordance with the instructions received and
protecting the interests of the owner most carefully.
5. To adopt all the measures which may be necessary to keep the vessel well
supplied and equipped, purchasing for the purpose all that may be
necessary, provided there is no time to request instructions of the agent.
6. To make, in similar urgent cases and on a voyage, the repairs to the hull
and engines of the vessel and to her rigging and equipment which are
absolutely necessary in order for her to be able to continue and conclude
her voyage; but if she should arrive at a point where there is a consignee of
the vessel, he shall act in concurrence with the latter.
Note: First 3 powers cannot be renounced as they relate to public order and are
vested in the captain as a ‘delegation of public authority’.
Article 611. In order to comply with the obligations mentioned in the foregoing
article, the captain, when he has no funds and does not expect to receive any from
the agent, shall procure the same in the successive order stated below:
1. By requesting said funds of the consignees or correspondents of a vessel.
2. By applying to the consignees of the cargo or to the persons interested
therein.
3. By drawing on the agent.
4. By borrowing the amount required by means of a bottomry bond.
5. By selling a sufficient amount of the cargo to cover the amount absolutely
necessary to repair the vessel, and to equip her to pursue the voyage.
In these two last cases he must apply to the judicial authority of the port, if in the
Philippines, and to the consul of the Republic of the Philippines if in a foreign country,
and where there is none, to the local authority, proceeding in accordance with the
provisions of Article 583, and with the provisions of the law of civil procedure.
Article 612. The following obligations shall be inherent in the office of captain:
1. To have on board before starting on a voyage a detailed inventory of the
hull, engines, rigging, spare-masts, tackle, and other equipment of the
vessel; the royal or the navigation certificate; the roll of the persons who
make up the crew of the vessel, and the contracts entered into with them;
the lists of passengers; the bill of health; the certificate of the registry
proving the ownership of the vessel and all the obligations which encumber
the same up to that date; the charter parties or authenticated copies
thereof; the invoices or manifests of the cargo, and the memorandum of the
visit or inspection by experts, should it have been made at the port of
departure.
2. To have a copy of this code on board.
3. To have three folioed and stamped books, placing at the beginning of each
one a memorandum of the number of folios it contains, signed by the
maritime authority, and in his absence by the competent authority. In the
first book, which shall be called "log book," he shall enter day by day the
condition of the atmosphere, the prevailing winds, the courses taken, the
rigging carried, the power of the engines used in navigation, the distances
covered, the maneuvers executed, and other incidents of navigation; he
shall also enter the damage suffered by the vessel in her hull, engines,
rigging, and tackle, no matter what its cause may be, as well as the
impairment and damage suffered by cargo, and the effect and importance of
the jettison, should there be any; and in cases of serious decisions which
require the advice or a meeting of the officers of the vessel, or even of the
crew and passengers, he shall record the decisions adopted. For the
information indicated he shall make use of the binnacle book and of the
steam of engine book kept by the engineer. In the second book called the
"accounting book," he shall record all the amounts collected and paid for the
account of the vessel, entering specifically article by article, the source of
the collection and the amounts spent for provisions, repairs, acquisitions of
equipment or goods, fuel, food, outfits, wages, and other expenses of
whatever nature they may be. He shall furthermore enter therein a list of all
the members of the crew, stating their domiciles, their wages and salaries,
and the amounts they may have received on account, directly or by delivery
to their families. In the third book, called "freight book," he shall record the
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 loading and discharge of all the goods, stating their marks and packages,
names of the shippers and of the consignees, ports of loading and
unloading, and the freightage they give. In this same book he shall record
the names and places of sailing of the passengers, the number of packages
in their baggage, and the price of passage.
4. Before receiving cargo, to make with the officers of the crew and two
experts, if required by the shippers and passengers, an examination of the
vessel, in order to ascertain whether it is water-tight, with the rigging and
engines in good condition, and with the equipment required for good
navigation, preserving under his responsibility a certificate of the
memorandum of his inspection, signed by all those who may have taken
part therein. The experts shall be appointed, one by the captain of the
vessel and another by those who request its examination, and in case of
disagreement a third shall be appointed by the marine authority of the port
or by the authority, exercising his functions.
5. To remain constantly on board the vessel with the crew while the cargo is
being taken on board and to carefully watch the stowage thereof; not to
consent to the loading of any merchandise or matter of a dangerous
character, such as inflammable or explosive substances, without the
precautions which are recommended for their packing, handling and
isolation; not to permit the carriage on deck of any cargo which by reason of
its arrangement, volume, or weight makes the work of the sailors difficult,
and which might endanger the safety of the vessel; and if, on account of the
nature of the merchandise, the special character of the shipment, and
principally the favorable season in which it is undertaken, merchandise may
be carried on deck, he must hear the opinion of the officers of the vessel
and have the consent of the shippers and of the ship agent.
6. To demand a pilot at the expense of the vessel whenever required by the
navigation, and principally when he has to enter a port, canal, or river, or
has to take a roadstead or anchoring place with which neither he nor the
officers and crew are acquainted.
7. To be on deck on reaching land and to take command on entering and
leaving ports, canals, roadsteads, and rivers, unless there is a pilot on board
discharging his duties. He shall not spend the night away from the vessel
except for serious causes or by reason of official business.
8. To present himself, when making a port in distress, to the maritime
authority if in the Philippines and to the consul of the Republic of the
Philippines if in a foreign country, before twenty-four hours have elapsed,
and to make a statement of the name registry, and port of departure of the
vessel, of its cargo, and the cause of arrival which declaration shall be
visaed by the authority or the consul, if after examining the same it is found
to be acceptable, giving the captain the proper certificate proving his arrival
in distress and the reasons therefor. In the absence of the maritime
authority or of the consul, the declaration must be made before the local
authority.
9. To take the necessary steps before the competent authority in order to
record in the certificate of the vessel in the registry of vessels the obligations
which he may contract in accordance with Article 583.
10. To place under good care and custody all the papers and belongings of any
members of the crew who might die on the vessel, drawing up a detailed
inventory, in the presence of passengers, or, in their absence, of members
of the crew as witnesses.
11. To conduct himself according to the rules and precepts contained in the
instructions of the shipagent, being liable for all that which he may do in
violation thereof.
12. To inform the ship agent from the port at which the vessel arrives, of the
reason of his arrival, taking advantage of the semaphore, telegraph, mail,
etc., as the case may be; to notify him of the cargo he may have received,
stating the names and domiciles of the shippers, freightage earned, and
amounts borrowed on bottomry loan; to advise him of his departure, and of
any operation and date which may be of interest to him.
13. To observe the rules with respect to situation, lights and maneuvers in order
to avoid collisions.
14. To remain on board, in case the vessel is in danger, until all hope to save it
is lost, and before abandoning it, to hear the officers of the crew, abiding by
the decision of the majority; and if the boats are to be taken to, he shall
take with him, before anything else, the books and papers, and then the
articles of most value, being obliged to prove, in case of the loss of the
books and papers, that he did all he could to save them.
15. In case of wreck, to make the proper protest in due form at the first port of
arrival, before the competent authority or the Philippine consul, within
twenty-four hours, specifying therein all the incidents of the wreck, in
accordance with subdivision 8 of this article.
16. To comply with the obligations imposed by the laws and regulations on
navigation, customs, health, and others.
Note: 3 books to be kept by the captain: log book, accounting book and freight book
Article 622. If while on a voyage the captain should learn of the appearance of
privateers or men of war against his flag, he shall be obliged to make the nearest
neutral port, inform his agent or shippers, and await an occasion to sail under
convoy, or until the danger is over or he has received express orders from the ship
agent or the shippers.
Article 624. A captain whose vessel has gone through a hurricane or who believes
that the cargo has suffered damages or averages, shall make a protest thereon
before the competent authority at the first port he touches, within 24 hours following
his arrival and shall ratify it within the same period when he arrives at his destination,
immediately proceeding with the proof of the facts, and he may not open the hatches
until after this has been done.
The captain shall proceed in the same manner, if, the vessel having been wrecked;
he is saved alone or with part of his crew, in which case he shall appear before the
nearest authority, and make a sworn statement of facts.
The authority or the consul shall verify the said facts receiving sworn statements of
the members of the crew and passengers who may have been saved; and taking
such other steps as may assist in arriving at the facts he shall make a statement of
the result of the proceedings in the log book and in that of the sailing mate, and shall
deliver to the captain the original records of the proceedings, stamped and folioed,
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with a memorandum of the folios, which he must rubricate, in order that it may be Article 615. Without the consent of the agent, the captain cannot have himself
presented to the judge or court of the port of destination. substituted by another person; and should he do so, besides being liable for all the
The statement of the captain shall be accepted if it is in accordance with those of the acts of the substitute and bound to the indemnities mentioned in the foregoing
crew and passengers; if they disagree, the latter shall be accepted, always saving article, the substitute as well as the captain may be discharged by the agent.
proof to the contrary.
Note: The prohibition against the captain’s substitution without the agent’s consent
Article 625. The captain, under his personal responsibility, as soon as he arrives at is essentially personal due to the confidence given to the captain arising from the fact
the port of destination, should get the necessary permission from the health and that he possesses the required technical ability and that he is the man worthy of
customs officers, and perform the other formalities required by the regulations of the shipowner’s trust.
administration, delivering the cargo without any defalcation, to the consignee, and in
a proper case, the vessel, rigging and freightage to the ship agent. Article 617. The captain cannot contract loans on respondentia, and should he do so
If by reason of the absence of the consignee or on account of the nonappearance of the contracts shall be void.
a legal holder of the bills of lading, the captain should not know to whom he is to Neither can he borrow money on bottomry for his own transactions, except on the
legally make the delivery of the cargo, he shall place it at the disposal of the proper portion of the vessel he owns, provided no money has been previously borrowed on
judge or court or authority, in order that he may determine what is proper with the whole vessel, and provided there does not exist any other kind of lien or
regards to its deposit, preservation and custody. obligation thereon. When he is permitted to do so, he must necessarily state what
interest he has in the vessel.
CASE FACTS HELD/RATIO DOCTRINE CLASS NOTES In case of violation of this article the principal, interest, and costs shall be charged to
Inter Tayong is Capt. Tayong A ship’s captain Captain’s 3 the private account of the captain, and the agent may furthermore have the right to
Orient v. Inter Orient’s had reasonable must be distinct roles: discharge him.
NLRC captain which grounds to accorded a (1) general
it terminated believe that the reasonable agent of the Article 621. A captain who borrows money on bottomry, or who pledges or sells
due to his safety of the measure of shipowner; (2) merchandise or provisions in other cases and without the formalities prescribed in
delay in vessel and the discretionary commander and this code, shall be liable for the principle, interest, and costs, and shall indemnify for
sailing to crew under his authority to technical the damages he may cause.
South Africa command decide what the director of the The captain who commits fraud in his accounts shall reimburse the amount
to load coal. required him to safety of the vessel [most defrauded, and shall be subject to the provisions contained in the penal code.
The delay was wait for the ship and of its important role];
due to delivery of the crew and cargo and (3) Article 583. If while on a voyage the captain should find it necessary to contract one
Tayong’s supplies needed specifically representative or more of the obligations mentioned in subdivisions 8 and 9 of Article 580, he shall
decision not for the repair of requires on a of the country apply to the judge or court if he is in Philippine territory, and otherwise to the consul
to embark for the ship. stipulated under whose of the Republic of the Philippines, should there be one, and, in his absence, to the
South Africa ocean voyage. flag he judge or court or proper local authority, presenting the certificate of the registration
until the navigates. sheet treated of in Article 612 and the instruments proving the obligation contracted.
vessel he The judge or court, the consul, or the local authority, as the case may be, in view of
commands the result of the proceedings instituted, shall make a temporary memorandum of
was repaired. their result in the certificate, in order that it may be recorded in the registry when the
vessel returns to the port of its registry, or so that it can be admitted as a legal and
(c) Prohibited acts and transactions preferred obligation in case of sale before its return, by reason of the sale of the
vessel on account of a declaration of unseaworthiness.
Article 613. A captain who navigates for freight in common or on shares cannot make The omission of this formality shall make the captain personally liable for the credits
any transaction for his exclusive account, and should he do so the profit shall belong prejudiced on his account.
to the other persons in interest, and the losses shall be for his own exclusive account.
3. Other Officers and Crew
Article 614. A captain who, having made an agreement to make a voyage, fails to (a) Contracts and formalities
perform his undertaking, without being prevented by fortuitous accident or force
majeure, shall indemnify for all the losses which he may cause, without prejudice to Article 634. The captain may make up the crew of his vessel with such number of
the criminal penalties which may be proper. men as he may consider proper, and in the absence of Filipino sailors, he may take
on foreigners residing in the country, the number thereof not to exceed one-fifth of

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the crew. If in foreign ports the captain should not find a sufficient number of Filipino
sailors, he may complete the crew with foreigners, with the consent of the consul or
marine authorities.
The agreement which the captain may make with the members of the crew and
others who go to makeup the complement of the vessel, to which reference is made
in Article 612, must be reduced to writing in the account book, without the
intervention of a notary public or clerk of court ("escribano"), signed by the parties
thereto and visaed by the marine authority if they be executed in Philippine territory
or by the consuls or consular agents of the Republic of the Philippines if executed
abroad, stating therein all the obligations which each one contracts and all the rights
he acquires said authorities taking care that these obligations and rights are recorded
in a clear and definite manner which give no room for doubts or claims.
The captain shall take care to read to them the articles of this Code which concern
them, stating in said document that they were read.
If the book contains the requisites prescribed in Article 612, and there should not
appear any signs of alterations in its entries, it shall be admitted as evidence in
questions which may arise between the captain and the crew with respect to the
agreements contained therein and the amounts paid on account of the same.
Every member of the crew may demand of the captain a copy, signed by the latter,
of the agreement and of the liquidation of his wages, as they appear in the book.
(b) Duties and liabilities
Article 635. A seaman who has been contracted to serve on a vessel cannot rescind
his contract nor fail to comply therewith except by reason of a legitimate impediment
which may have occurred.
Neither can he pass from the service of one vessel to another without obtaining the
written permission of the captain of the vessel on which he may be.
If, without obtaining said permission, the seaman who has signed for one vessel
should sign for another one, the second contract shall be void, and the captain may
choose between forcing him to fulfill the service to which he first bound himself or
look for a person to substitute him at his expense.
Furthermore, he shall lose the wages earned on his first contract to the benefit of the
vessel for which he may have signed.
A captain who, knowing that a seaman is in the service of another vessel, should
have made a new agreement with him, without having requested the permission
referred to in the foregoing paragraphs, shall be personally liable to the captain of
the vessel to which the seaman first belonged for that part of the indemnity, referred
to in the third paragraph of this article, which the seaman may not be able to pay.
(c) Rights
Article 636. Should a fixed period for which a seaman has signed not be stated, he
may not be discharged until the end of the return voyage to the port where he
enrolled.
Article 637. Neither can the captain discharge a seaman during the time of his
contract except for sufficient cause, the following being considered as such:
1. The perpetration of a crime which disturbs order on the vessel.
2. Repeated offenses of insubordination, against discipline, or against the
fulfillment of the service.
3. Repeated incapacity or negligence in the fulfillment of the service to be
rendered.
4. Habitual drunkenness.
5. Any occurrence which incapacitates the seaman to carry out the work under
his charge, with the exception of the provisions contained in article 644.
6. Desertion.
The captain may, however, before setting out on a voyage and without giving any
reason whatsoever, refuse to permit a seaman he may have engaged from going on
board and may leave him on land, in which case he will be obliged to pay him his
wages as if he had rendered services.
This indemnity shall be paid from the funds of the vessel if the captain should have
acted for reasons of prudence and in the interest of the safety and good service of
the former. Should this not be the case, it shall be paid by the captain personally.
After the vessel has sailed, and during the voyage and until the conclusion thereof,
the captain can not abandon any member of his crew on land or on the sea, unless,
by reason of being guilty of some crime, his imprisonment and delivery to the
competent authority is proper in the first port touched, which will be obligatory on
the captain.
Article 638. If, the crew having been engaged, the voyage is revoked by the will of
the agent or of the charterers before or after the vessel has put to sea or if the vessel
is in the same manner given a different destination than that fixed in the agreement
with the crew, the latter shall be indemnified because of the rescission of the contract
according to the case, viz:
1. If the revocation of the voyage should be decided before the departure of
the vessel from the port, each seaman engaged shall be given one month's
salary, besides what may be due him in accordance with his contract, for the
services rendered to the vessel up to the date of the revocation.
2. If the agreement should have been for a fixed amount for the whole voyage,
there shall be graduated what may be due for said month and days,
calculating the same in proportion to the estimated duration of the voyage,
in the judgment of experts, in the manner established in the law of civil
procedure; and if the proposed voyage should be of such short duration that
it is calculated at one month more or less, the indemnity shall be fixed for
fifteen days, discounting in all cases the sums advanced.
3. If the revocation should take place after the vessel has put to sea, the
sailors engaged for a fixed amount for the voyage shall receive the salary
which may have been offered them in full as if the voyage had terminated,
and those engaged by the month shall receive the amount corresponding to
the time they might have been on board and to the time they may require to
arrive at the port of destination, the captain being obliged, furthermore, to
pay said sailors the passage to the said port or to the port of sailing of the
vessel, as may be convenient for them.
4. If the agent or the charterers of the vessel should give said vessel a
destination other than that fixed in the agreement, and the members of the
crew should not agree thereto, they shall be given by way of indemnity half
the amount fixed in case no. 1, besides what may be owed them for the part
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 of the monthly wages corresponding to the days which have elapsed from
the date of their agreements.
If they accept the change, and the voyage, on account of the greater distance or for
other reasons, should give rise to an increase of wages, the latter shall be privately
regulated, or through amicable arbitrators in case of disagreement. Even though the
voyage may be to a nearer point, this shall not give rise to a reduction in the wages
agreed upon.
If the revocation or change of the voyage should originate from the shippers or
charterers, the agent shall have a right to demand of them the indemnity which is
justly due.
Article 639. If the revocation of the voyage should arise from a just cause
independent of the will of the agent or charterers, and the vessel should not have left
the port, the members of the crew shall not have any other right than to receive the
wages earned up to the day on which the revocation took place.
Article 640. The following shall be just causes for the revocation of the voyage:
1. A declaration of war or interdiction of commerce with the power to whose
territory the vessel was bound.
2. The blockade of the port of destination or the breaking out of an epidemic
after the agreement.
3. The prohibition to receive in said port the goods which make up the cargo of
the vessel.
4. The detention or embargo of the same by order of the government, or for
any other reason independent of the will of the agent.
5. The inability of the vessel to navigate.
Article 641. If, after a voyage has been begun, any of the first three causes
mentioned in the foregoing article should occur, the sailors shall be paid at the port
the captain may deem it advisable to make for the benefit of the vessel and cargo,
according to the time they may have served thereon; but if the vessel is to continue
the voyage, the captain and the crew may mutually demand the enforcement of the
contract.
In case of the occurrence of the fourth cause, the crew shall continue to be paid half
wages, if the agreement is by month but if the detention should exceed three
months, the engagement shall be rescinded and the crew shall be paid what they
should have earned, according to the contract, if the voyage had been made. And if
the agreement had been made for a fixed sum for the voyage, the contract must be
complied within the terms agreed upon.
In the fifth case, the crew shall not have any other right than be entitled to recover
the wages earned; but if the disability of the vessel should have been caused by the
negligence or lack of skill of the captain, engineer, or sailing mate, they shall
indemnify the crew for the loss suffered, always reserving the criminal liability which
may be proper.
Article 642. If the crew has been engaged to work on shares they shall not be
entitled, by reason of the revocation, delay, or greater extension of the voyage, to
anything but the proportionate part of the indemnity paid into the common funds of
the vessel by the persons liable for said occurrences.
Article 643. If the vessel and her freight should be totally lost, by reason of capture
or wreck, all rights of the crew to demand any wages whatsoever shall be
extinguished, as well as that of the agent for the recovery of the advances made.
If a portion of the vessel or freight should be saved, or part of either, the crew
engaged on wages, including the captain, shall retain their rights on the salvage, so
far as they go, on the remainder of the vessel as well as value of the freightage or
the cargo saved; but sailors who are engaged on shares shall not have any right
whatsoever to the salvage of the hull, but only on the portion of the freightage
saved. If they should have worked to collect the remainder of the ship-wrecked
vessel, they shall be given an award in proportion to the efforts made and to the risks
encountered in order to accomplish the salvage.
Article 644. A seaman who falls sick shall not lose his right to wages during the
voyage, unless the sickness is the result of his own fault. At any rate, the costs of the
attendance and cure shall be defrayed from the common funds, in the form of a loan.
If the sickness should be caused by an injury received in the service or defense of the
vessel the seaman shall be attended and cured from the common funds, there being
deducted before anything else from the proceeds of the freight, the cost of the
attendance and cure.
Article 645. If a seaman should die during the voyage his heir shall be given the
wages earned and not received, according to his engagement and the reason for his
death, namely —
If he should have died a natural death and should have been engaged on wages
there shall be paid what may have been earned up to the date of his death.
If the engagement had been made for a fixed sum for the whole voyage there shall
be paid half the amount earned if the seaman died on the voyage out, and the whole
amount if he died on the return voyage.
And if the engagement had been made on shares and the death should have
occurred after the voyage was begun, the heirs shall be paid the entire portion due
the seaman; but should the latter have died before the departure of the vessel from
the port, the heirs shall not be entitled to claim anything.
If the death should have occurred in the defense of the vessel, the seaman shall be
considered as living, and his heirs shall be paid, at the end of the voyage, the full
amount of wages or the full part of the profits due him as to the others of his grade.
The seaman shall likewise be considered as present in the event of his capture when
defending the vessel, in order to enjoy the same benefits as the rest; but should he
have been captured on account of carelessness or other accident not related to the
service, he shall only receive the wages due up to the day of his capture.
Article 646. The vessel with her engines, rigging, equipment, and freights shall be
liable for the wages earned by the crew engaged per month or for the trip, the
liquidation and payment ought to take place between one voyage and the other.
After a new voyage has been undertaken, credits such as the former shall lose their
right of preference.
Article 647. The officers and the crew of the vessel shall be exempted from all
obligations contracted, if they deem it proper, in the following cases:
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 1. If, before the beginning of the voyage, the captain attempts to change it, or
there occurs a naval war with the power to which the vessel was destined.
2. If a disease should break out and be officially declared epidemic in the port
of destination.
3. If the vessel should change owner or captain.
4. Supercargoes
Article 649. Supercargoes shall discharge on board the vessel the administrative
duties which the agent or shippers may have assigned them; they shall keep an
account and record of their transactions in a book which shall have the same
conditions and requisites as required for the accounting book of the captain, and shall
respect the latter in his duties as chief of the vessel.
The powers and liabilities of the captain shall cease, when there is a supercargo, with
regard to that part of the administration legitimately conferred upon the latter, but
shall continue in force for all acts which are inseparable from his authority and office.
Article 650. All the provisions contained in the second section of title iii, book ii, with
regard to qualifications, manner of making contracts, and liabilities of factors shall be
applicable to supercargoes.
Article 651. Supercargoes cannot, without special authorization or agreement, make
any transaction for their own account during the voyage, with the exception of the
ventures which, in accordance with the custom of the port of destination, they are
permitted to do.
Neither shall they be permitted to invest in the return trip more than the profits from
the ventures, unless there is a special authorization thereto from the principals.
Note: Supercargo = an agent of the owner of goods shipped as cargo on a vessel,
who has charge of the cargo on board, sells the cargo to the best advantage in the
foreign markets, buys a cargo to be brought back on the return voyage of the ship,
and comes home with it.
D. Accidents and Damages in Maritime Commerce
1. Averages
(a) Nature and Kinds
Article 806. For the purposes of this code the following shall be considered averages:
1. All extraordinary or accidental expenses which may be incurred during the
voyage in order to preserve the vessel, the cargo, or both.
2. Any damages or deteriorations which the vessel may suffer from the time it
puts to sea from the port of departure until it casts anchor in the port of
destination, and those suffered by the merchandise from the time they are
loaded in the port of shipment until they are unloaded in the port of their
consignment.
Article 807. The petty and ordinary expenses incident to navigation, such as those of
pilotage of coasts and ports, those of lighterage and towage, anchorage, inspection,
health, quarantine, lazaretto, and other so-called port expenses, costs of barges and
unloading until the merchandise is placed on the wharf, and any other usual
expenses of navigation, shall be considered ordinary expenses to be defrayed by the
shipowner, unless there is an express agreement to the contrary.
Article 808. Averages shall be:
1. Simple or particular.
2. General or gross.
Notes:
Average constitutes of:
(1) expenses, which must be:
(a) extraordinary or accidental
(b) incurred during the voyage
(c) incurred in order to preserve the vessel, the cargo, or both
(2) damages or deteriorations, which must:
(a) have been suffered from the time the vessel puts to sea from the port of
departure until it casts anchor in the port of destination, or
(b) have been suffered by the merchandise from the time they are loaded in the
port of shipment until they are unloaded in the port of their consignment
Expenses in Art 807 are not considered average.
Law of averages is not applicable when negligence of the captains of the colliding
vessel is the cause of the collision, and the cargoes are not jettisoned to save some
of the cargoes and the vessel (Nat’l Dev’t v CA).
(1) Simple or Particular
(a) Defined
Article 809. Simple or particular averages shall be, as a general rule, all the expenses
and damages caused to the vessel or to her cargo which have not redounded to the
benefit and common profit of all the persons interested in the vessel and her cargo,
and especially the following:
1. The damages suffered by the cargo from the time of its embarkation until it
is unloaded, either on account of the nature of the goods or by reason of an
accident at sea or force majeure, and the expenses incurred to avoid and
repair the same.
2. The damages suffered by the vessel in her hull, rigging, arms, and
equipment, for the same causes and reasons, from the time she puts to sea
from the port of departure until she anchored in the port of destination.
3. The damages suffered by the merchandise loaded on deck, except in
coastwise navigation, if the marine ordinances allow it.
4. The wages and victuals of the crew when the vessel should be detained or
embargoed by a legitimate order or force majeure, if the charter should
have been for a fixed sum for the voyage.
5. The necessary expenses on arrival at a port, in order to make repairs or
secure provisions.
6. The lowest value of the goods sold by the captain in arrivals under stress for
the payment of provisions and in order to save the crew, or to cover any
other requirement of the vessel against which the proper amount shall be
charged.
7. The victuals and wages of the crew during the time the vessel is in
quarantine.
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 8. The damage suffered by the vessel or cargo by reason of an impact or
collision with another, if it were accidental and unavoidable. If the accident
should occur through the fault or negligence of the captain, the latter shall
be liable for all the damage caused.
9. Any damage suffered by the cargo through the faults, negligence, or
barratry of the captain or of the crew, without prejudice to the right of the
owner to recover the corresponding indemnity from the captain, the vessel,
and the freight.
Note: Enumeration under Art 809 is not exclusive.
(b) Effects
Article 810. The owner of the goods which gave rise to the expense or suffered the
damage shall bear the simple or particular averages.
(2) Gross or General
(a) Defined
Article 811. General or gross averages shall be, as a general rule, all the damages
and expenses which are deliberately caused in order to save the vessel, her cargo, or
both at the same time, from a real and known risk, and particularly the following:
1. The goods or cash invested in the redemption of the vessel or cargo
captured by enemies, privateers, or pirates, and the provisions, wages, and
expenses of the vessel detained during the time the arrangement or
redemption is taking place.
2. The goods jettisoned to lighten the vessel, whether they belong to the
vessel, to the cargo, or to the crew, and the damage suffered through said
act by the goods kept.
3. The cables and masts which are cut or rendered useless, the anchors and
the chains which are abandoned in order to save the cargo, the vessel, or
both.
4. The expenses of removing or transferring a portion of the cargo in order to
lighten the vessel and place her in condition to enter a port or roadstead,
and the damage resulting therefrom to the goods removed or transferred.
5. The damage suffered by the goods of the cargo through the opening made
in the vessel in order to drain her and prevent her sinking.
6. The expenses caused through floating a vessel intentionally stranded for the
purpose of saving her.
7. The damage caused to the vessel which it is necessary to break open,
scuttle, or smash in order to save the cargo.
8. The expenses of curing and maintaining the members of the crew who may
have been wounded or crippled in defending or saving the vessel.
9. The wages of any member of the crew detained as hostage by enemies,
privateers, or pirates, and the necessary expenses which he may incur in his
imprisonment, until he is returned to the vessel or to his domicile, should he
prefer it.
10. The wages and victuals of the crew of a vessel chartered by the month
during the time it should be embargoed or detained by force majeure or by
order of the Government, or in order to repair the damage caused for the
common good.
11. The loss suffered in the value of the goods sold at arrivals under stress in
order to repair the vessel because of gross average.
12. The expenses of the liquidation of the average.
Article 817. If in lightening a vessel on account of a storm, in order to facilitate her
entry into a port or roadstead, part of her cargo should be transferred to lighters or
barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss
has originated from a gross average, the amount thereof being distributed between
the entire vessel and cargo which caused the same.
If, on the contrary, the merchandise transferred should be saved and the vessel
should be lost, no liability can be demanded of the salvage.
Article 818. If, as a necessary measure to extinguish a fire in a port; roadstead;
creek, or bay, it should be decided to sink any vessel, this loss shall be considered
gross average, to which the vessels saved shall contribute.
Notes:
Requisites for general average:
1. Common danger
2. For the common safety, part of the vessel or the cargo, or both is sacrificed
deliberately
3. From the expenses or damages caused follows the successful saving of the
vessel and cargo
4. The expenses or damages should have been incurred or inflicted after
talking legal steps and authority
(b) Essential Requisites
Article 813. In order to incur the expenses and cause the damages corresponding to
gross average, a previous resolution of the captain, adopted after deliberation with
the sailing mate and other officers of the vessel, and with a hearing of the persons
interested in the cargo who may be present, shall be required.
If the latter shall object, and the captain and officers, or a majority, or the captain, if
opposed to the majority, should consider certain measures necessary, they may be
executed under his liability, without prejudice to the freighters exercising their rights
against the captain before the judge or court of competent jurisdiction, if they can
prove that he acted with malice, lack of skill, or negligence.
If the persons interested in the cargo, being on the vessel, should not be heard, they
shall not contribute to the gross average, which contribution shall be paid by the
captain, unless the urgency of the case should be such that the time necessary for
previous deliberation was lacking.
Article 814. The resolution adopted to cause the damages which constitute a general
average must necessarily be entered in the log book, stating the motives and reasons
therefor, the votes against it, and the reasons for the disagreement should there be
any, and the irresistible and urgent causes which moved the captain if he acted of his
own accord.
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In the first case the minutes shall be signed by all the persons present who could do 2. Those in the hold, always beginning with those of the greatest weight and
so before taking action if possible, and if not at the first opportunity; in the second smallest value, to the amount and number absolutely indispensable.
case by the captain and by the officers of the vessel.
In the minutes and after the resolution there shall be stated in detail all the goods Article 816. In order that the goods jettisoned may be included in the gross average
cast away, and mention shall be made of the injuries caused to those kept on board. and the owners thereof be entitled to indemnity, it shall be necessary in so far as the
The captain shall be obliged to deliver one copy of these minutes to the maritime cargo is concerned that their existence on board be proven by means of the bill of
judicial authority of the first port he may make within twenty-four hours after his lading; and with regard to those belonging to the vessel, by means of the inventory
arrival, and to ratify it immediately by an oath. made up before the departure, in accordance with the first paragraph of Article 612.
Article 860. If, notwithstanding the jettison of the merchandise, breakage of masts,
ropes, and equipment, the vessel should be lost running said risk, no contribution (e) Jason Clauses (York-Antwerp Rules, Rule D)
whatsoever by reason of gross average shall be proper. Rights to contribution in general average shall not be affected, though the
The owners of the goods saved shall not be liable for the indemnity of those event which gave rise to the sacrifice or expenditure may have been due to the
jettisoned, lost, or damaged. fault of one of the parties to the adventure; but this shall not prejudice any
remedies or defenses which may be open against or to that party in respect of
CASE FACTS HELD/RATIO DOCTRINE CLASS such fault.
NOTES
Magsaysay SS San Antonio, The expenses incurred It is the 2. Arrival Under Stress
Inc. v. owned by in floating the ship is deliverance
Agan Magsaysay, had not a general average: from an Note: Arrival under stress is the arrival of a vessel at the nearest and most
in its cargo (1) vessel & cargo immediate, convenient port, if during the voyage the vessel cannot continue the trip to the port
belonging to were at the time in no impending of destination due to: (1) lack of provisions; (2) a well-founded fear of seizure,
Agan. The ship imminent danger; (2) peril, by a privateers, or pirates; or (3) by reason of any accident of the sea disabling it to
ran aground the cargo, without common navigate.
after having a need of expensive sacrifice, that
stopover so salvage operation, constitutes (a) Causes
Magsaysay had have been unloaded the essence
it refloated. by the owners; (3) of general Article 819. If during the voyage the captain should believe that the vessel cannot
Agan did not salvage operation was average. continue the trip to the port of destination on account of the lack of provisions, well-
make a for the benefit of the founded fear of seizure, privateers, or pirates, or by reason of any accident of the sea
deposit/bond to vessel and not for the disabling it to navigate, he shall assemble the officers and shall summon the persons
answer for the purpose of saving the interested in the cargo who may be present, and who may attend the meeting
contribution to cargo; (4) expenses or without the right to vote; and if, after examining the circumstances of the case, the
the average. damages incurred reason should be considered well-founded, the arrival at the nearest and most
were not taken convenient port shall be agreed upon, drafting and entering the proper minutes,
through proper legal which shall be signed by all, in the log book.
steps and authority. The captain shall have the deciding vote, and the persons interested in the cargo,
may make the objections and protests they may deem proper, which shall be entered
(c) Effects in the minutes in order that they may make use thereof in the manner they may
Article 812. In order to satisfy the amount of the gross or general averages, all the consider advisable.
persons having an interest in the vessel and cargo therein at the time of the
occurrence of the average shall contribute. Article 820. An arrival shall not be considered lawful in the following cases:
1. If the lack of provisions should arise from the failure to take the necessary
(d) Jettison, Arts. 815, 816 provisions for the voyage according to usage and customs, or if they should
have been rendered useless or lost through bad stowage or negligence in
Article 815. The captain shall supervise the jettison, and shall order the goods cast their care.
overboard in the following order: 2. If the risk of enemies, privateers, or pirates should not have been well
1. Those which are on deck, beginning with those which embarrass the known, manifest, and based on positive and provable facts.
handling of the vessel or damage her, preferring, if possible, the heaviest
ones and those of least utility and value.

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 3. If the defect of the vessel should have arisen from the fact that it was not
repaired, rigged, equipped, and prepared in a manner suitable for the
voyage, or from some erroneous order of the captain.
4. When malice, negligence, want of foresight, or lack of skill on the part of the
captain exists in the act causing the damage.
(b) Formalities
Article 819. If during the voyage the captain should believe that the vessel cannot
continue the trip to the port of destination on account of the lack of provisions, well-
founded fear of seizure, privateers, or pirates, or by reason of any accident of the sea
disabling it to navigate, he shall assemble the officers and shall summon the persons
interested in the cargo who may be present, and who may attend the meeting
without the right to vote; and if, after examining the circumstances of the case, the
reason should be considered well-founded, the arrival at the nearest and most
convenient port shall be agreed upon, drafting and entering the proper minutes,
which shall be signed by all, in the log book.
The captain shall have the deciding vote, and the persons interested in the cargo,
may make the objections and protests they may deem proper, which shall be entered
in the minutes in order that they may make use thereof in the manner they may
consider advisable.
Article 822. If in order to make repairs to the vessel or because there is danger that
the cargo may suffer damage, it should be necessary to unload, the captain must
request authorization from the competent judge or court for the removal, and carry it
out with the knowledge of the person interested in the cargo, or his representative,
should there be any.
In a foreign port, it shall be the duty, of the Philippine Consul, where there is one, to
give the authorization.
In the first case, the expenses shall be for the account of the ship agent or owner,
and in the second, they shall be chargeable against the owners of the merchandise
for whose benefit the act was performed.
If the unloading should take place for both reasons, the expenses shall be divided
proportionately between the value of the vessel and that of the cargo.
(c) Expenses
Article 821. The expenses of an arrival under stress shall always be for the account of
the shipowner or agent, but they shall not be liable for the damages which may be
caused the shippers by reason of the arrival provided the latter is legitimate.
Otherwise, the ship agent and the captain shall be jointly liable.
Article 822. If in order to make repairs to the vessel or because there is danger that
the cargo may suffer damage, it should be necessary to unload, the captain must
request authorization from the competent judge or court for the removal, and carry it
out with the knowledge of the person interested in the cargo, or his representative,
should there be any.
In a foreign port, it shall be the duty, of the Philippine Consul, where there is one, to
give the authorization.
In the first case, the expenses shall be for the account of the ship agent or owner,
and in the second, they shall be chargeable against the owners of the merchandise
for whose benefit the act was performed.
If the unloading should take place for both reasons, the expenses shall be divided
proportionately between the value of the vessel and that of the cargo.
(d) Responsibility of Captain
Article 823. The custody and preservation of the cargo which has been unloaded shall
be intrusted to the captain, who shall be responsible for the same, except in cases of
force majeure.
Article 824. If the entire cargo or part thereof should appear to be damaged, or there
should be imminent danger of its being damaged, the captain may request of the
competent judge or court, or of the consul in a proper case, the sale of all or of part
of the former, and the person taking cognizance of the matter shall authorize it, after
an examination and declaration of experts, advertisements, and other formalities
required by the case, and an entry in the book, in accordance with the provisions of
Article 624.
The captain shall, in a proper case, justify the legality of his conduct, under the
penalty of answering to the shipper for the price the merchandise would have
brought if they had arrived in good condition at the port of destination.
Article 825. The captain shall be responsible for the damages caused by his delay, if
after the cause of the arrival under stress has ceased, he should not continue the
voyage. If the cause of arrival should have been the fear of enemies, privateers, or
pirates, a deliberation and resolution in a meeting of the officers of the vessel and
persons interested in the cargo who may be present, in accordance with the
provisions contained in Article 819, shall precede the departure
3. Collisions
Notes:
Collision = the impact of 2 moving vessels
Allision = the striking of a moving vessel against one that is stationary, or a vessel
and other floating, though non-navigable objects
(a) Classes and Effects
(1) Fortuitous
Article 830. If a vessel should collide with another, through fortuitous event or force
majeure, each vessel and its cargo shall bear its own damages.
Article 832. If by reason of a storm or other cause of force majeure, a vessel which is
properly anchored and moored should collide with those nearby, causing them
damages, the injury occasioned shall be considered as particular average of the
vessel run into.
(2) Culpable
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 the consigned the mortgagee both shall be
Article 826. If a vessel should collide with another, through or the fault, negligence, lost/damaged and solidarily
or lack of skill of the captain, sailing mate, or any other member of the complement, cargoes seeks to manager/operator responsible for
the owner of the vessel at fault shall indemnify the losses and damages suffered, recover. of Dona Nati the losses and
after an expert appraisal. respectively, are damages suffered
both liable to Dev’t by their cargoes.
Article 827. If the collision is imputable to both vessels, each one shall suffer its own Insurance.
damages, and both shall be solidarily responsible for the losses and damages Gov’t v. The Gov’t seeks to The owners of Where both
occasioned to their cargoes. Phil. recover the value both vessels are vessels are to
Steamship of sacks of rice liable for the loss blame, both shall
Article 831. If a vessel should be forced by a third vessel to collide with another, the which were lost at of sacks of rice. be solidarily
owner of the third vessel shall indemnify the losses and damages caused, the captain sea, as a result of Antipolo’s mate responsible for
thereof being civilly liable to said owner. a collision was negligent in the damage
between the having permitted occasioned to
(3) Inscrutable Fault steamer Antipolo the vessel to their cargoes.
owned by the Phil. approach directly
Article 828. The provisions of the preceding article are applicable to the use in which Steamship, and towards the Isabel
it cannot be determined which of the two vessels has caused the collision. the vessel Isabel, until the two were
upon which said in dangerous
CASE FACTS HELD/RATIO DOCTRINE CLASS rice was proximity.
NOTES embarked.
A. Urrutia A collision Those managing The steamer’s Smith Bell M/V Don Carlos, M/V Don Carlos When 2 power-
& Co. v. occurred between the steamer were greater facility of and Co. v. owned by Go was negligent and driven vessels are
Baco River a steamship and a guilty of gross maneuvering over CA Thong collided at fault in the meeting end on,
Plantation sail vessel. The negligence; and so a sail vessel with M/S Yotai collision: (1) while or nearly end on,
sail vessel kept its they could recover means it has the Maru resulting to M/S Yotai Maru so as to involve
course until just nothing. The greater ability to the latter’s having turned to its right, risk of collision,
before its steamer was avoid collisions; holes on her M/V Don Carlos each shall alter
helmsman threw brought into such so as a general portside through turned to its left; her course to
it hard to port close proximity to rule, when which seawater (2) Don Carlos starboard (right
(left side) in an the sail vessel that meeting a sailing rushed in, failed to have on side), so that
effort to avoid the a collision was vessel, whether damaging all its board “proper each may pass on
collision. But the apparently close hauled or cargo. The look-out”; (3) Don the port (left) side
movement was inevitable. with the wind insurance Carlos’ 2nd mate of the other.
unsuccessful and free, the sail companies as was, immediately
the sail vessel vessel has a right subrogees before and during
rammed the to keep her commenced the collision, in
steamer. The course, and it is actions against Go command
steamer sank and the duty of the Thong for although its
8 lives were lost. steamer to adopt damages captain, was in the
The sail vessel precautions as will sustained by the vessel at the time.
was considerably avoid the sail shipments.
injured. vessel.
National National Dev’t’s A vessel who Art. 827 provides 4. Shipwrecks
Dev’t Co. Dona Nati collided suffers collision that if the collision
v. CA, with SS through its own is imputable to Article 840. The losses and deteriorations suffered by a vessel and her cargo by
supra Yasushima Maru. fault must bear its both vessels, each reason of shipwreck or stranding shall be individually for the account of the owners,
Dev’t Insurance, own losses, so one shall suffer its the part which may be saved belonging to them in the same proportion.
as subrogee of NDP and MCP, as own damages and

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Article 841. If the wreck or stranding should be caused by the malice, negligence, or
lack of skill of the captain, or because the vessel put to sea was insufficiently repaired
and equipped, the shipagent or the shippers may demand indemnity of the captain
for the damages caused to the vessel or to the cargo by the accident, in accordance
with the provisions contained in Articles 610, 612, 614, and 621.
Article 842. The goods saved from the wreck shall be specially bound for the payment
of the expenses of the respective salvage, and the amount thereof must be paid by
the owners of the former before they are delivered to them, and with preference over
any other obligation if the merchandise should be sold.
Article 843. If several vessels sail under convoy, and any of them should be wrecked,
the cargo saved shall be distributed among the rest in proportion to the amount
which each one is able to take.
If any captain should refuse, without sufficient cause, to receive what may
correspond to him, the captain of the wrecked vessel shall enter a protest against
him, before two sea officials, of the losses and damages resulting therefrom, ratifying
the protest within twenty-four hours after arrival at the first port, and including it in
the proceedings he must institute in accordance with the provisions contained in
Article 612.
If it is not possible to transfer to the other vessels the entire cargo of the vessel
wrecked, the goods of the highest value and smallest volume shall be saved first, the
designation thereof to be made by the captain with the concurrence of the officers of
his vessel
Notes: Shipwreck = a ship which has received injuries rendering her incapable of
navigation; or loss of a vessel at sea, either by being swallowed up by the waves, by
running against another vessel or thing at sea, or on the coast
Gen Rule: In shipwreck, each owner shall bear his own losses, such as those arising
from force majeure
Except: Captain shall be liable in case the wreck or stranding is due to the (1) malice,
negligence, or slack of skill of the captain, or (2) because the vessel put to sea was
insufficiently repaired and equipped
(a) Salvage Law (Act No. 2616)
SECTION 1. When in case of shipwreck, the vessel or its cargo shall be beyond the
control of the crew, or shall have been abandoned by them, and picked up and
conveyed to a safe place by other persons, the latter shall be entitled to a reward for
the salvage.
Those who, not being included in the above paragraph, assist in saving a vessel or its
cargo from shipwreck, shall be entitled to a like reward.
SECTION 2. If the captain of the vessel, or the person acting in his stead, is present,
no one shall take from the sea, or from the shores or coast merchandise or effects
proceeding from a shipwreck or proceed to the salvage of the vessel, without the
consent of such captain or person acting in his stead.
SECTION 3. He who shall save or pick up a vessel or merchandise at sea, in the
absence of the captain of the vessel, owner, or a representative of either of them,
they being unknown, shall convey and deliver such vessel or merchandise, as soon as
possible, to the Collector of Customs, if the port has a collector, and otherwise to the
provincial treasurer or municipal mayor.
SECTION 4. After the salvage is accomplished, the owner or his representative shall
have a right to the delivery of the vessel or things saved, provided that he pays, or
gives a bond to secure, the expenses and the proper reward.
The amount and sufficiency of the bond, in the absence of agreement, shall be
determined by the Collector of Customs or by the Judge of the Court of First Instance
of the province in which the things saved may be found.
SECTION 5. The Collector of Customs, provincial treasurer, or municipal mayor, to
whom a salvage is reported, shall order:
a. That the things saved be safeguard and inventoried.
b. The sale at public auction of the things saved which may be in danger of
immediate loss or of those whose conservation is evidently prejudicial to the
interests of the owner, when no objection is made to such sale.
c. The advertisement within the thirty days subsequent to the salvage, in one
of the local newspapers or in the nearest newspaper published, of all the
details of the disaster, with a statement of the mark and number of the
effects requesting all interested persons to make their claims.
SECTION 6. If, while the vessel or things saved are at the disposition of the
authorities, the owner or his representative shall claim them, such authorities shall
order their delivery to such owner or his representative, provided that there is no
controversy over their value, and a bond is given by the owner or his representative
to secure the payment of the expenses and the proper reward. Otherwise, the
delivery shall nor be made until the matter is decided by the Court of First Instance of
the province.
SECTION 7. No claim being presented in the three months subsequent to the
publication of the advertisement prescribed in sub-section (c) of Section five, the
things save shall be sold at public auction, and their proceeds, after deducting the
expenses and the proper reward shall be deposited in the insular treasury. If three
years shall pass without anyone claiming it, one-half of the deposit shall be adjudged
to him who saved the things, and the other half to the insular government.
SECTION 8. The following shall have no right to a reward for salvage or assistance:
a. The crew of the vessel shipwrecked or which was is danger of shipwreck;
b. He who shall have commenced the salvage in spite of opposition of the
captain or his representative; and
c. He who shall have failed to comply with the provisions of Section three.
SECTION 9. If, during the danger, an agreement is entered into concerning the
amount of the reward for salvage or assistance, its validity may be impugned
because it is excessive, and it may be required to be reduced to an amount
proportionate to the circumstances.
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 to a safe port. but also as an salvage.
SECTION 10. In a case coming under the last preceding section, as well as in the Salvor seeks incentive to render
absence of an agreement, the reward for salvage or assistance shall be fixed by the remuneration for prompt and efficient
Court of First Instance of the province where the things salvaged are found, taking the salvage aid in such cases
into account principally the expenditures made to recover or save the vessel or the service it when requested by
cargo or both, the zeal demonstrated, the time employed, the services rendered, the rendered. those in the midst of
excessive express occasioned the number of persons who aided, the danger to which such unfortunate
they and their vessels were exposed as well as that which menaced the things circumstances.
recovered or salvaged, and the value of such things after deducting the expenses. Erlanger Steamship Nippon The ship is deemed The relief of
& & its crew left the abandoned and E&G property from
SECTION 11. From the proceeds of the sale of the things saved shall be deducted, Galinger ship and arrived at has a valid salvage an impending
first, the expenses of their custody, conservation, advertisement, and auction, as well (E&G) v. Zambales. The claim for it satisfied peril of the sea,
as whatever taxes or duties they should pay for their entrance; then there shall be Swedish ship was stranded the 3 requisites: (1) by the voluntary
deducted the expenses of salvage; and from the net amount remaining shall be taken East but the remaining marine peril; (2) exertions of
the reward for the salvage or assistance which shall not exceed fifty per cent of such Asiatic goods and crews service voluntarily those who are
amount remaining. Co. were eventually rendered when not under no legal
fetched. required as an obligation to
SECTION 12. If in the salvage or in the rendering of assistance different persons shall E&G proceeded to existing duty or from render
have intervened the reward shall be divided between them in proportion to the tow “the stranded a special contract; assistance, and
services which each one may have rendered, and, in case of doubt, in equal parts. and abandoned (3) success, in whole the consequent
Those who, in order to save persons, shall have been exposed to the same dangers Nippon” and or in part, or that ultimate safety
shall also have a right to participation in the reward. brought an action the service rendered of the property,
against the contributed to such constitute a
SECTION 13. If a vessel or its cargo shall have been assisted or saved, entirely or insurance success. case of salvage.
partially, by another vessel, the reward for salvage or for assistance shall be divided companies who
between the owner, the captain, and the remainder of the crew of the latter vessel, represented the
so as to give the owner a half, the captain a fourth, and all the remainder of the crew cargo salved from
the other fourth of the reward, in proportion to their respective salaries, in the the Nippon.
absence of an agreement to the contrary. The express of salvage, as well as the Atlantic, While Kyodo Maru Atlantic Gulf is In fixing the
reward for salvage or assistance, shall be a charge on the things salvaged on their Gulf & was discharging entitled to reward for
value. Pacific its coal in Manila compensation but its salvage, the ff
Co. v. Bay, it hit one of amount claimed was should be
Notes: Uchida its submerged exorbitant. In the considered:
Key Elements of Salvage: Kisen lighter perforating absence of an expenditures
1. Act/service rendered Kaisha the ship's hull so it agreement, the made to recover
2. Goods rescued began to sink. court may fix the or save the
3. Compensation Atlantic Gulf reward for salvage vessel or the
4. Derelict salvaged the ship in the province cargo or both,
and seeks to where things are demonstrated
CASE FACTS HELD/RATIO DOCTRINE CLASS recover found. zeal, time
NOTES compensation. employed,
G. During a storm Salvor is entitled to The towage of a rendered
Urrutia & the steamer remuneration. vessel in peril to services,
Co. v. Nuestra Señora Compensation in some place of excessive
The Pasig belonging to G such cases deserves security, when it expenses
Steamer Urrutia, salvaged to be considered as is unable by incurred, no. of
and The Pasig a reward for the itself to reach persons who
Lighter Steamer’s San service rendered in the same, is a aided, level of
Co. Juan by taking it the midst of a peril service of exposure to

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 danger, and; a. until a fixed day = determined no. of days/month
whatever b. for a voyage = either outgoing or return, or round trip
“menaced the 3. As to freightage
things a. for a fixed amount for the whole cargo
recovered or b. for a fixed rate per ton
salvaged” and c. for so much per month
the value of the
said things after CASE FACTS HELD/RATIO DOCTRINE CLASS
deducting the NOTES
expenses Planters Planters bought A common If the charter
Barrios v. Capt. Barrios of Service rendered by 3 elements to a Products v. urea fertilizer carrier shall agreement
Go MV Henry I Barrios constituted valid salvage CA, supra from Mitsubishi remain as such, entered into is one
Thong received an SOS mere “towage” since claim: (1) a which Planters notwithstanding of
signal from MV there was no danger marine peril; (2) shipped aboard the charter of demise/bareboat
Don Alfredo of the vessel service the M/V Sun the whole or charter, the carrier
owned by Go capsizing, in view of voluntarily Plum. Prior to its part of the becomes private
Tong. Capt. the fairness of the rendered when voyage, a time vessel by one or and the
Barrios steered sea, and the not required as charter-party on more persons, presumption of
towards MV Don condition of the an existing duty the vessel was provided the negligence does
Alfredo and towed weather. Although or from a entered into charter is limited not arise.
it. It was due to MV Don Alfredo was special contract; between its owner to the ship only,
MV Don Alfredo's drifting towards the and (3) success and Mitsubishi as as in the case of
engine failure and open sea, there was in whole or in shipper/charterer. a time-charter or
loss of propeller no danger of it part, or that the Upon arrival, urea voyage-charter.
that it was drifting floundering or being service shortage and But common
slowly in the open stranded, as it was rendered contamination carrier is still not
sea, at a far from any island contributed to was reported. liable due to its
moderate wind. or rocks. such success. Planters filed an EOD.
Barrios seeks to action for
recover damages.
compensation for Coastwise Pag-asa Sales Coastwise’s As common carrier
“salvage” Lighterage entered into a contract with the is liable for breach
Corp. v. CA contract to consignee was of the contract of
E. Special Contracts of Maritime Commerce transport one of carriage, having
1. Charter Parties molasses w/ affreightment – failed to overcome
a. Definition Coastwise, using where the vessel the presumption
the latter’s dumb owner leases of negligence with
Note: Charter party is a contract by virtue of which the owner or the agent of the barges. But one part or all of its the loss and
vessel binds himself to transport merchandise or persons for a fixed price. It is also a of the barges space to haul destruction of
lease of the whole or a portion of the vessel for the transportation of goods pr person struck an goods for goods it
from one port to another. unknown sunken others. transported, by
object which Coastwise was proof of its
b. Kinds made a hole not converted exercise of EOD.
causing water to into a private
Notes: gush in through it. carrier, but
1. As to extent of vessel hired As a result, the remained a
a. total = whole vessel chartered molasses at the common carrier
b. partial = only a part of the vessel chartered cargo tanks were and was still
2. As to time contaminated and liable as such.

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 became unfit for There was no Article 719. A loan in which under any condition whatever, the repayment of the sum
the use it was proof of the loaned and of the premium stipulated depends upon the safe arrival in port of the
intended. exercise of EOD. goods on which it is made, or of the price they may receive in case of accident, shall
Caltex MT Vector carried Caltex & MT A charter party is be considered a loan on bottomry or respondentia.
Phils. v. Caltex's gasoline Vector entered a contract by
Sulpicio by virtue of a into a contract which an entire Notes:
Lines charter contract of affreightment, ship, or some Loan on bottomry or respondentia is a real, unilateral, aleatory contract where:
between them. also known as a principal part (1) delivery of the amount loaned is necessary for the perfection of the
MT Vector and MV voyage charter. thereof, is let by contract;
Dona Paz (owned Caltex, as a the owner to (2) although there are reciprocal benefits, the contract produces obligations only
by Sulpicio Lines) charterer, has another person for for 1 party, the borrower, who must return the amount borrowed plus
collided which no obligation a specified time or premium; and
killed the latter's before use. The charterer (3) the lender really runs known risks
passengers. transporting its mans the vessel Loan on bottomry or respondentia, unlike ordinary loan, is not subject to the
Sulpicio filed a cargo to ensure with his own provisions of the Usury Law = there is no limit as to the rate of the intrest in view of
complaint against that the vessel it people and the fact that there are different classes and various accidents to which maritime
Caltex for having chartered becomes, in voyages are exposed.
chartered MT complied with all effect, the owner
Vector w/ gross legal for the voyage or F. Bill of Lading
and evident bad requirements. service stipulated,
faith. The duty rests subject to liability Notes: Bill of lading operates both as a:
upon the for damages 1. receipt for the goods shipped which contains date, place of shipment, goods
common carrier caused by description, conditions quality and value
simply for being negligence. 2. contract to transport and deliver the goods as stipulated which contains
engaged in parties’ names, fixed route, destination and freight charges, rights and
“public service.” obligations assumed by the parties

2. Loans on Bottomry and Respondentia 1. Contents

a. Loan on Bottomry, defined
Notes: Loan on bottomry is a contract in the nature of a mortgage, by which the
shipowner borrows money for the use, equipment or repair of the vessel, and for a
definite term, pledges the ship (or its keel and bottom) as a security for its
repayment.
If the ship is lost in the course of a voyage, or during the limited time, by any of the
perils enumerated in the contract, then the lender shall also lose his money.
b. Loan on Respondentia, defined
Notes: Loan on respondentia is one made on the goods laden on board the ship, and
which are to be sold or exchanged in the course of the voyage the borrower’s
personal responsibility being deemed the principal security for the performance of the
contract, which is called respondentia.
Even though the ship perishes, the lender must be paid his principal and interest,
provided that the goods are saved.
c. Character of Loan
Article 706. The captain of the vessel and the shipper shall have the obligation of
drawing upthe bill of lading in which shall be stated:
1. The name, registry, and tonnage of the vessel.
2. The name of the captain and his domicile.
3. The port of loading and that of unloading.
4. The name of the shipper.
5. The name of the consignee, if the bill of lading is issued in the name of a
specified person.
6. The quantity, quality, number of packages and marks of the merchandise.
7. The freightage and the primage stipulated.
The bill of lading may be issued to bearer, to order, or in the name of a specified
person, and must be signed within twenty-four hours after the cargo has been
received on board, the shipper being entitled to demand the unloading at the
expense of the captain should the latter not sign it, and, in every case, the losses and
damages suffered thereby
Article 707. Four true copies of the original bill of lading shall be made, and all of
them shall be signed by the captain and the shipper. Of these, the shipper shall keep
one and send another to the consignee; the captain shall take two, one for himself
and another for the ship agent.

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There may also be drawn up as many copies of the bill of lading as may be
considered necessary by the person interested; but when they are issued to order or
to bearer, they shall be stated in all the copies, be they the first four or the
subsequent ones, the destination of each one, stating whether it is for the agent, for
the captain, for the shipper, or for the consignee. If the copy sent to the latter should
have a duplicate, this circumstance and the fact that it is not valid except in default of
the first one must be stated therein.
Article 713. If before the delivery of the cargo a new bill of lading should be
demanded of the captain, on the allegation that the failure to present the previous
ones is due to their loss or to any other just cause, he shall be obliged to issue it,
provided that security for the value of the cargo is given to his satisfaction, but
without changing the consignment, and stating therein the circumstances prescribed
in the last paragraph of Article 707, under penalty, should he not so state, of being
held liable for said cargo if improperly delivered through his fault.
Article 714. If before the vessel puts to sea the captain should die or should cease to
hold his position through any cause, the shippers shall have the right to demand of
the new captain the ratification of the first bills of lading, and the latter must do so,
provided that all the copies previously issued be presented or returned to him, and it
should appear from all examination of the cargo that they are correct.
Note: The bill must be in writing and signed within 24 hours after the cargo has
been received on board. Otherwise, the shipper may demand (1) the unloading of the
goods at the captain’s expense and (2) the payment of the losses and damages
suffered by the captain’s refusal to sign the bill.
2. Probative Value
Article 709. A bill of lading drawn up in accordance with the provisions of this title
shall be proof as between all those interested in the cargo and between the latter and
the insurers, proof to the contrary being reserved for the latter.
Article 710. If the bills of lading do not agree, and no change or erasure can be
observed in any of them, those possessed by the shipper or consignee signed by the
captain shall be proof against the captain or ship agent in favor of the consignee or
shipper; and those possessed by the captain or ship agent signed by the shipper shall
be proof against the shipper or consignee in favor of the captain or ship agent.
Notes: Under Art 709, the bill of lading properly drawn shall be proof between the
parties of their agreements. Art 710 governs the case where the bill of lading do not
agree, and no change or erasure can be observed in any of them. In case of conflict
in the provisions of the charter party and the bill of lading, even when both appear
unaltered, the contents of the bill of lading prevail.
Issuance of bill of lading is not proof of loading of goods.
G. Passenger on Sea Voyage
1. Nature of Contracts
Article 695. The right to passage, if issued to a specified person, cannot be
transferred without the consent of the captain or of the consignee.
2. Obligations of Passengers
Article 693. If the passage price has not been agreed upon, the judge or court shall
summarily fix it, after a declaration of experts.
Article 699. If the contract is rescinded, before or after the commencement of the
voyage, the captain shall have a right to claim payment of what he may have
furnished the passengers.
Article 704. The captain, in order to collect the passage-money and expenses of
sustenance, may retain the goods belonging to the passenger, and in case of the sale
of the same he shall be given preference over other creditors acting the same way as
in the collection of freightage
Article 694. Should the passenger not arrive on board at the time fixed, or should
leave the vessel without permission from the captain when the latter is ready to leave
the port, the captain may continue the voyage and demand the full passage price.
Article 700. In all matters pertaining to the preservation of order and discipline on
board the vessel passengers shall be subject to the orders of the captain, without any
distinction whatsoever.
3. Rights of Passengers
Article 697. If before the voyage is begun it is suspended through the exclusive fault
of the captain or ship agent, the passengers shall have the right to a refund of their
fares and to recover losses and damages; but if the suspension is due to fortuitous
events, or to force majeure, or to any other cause independent of the captain or ship
agent, the passengers shall only be entitled to the return of the fare.
Article 698. In case a voyage already begun should be interrupted, the passengers
shall be obliged to pay the fare in proportion to the distance covered, without right to
recover for losses and damages if the interruption is due to fortuitous event or to
force majeure, but with a right to indemnity if the interruption should have been
caused by the captain exclusively. If the interruption should be caused by the
disability of the vessel, and a passenger should agree to await the repairs, he may
not be required to pay any increased price of passage, but his living expenses during
the stay shall be for his own account.
In case of delay in the departure of the vessel, the passengers have the right to
remain on board and to be furnished with food for the account of the vessel unless
the delay is due to fortuitous events or to force majeure. If the delay should exceed
ten days, passengers requesting the same shall be entitled to the return of the fare;
and if it is due exclusively to the fault of the captain or ship agent, they may also
demand indemnity for losses and damages.
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A vessel exclusively devoted to the transportation of passengers must take them City instead. The Trans-Asia is Code.
directly to the port or ports of destination, no matter what the number of passengers captain acceded. liable for moral
may be, making all the stops indicated in its itinerary. and exemplary
damages
CASE FACTS HELD/RATIO DOCTRINE CLASS because of its
NOTES non-fulfillment
Sweet Lines Pvt respondents Bypassing the In case of of the implied
v. CA purchased 1st port of interruption of a warranty of
class tix from Catbalogan w/o voyage already seaworthiness.
Sweet Lines giving notice, or begun, the
bound for offer to bring passengers shall H. Carriage of Goods by Sea Act (Commonwealth Act No. 65; Public Act. No.
Catbalogan but pvt respondents only be obliged to 521, 74th US Congress)
not only was to their pay the fare in
there a 3-hr late destination at proportion to the Section 1. When used in this Act —
departure but its expense, or distance covered, (a) The term "carrier" includes the owner or the charterer who enters into a contract
the ship was also refund the without right to of carriage with a shipper.
towed back to value of the recover damages if (b) The term "contract of carriage" applies only to contracts of carriage covered by a
Cebu due to tickets the interruption is bill of lading or any similar document of title, insofar as such document relates to the
engine trouble. purchased, was due to fortuitous carriage of goods by sea, including any bill of lading or any similar document as
Repairs were bad faith on event or force aforesaid issued under or pursuant to a charter party from the moment at which such
completed the petitioner’s part majeure, but with a bill of lading or similar document of title regulates the relations between a carrier and
following day but so damages are right to indemnity, a holder of the same.
instead of awarded if the interruption (c) The term "goods" includes goods, wares, merchandise, and articles of every kind
docking at accordingly. should have been whatsoever, except live animals and cargo which by the contract of carriage is stated
Catbalogan, the caused by the as being carried on deck and is so carried.
vessel directed captain exclusively. (d) The term "ship" means any vessel used for the carriage of goods by sea.
to Tacloban. (e) The term "carriage of goods" covers the period from the time when the goods are
Trans-Asia Atty. Arroyo The vessel was Art. 698 must be loaded on to the time when they are discharged from the ship.
Shipping v. bought a ticket unseaworthy read together with
CA from Trans-Asia even before the Arts. 2199, 2200, RISKS
bound to CDO voyage began. 2201, and 2208 in Section 2. Subject to the provisions of section 6, under every contract of carriage of
from Cebu. Even before it relation to Art 21 of goods by sea, the carrier in relation to the loading handling, stowage, carriage,
Arroyo noticed could finish the Civil Code. In custody, care, and discharge of such goods, shall be subject to the responsibilities
that some repair these repairs, it doing so, there was and liabilities and entitled to the rights and immunities hereinafter set forth.
works were allowed the no delay on Trans
being vessel to leave Asia, hence Arroyo RESPONSIBILITIES AND LIABILITIES
undertaken on the port of is NOT entitled to Section 3. (1) The carrier shall be bound, before and at the beginning of the voyage,
the vessel's origin on only 1 actual damages. to exercise due diligence to -
engine. The functioning As to the rights and (a) Make the ship seaworthy;
vessel departed engine, instead duties of the parties (b) Properly man, equip, and supply the ship;
w/ only 1 engine of 2. Even the strictly arising out (c) Make the holds, refrigerating and cooling chambers, and all other parts of
running until it lone functioning of such delay, Art. the ship in which goods are carried, fit and safe for their reception carriage
stopped and engine was not 698 specifically and preservation.
dropped its in perfect provides for such a (2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for,
anchor. Some condition as situation. This and discharge the goods carried.
passengers sometime after article applies (3) After receiving the goods into his charge the carrier, or the master or agent of the
demanded that it had run its suppletorily carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing
they be allowed course, it pursuant to Art among other things —
to return to Cebu conked out. 1766 of the Civil

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 (a) The leading marks necessary for identification of the goods as the same are
furnished in writing by the shipper before the loading of such goods starts,
provided such marks are stamped or otherwise shown clearly upon the
goods if uncovered, or on the cases or coverings in which such goods are
contained, in such a manner as should ordinarily remain legible until the end
of the voyage.
(b) Either the number of packages or pieces, or the quantity or weight, as the
case may be, as furnished in writing by the shipper.
(c) The apparent order and conditions of the goods: Provided, That no carrier,
master, or agent of the carrier, shall be bound to state or show in the bill of
lading any marks, number, quantity, or weight which he has reasonable
ground for suspecting not accurately to represent the goods actually
received, or which he has had no reasonable means of checking.
(4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier of
the goods as therein described in accordance with paragraphs (3) (a), (b), and (c) of
this section: (The rest of the provision is not applicable to the Philippines).
(5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at
the time of shipment of the marks, number, quantity, and weight, as furnished by
him; and the shipper shall indemnify the carrier against all loss, damages, and
expenses arising or resulting from inaccuracies in such particulars. The right of the
carrier to such indemnity shall in no way limit his responsibility and liability under the
contract of carriage to any person other than the shipper.
(6) Unless notice or loss or damage and the general nature of such loss or damage
by given in writing to the carrier or his agent at the port of discharge or at the time
of the removal of the goods into the custody of the person entitled to delivery thereof
under the contract of carriage, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill of lading. If the loss or
damage is not apparent, the notice must be given within three days of the delivery.
Said notice of loss or damage may be endorsed upon the receipt for the goods given
by the person taking delivery thereof.
The notice in writing need not be given if the state of the goods has at the time of
their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of
loss or damage unless suit is brought within one year after delivery of the goods or
the date when the goods should have been delivered: Provided, that, if a notice of
loss or damage, either apparent or concealed, is not given as provided for in this
section, that fact shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should
have been delivered.
In the case of any actual or apprehended loss or damage, the carrier and the receiver
shall give all reasonable facilities to each other for inspecting and tallying the goods.
(7) After the goods are loaded the bill of lading to be issued by the carrier, master,
or agent of the carrier to the shipper shall if the shipper so demands, be a "shipped"
bill of lading: Provided, that if the shipper shall have previously taken up any
document of title to such goods, he shall surrender the same as against the issue of
the "shipped" bill of lading, but at the option of the carrier such document of title
may be noted at the port of shipment by the carrier, master, or agent with the
name or names of the ship or ships upon which the goods have been shipped and
the date or dates of shipment, and when so noted the same shall for the purpose of
this section be deemed to constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier
of the ship from liability for loss or damage to or in connection with the goods, arising
from negligence, fault, or failure in the duties and obligations provide in this section
or lessening such liability otherwise than as provided in this Act, shall be null and void
and of no effect. A benefit of insurance in favor of the carrier, or similar clause, shall
be deemed to be a clause relieving the carrier from liability.
RIGHTS AND IMMUNITIES
Section 4. (1) Neither the carrier nor the ship shall be liable for loss or damage
arising or resulting from unseaworthiness unless caused by want of due diligence on
the part of the carrier to make the ship seaworthy, and to secure that the ship is
properly manned, equipped, and supplied, and to make to the holds, refrigerating
and cool chambers, and all other parts of the ship in which goods are carried fit and
safe for their reception, carriage, and preservation in accordance with the provisions
of paragraph (1) of section 3. Whenever loss or damage has resulted from
unseaworthiness, the burden of proving the exercise of due diligence shall be on the
carrier or other persons claiming exemption under the section.
(2) Neither the carrier nor the ship shall be responsible for loss or damage arising or
resulting from —
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the
carrier in the navigation or in the management of the ship;
(b) Fire, unless caused by the actual fault or privity of the carrier;
(c) Perils, dangers, and accidents of the sea or other navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or seizure under legal
process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the goods, his agent or
representative;
(j) Strikes or lockouts or stoppage or restraint of labor from whatever cause,
whether partial or general; Provided, That nothing herein contained shall be
construed to relieve a carrier from responsibility for the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at sea;
(m) Wastage in bulk or weight or any other loss or damage arising from inherent
defect, quality, or vice of the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due diligence; and
(q) Any other cause arising without the actual fault and privity of the carrier and
without the fault or neglect of the agents or servants of the carrier, but the
burden of proof shall be on the person claiming the benefit of this exception
to show that neither the actual fault or privity of the carrier nor the fault or
neglect of the agents or servants of the carrier contributed to the loss or
damage.
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(3) The shipper shall not be responsible for loss or damage sustained by the carrier
or the ship arising from any cause without the act, fault, or neglect of the shipper, his
agents, or servants.
(4) Any deviation in saving or attempting to save life or property at sea, or any
reasonable deviation shall not be deemed to be an infringement or breach of this Act
or of the contract of carriage, and the carrier shall not be liable for any loss or
damage resulting therefrom: Provided, however, That if the deviation is for the
purpose of loading cargo or unloading cargo or passengers it shall, prima facie, be
regarded as unreasonable.
(5) Neither the carrier nor the ship shall in any event be or become liable for any loss
or damage to or in connection with the transportation of goods in an amount
exceeding $500 per package lawful money of the United States, or in case of goods
not shipped in packages, per customary freight unit, or the equivalent of that sum in
other currency, unless the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading. This declaration, if
embodied in the bill of lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
By agreement between the carrier, master, or agent of the carrier, and the shipper
another maximum amount than that mentioned in this paragraph may be fixed:
Provided, that such maximum shall not be less than the figure above named. In no
event shall the carrier be liable for more than the amount of damage actually
sustained.
Neither the carrier nor the ship shall be responsible in any event for loss or damage
to or in connection with the transportation of the goods if the nature or value thereof
has been knowingly and fraudulently misstated by the shipper in the bill of lading.
(6) Goods of an inflammable, explosive, or dangerous nature to the shipment
whereof, the carrier, master or agent of the carrier, has not consented with
knowledge of their nature and character, may at any time before discharge
be landed at any place or destroyed or rendered innocuous by the carrier
without compensation, and the shipper of such goods shall be liable for all
damages and expenses directly or indirectly arising out of or resulting from
such shipment. If any such goods shipped with such knowledge and consent
shall become a danger to the ship or cargo, they may in like manner be
landed at any place, or destroyed or rendered innocuous by the carrier
without liability on the part of the carrier except to general average, if any.
SURRENDER OF RIGHTS AND IMMUNITIES AND INCREASE OF RESPONSIBILITIES
AND LIABILITIES
Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of his
rights and immunities or to increase any of his responsibilities and liabilities under
this Act, provided such surrender or increase shall be embodied in the bill of lading
issued to the shipper.
The provisions of this Act shall not be applicable to charter parties; but if bills of
lading are issued in the case of a ship under charter party, they shall comply with the
terms of this Act. Nothing in this Act shall be held to prevent the insertion in a bill of
lading of any lawful provision regarding general average.
SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of the preceding section, a carrier, master
or agent of the carrier, and a shipper shall, in regard to any particular goods be at
liberty to enter into any agreement in any terms as to the responsibility and liability
of the carrier for such goods, and as to the rights and immunities of the carrier in
respect of such goods, or his obligation as to seaworthiness (so far as the
stipulation regarding seaworthiness is not contrary to public policy), or the care or
diligence of his servants or agents in regard to the loading, handling stowage,
carriage, custody, care, and discharge of the goods carried by sea: Provided, That in
this case no bill of lading has been or shall be issued and that the terms agreed shall
be embodied in a receipt which shall be a non-negotiable document and shall be
marked as such.
Any agreement so entered into shall have full legal effect: Provided, That this section
shall not apply to ordinary commercial shipments made in the ordinary course of
trade but only to other shipments where the character or condition of the property
to be carried or the circumstances, terms, and conditions under which the carriage
is to be performed are such as reasonably to justify a special agreement.
Section 7. Nothing contained in this Act shall prevent a carrier or a shipper from
entering into any agreement, stipulation, condition, reservation, or exemption as to
the responsibility and liability of the carrier or the ship for the loss or damage to or
in connection with the custody and care and handling of goods prior to the loading on
and subsequent to the discharge from the ship on which the goods are carried by
sea.
Section 8. The provisions of this Act shall not affect the rights and obligations of the
carrier under the provisions of the Shipping Act, 1916, or under the provisions of
Section 4281 to 4289, inclusive, of the Revised Statutes of the United States, or of
any amendments thereto; or under the provisions of any other enactment for the
time being in force relating to the limitation of the liability of the owners of seagoing
vessels.
Section 9. Nothing contained in this Act shall be construed as permitting a common
carrier by water to discriminate between competing shippers similarly place in time
and circumstances, either (a) with respect to the right to demand and receive bills
of lading subject to the provisions of this Act; or (b) when issuing such bills of lading,
either in the surrender of any of the carrier's rights and immunities or in the increase
of any of the carrier's responsibilities and liabilities pursuant to section 6, title I, of
this Act or (c) in any other way prohibited by the Shipping Act, 1916, s amended.
Section 10. (Not applicable to the Philippines.).
Section 11. Where under the customs of any trade the weight of any bulk cargo
inserted in the bill of lading is a weight ascertained or accepted by a third party
other than the carrier or the shipper, and the fact that the weight is so ascertained
or accepted is stated in the bill of lading, then, notwithstanding anything in this Act,
the bill of lading shall not be deemed to be prima facie evidence against the carrier of
the receipt of goods of the weight so inserted in the bill of lading, and the accuracy
thereof at the time of shipment shall not be deemed to have been guaranteed by the
shipper.
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 draft to Yau Yue because the
Section 12. (Not applicable to the Philippines.). which indorsed it to same had
Ang. But despite perished,
Section 13. This Act shall apply to all contracts for carriage of goods by sea to or Teves’ non-payment, gone out of
from ports of the United States in foreign trade. As used in this Act the term "United he was able to get commerce,
States" includes its districts, territories, and possessions: Provided, however, that the the goods released to or
Philippine legislature may by law exclude its application to transportation to or from him by American disappeared
ports of the Philippine Islands. The term "foreign trade" means the transportation of Steamship (carrier’s that their
goods between the ports of the United States and ports of foreign countries. Nothing agent). Ang filed an existence is
in this Act shall be held to apply to contracts for carriage of goods by sea between action to claim the unknown or
any port of the United States or its possessions, and any other port of the United goods. American they cannot
States or its possession: Provided, however, That any bill of lading or similar Steamship contends be
document of title which is evidence of a contract for the carriage of goods by sea that Ang’s action has recovered.
between such ports, containing an express statement that it shall be subject to the prescribed under The
provisions of this Act, shall be subjected hereto as fully as if subject hereto as fully as COGSA. applicable
if subject hereto by the express provisions of this Act: Provided, further, That every rule on
bill of lading or similar document of title which is evidence of a contract for the prescription
carriage of goods by sea from ports of the United States, in foreign trade, shall is found in
contain a statement that it shall have effect subject to the provisions of this Act. the Civil
Section 14. Upon the certification of the Secretary of Commerce that the foreign Code, either:
commerce of the United States in its competition with that of foreign nations is 10 years for
prejudiced the provisions, or any of them, of Title I of this Act, or by the laws of any breach of
foreign country or countries relating to the carriage of goods by sea, the President of contract or 4
the United States, may, from time to time, by proclamation, suspend any or all years for
provisions of Title I of this Act for such periods of time or indefinitely as may be quasi-delict.
designated in the proclamation. The President may at any time rescind such F.H. Stevens shipped While If, in an action
suspension of Title I hereof, and any provisions thereof which may have been Stevens v. aboard Steven’s commenced, in due
suspended shall thereby be reinstated and again apply to contracts thereafter made Nordeutsc Norddeuscher’s action was time, a judgment
for the carriage of goods by sea. Any proclamation of suspension or rescission of any her vessel, thermometers dismissed for the plaintiff be
such suspension shall take effect on a date named therein, which date shall be not that were delivered over 20 days reversed, or if the
less than ten days from the issue of the proclamation. missing and after the plaintiff fail
Any contract for the carriage of goods by sea, subject to the provisions of this Act, destroyed. expiration of otherwise than
effective during any period when title I hereof, or any part thereof, is suspended, Norddeuscher refused the period of upon the merits,
shall be subject to all provisions of law now or hereafter applicable to that part of to pay despite 1 year within and the time limited
Title I which may have thus been suspended. Steven’s demands which his for the
and contended that action could commencement of
CASE FACTS HELD/RATIO DOCTRINE CLASS Steven’s cause of be brought such action has, at
NOTES action had prescribed. pursuant to the date of such
Ang v. Yau Yue sold to Teves Ang’s action COGSA, Sec 3 (6), CA 65, in reversal or failure,
American galvanized sheets has not yet par. 4, which relation to expired, the
Steamship which were covered prescribed. provides for 1 yr the COGSA, plaintiff, or, if he
Agencies by Teves’ bank draft “Loss” prescriptive period under Act die and the cause
in exchange for the contemplates for bringing an No. 190 of action survive,
Yau Yue’s bill of a situation action for “loss or provides that his representatives
lading to be where no damage” is the period may commence a
deposited in HSBC. delivery at all inapplicable where within which new action within 1
Teves failed to pay so was made by there is no such Stevens year after such
HSBC returnedthe bill the shipper loss but delivery to could initiate date, and this
of lading and demand of the goods the wrong person. the present provision shall apply

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 case was to any claim  2. The carriage by air within the meaning of the preceding paragraph
renewed, for asserted in any comprises the period during which the baggage or cargo is in charge
another year. pleading by a of the carrier, whether in an aerodrome or on board an aircraft, or, in the
defendant (Act No. case of a landing outside an aerodrome, in any place whatsoever.
190, Sec. 49)  3. The period of the carriage by air does not extend to any carriage by land,
by sea or by river performed outside an aerodrome. If, however, such a
(Roe Anuncio) carriage takes place in the performance of a contract for carriage by air, for
V. AIR TRANSPORTATION the purpose of loading, delivery or trans-shipment, any damage is
C. International Air Transportation presumed, subject to proof to the contrary, to have been the result of an
1. Constitutionality event which took place during the carriage by air.

CASE FACTS HELD/RATIO DOCTRINE CLASS Article 19:

TITLE NOTES  The carrier is liable for damage occasioned by delay in the carriage by air of
Santos Santos sued NOA The case The Convention passengers, baggage or cargo.
v. before the Makati was properly enjoys the
Northwe RTC for damages. dismissed. presumption of CASE FACTS HELD/RATIO DOCTRINE CLASS
st The case was The constitutionality for TITLE NOTES
dismissed for lack constitutiona being an executive- Northwest Cuenca sued Cuenca may Articles 17-19
of jurisdiction lity of the legislative act, which v. Cuenca Northwest for sue provide for
based on Article 28 Convention presumption was not damages. Northwest Northwest grounds for which
of the Convention. was upheld. overcome by argues that Articles for breach of an air carrier may
petitioner. 17-19 of the contract. be sued for
Convention are the damages, but the
2. When applicable only grounds for same is not
which it may be exclusive. Other
Relevant provision: sued, to any of which forms of breach of
the present case contract may be
WARSAW CONVENTION, Article 1(1): does not fall. grounds for suit.
 This Convention applies to all international carriage of persons, baggage or Alitalia v. Pablo sued Alitalia for Alitalia may Articles 17-19
cargo performed by aircraft for reward. It applies equally to gratuitous IAC an 11-month delay in be held provide for
carriage by aircraft performed by an air transport undertaking. the carriage of his liable. grounds for which
baggage. Alitalia puts an air carrier may
3. Liabilities under the Convention forth the same as be sued for
Northwest in the damages, but the
Relevant provisions: previous case. same is not
exclusive. Other
WARSAW CONVENTION, Article 17: forms of breach of
 The carrier is liable for damage sustained in the event of the death or contract may be
wounding of a passenger or any other bodily injury suffered by a grounds for suit.
passenger, if the accident which caused the damage so sustained took place
on board the aircraft or in the course of any of the operations of 4. Limitations on Liability
embarking or disembarking.
Relevant provision:
Article 18:
 1. The carrier is liable for damages sustained in the event of the WARSAW CONVENTION, Article 22:
destruction or loss of, or of damage to, any registered baggage or  1. In the carriage of persons the liability of the carrier for each passenger
any cargo, if the occurrence which caused the damage so sustained took is limited to the sum of two hundred and fifty thousand francs.
place during the carriage by air. Where, in accordance with the law of the court seised of the case, damages
may be awarded in the form of periodical payments, the equivalent capital

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 value of the said payments shall not exceed two hundred and fifty thousand
francs. Nevertheless, by special contract, the carrier and the passenger
may agree to a higher limit of liability.
 2. (a) In the carriage of registered baggage and of cargo, the liability
of the carrier is limited to a sum of two hundred and fifty francs per
kilogramme, unless the passenger or consignor has made, at the time
when the package was handed over to the carrier, a special declaration
of interest in delivery at destination and has paid a supplementary
sum if the case so requires. In that case the carrier will be liable to pay a
sum not exceeding the declared sum, unless he proves that the sum is
greater than the passenger's or consignor's actual interest in delivery at
destination.
 (b) In the case of loss, damage or delay of part of registered
baggage or cargo, or of any object contained therein, the weight to be taken
into consideration in determining the amount to which the carrier's liability is
limited shall be only the total weight of the package or packages
concerned. Nevertheless, when the loss, damage or delay of a part of
the registered baggage or cargo, or of an object contained therein, affects
the value of other packages covered by the same baggage check or the
same air waybill, the total weight of such package or packages shall also be
taken into consideration in determining the limit of liability.
 3. As regards objects of which the passenger takes charge himself
the liability of the carrier is limited to five thousand francs per
passenger.
 4. The limits prescribed in this Article shall not prevent the court from
awarding, in accordance with its own law, in addition, the whole or part
of the court costs and of the other expenses of the litigation
incurred by the plaintiff. The foregoing provision shall not apply if the
amount of the damages awarded, excluding court costs and other expenses
of litigation, does not exceed the sum which the carrier has offered in
writing to the plaintiff within a period of six months from the date of the
occurrence causing the damage, or before the commencement of the action,
if that is later.
 5. The sums mentioned in francs in this Article shall be deemed to refer to a
currency unit consisting of sixty-five and a half milligrammes of gold of
millesimal fineness nine hundred. These sums may be converted into
national currencies in round figures. Conversion of the sums into national
currencies other than gold shall, in case of judicial proceedings, be made
according to the gold value of such currencies at the date of the judgment.
CASE FACTS HELD/RATIO DOCTRINE CLASS
TITLE NOTES
Pan Pan Am was sued The stipulation Parties may
Am v. for the delay in the limiting Pan Am’s stipulate a limit
IAC delivery of liability is valid on the air
Pangan’s luggage. and binding upon carrier’s liability
A stipulation in the Pangan, since he subject to the
ticket provides for a did not declare a declaration of a
limitation in the higher value for higher value
liability of Pan Am his luggage and and payment of
to $20 per kilo. paid additional additional
charges. charges.
5. When Limitations Unavailable
Relevant provisions:
WARSAW CONVENTION, Article 3:
 1. In respect of the carriage of passengers a ticket shall be delivered
containing:
(a) an indication of the places of departure and destination;
(b) if the places of departure and destination are within the territory of a
single High Contracting Party, one or more agreed stopping places being
within the territory of another State, an indication of at least one such
stopping place;
(c) a notice to the effect that, if the passenger's journey involves an
ultimate destination or stop in a country other than the country of
departure, the Warsaw Convention may be applicable and that the
Convention governs and in most cases limits the liability
of carriers for death or personal injury and in respect of loss of or
damage to baggage.
 2. The passenger ticket shall constitute prima facie evidence of the
conclusion and conditions of the contract of carriage. The absence,
irregularity or loss of the passenger ticket does not affect the existence or
the validity of the contract of carriage which shall, none the less, be subject
to the rules of this Convention. Nevertheless, if, with the consent of
the carrier, the passenger embarks without a passenger ticket having been
delivered, or if the ticket does not include the notice required by
paragraph 1(c) of this Article, the carrier shall not be entitled to
avail himself of the provisions of Article 22.
Article 25:
 The limits of liability specified in Article 22 shall not apply if it is proved
that the damage resulted from an act or omission of the carrier, his
servants or agents, done with intent to cause damage or recklessly
and with knowledge that damage would probably result; provided
that, in the case of such act or omission of a servant or agent, it is also
proved that he was acting within the scope of his employment.
Article 25A:
 1. If an action is brought against a servant or agent of the carrier arising
out of damage to which this Convention relates, such servant or agent, if
he proves that he acted within the scope of his employment, shall be
entitled to avail himself of the limits of liability which
that carrier himself is entitled to invoke under Article 22.
 2. The aggregate of the amounts recoverable from the carrier, his servants
and agents, in that case, shall not exceed the said limits.
 3. The provisions of paragraphs 1 and 2 of this Article shall not apply
if it is proved that the damage resulted from an act or omission of the
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 servant or agent done with intent to cause damage or recklessly and with destination, or from the date on which the aircraft ought to have arrived, or
knowledge that damage would probably result. from the date on which the carriage stopped.
 2. The method of calculating the period of limitation shall be determined by
CASE FACTS HELD/RATIO DOCTRINE CLASS the law of the Court seised of the case.
TITLE NOTES
TWA v. Vinluan sued Inattention and The limitations on CASE FACTS HELD/RATIO DOCTRINE CLASS
CA TWA for lack of due care the liability of the TITLE NOTES
damages for not for the carrier do not Santos v. Santos sued NOA The case was The enumeration of
having availed passengers’ apply when the Northwest before the Makati properly the courts before
of a first class interest carrier acted RTC for damages. dismissed for which suits for
seat despite a attended the recklessly or with The case was lack of damages may be
confirmed acts of TWA. knowledge that dismissed for lack jurisdiction filed is not
reservation. TWA is liable for damage will of jurisdiction based on the arbitrary, but is
damages. probably result. based on Article Convention. founded on
28 of the convenience.
6. Conditions on Imposition of Liability Convention.
Luna v. Luna sued Failure to file a The Convention
Relevant provisions: CA Northwest for complaint with does not provide
damages due to Northwest the absolute limit
WARSAW CONVENTION, Article 26: the delay in the pursuant to the to the carrier’s
 1. Receipt by the person entitled to delivery of baggage or cargo without delivery of their Convention liability. Violations
complaint is prima facie evidence that the same has been delivered in baggage. does not result through a breach of
good condition and in accordance with the document of carriage. Northwest argues in the summary contract may be
 2. In the case of damage, the person entitled to delivery must complain to that the suit dismissal of the redressed by
the carrier forthwith after the discovery of the damage, and, at the latest, cannot prosper suit. Luna may invoking other
within seven days from the date of receipt in the case for failure to file a invoke the Civil laws, such as the
of baggage and fourteen days from the date of receipt in the case complaint with it Code. Civil Code.
of cargo. In the case of delay the complaint must be made at the latest within the 21-day
within twenty-one days from the date on which the baggage or cargo reglementary
have been placed at his disposal. period as
 3. Every complaint must be made in writing upon the document of mandated by the
carriage or by separate notice in writing despatched within the times Convention.
aforesaid. Lhuillier Lhuillier sued The case should The enumeration in
 4. Failing complaint within the times aforesaid, no action shall lie v. British British Airways for be dismissed. Article 28 is a
against the carrier, save in the case of fraud on his part. Airways damages before Article 28 of the jurisdiction, not a
the Makati RTC Convention venue, provision.
Article 28: for being rudely provides for the Failure to comply
 1. An action for damages must be brought, at the option of the plaintiff, treated. British courts before with the same
in the territory of one of the High Contracting Parties, either before Airways caused which action results in the
the Court having jurisdiction where the carrier is ordinarily resident, or has the dismissal of damages may dismissal of the
his principal place of business, or has an establishment by which the the action on lack be filed. action.
contract has been made or before the Court having jurisdiction at the place of jurisdiction.
of destination. PAL v. Complainant sued The suit may The 2-year
 2. Questions of procedure shall be governed by the law of the Court seised Savillo PAL for damages still prosper prescriptive period
of the case. arising from the because not all will only operate
delay in the causes of provided that the
Article 29: transporting them action of the action is solely
 1. The right to damages shall be extinguished if an action is not to their complainant are governed by the
brought within two years, reckoned from the date of arrival at the destination, which governed by the Convention.
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 caused him other Convention. The
injuries. PAL other injuries LIABILITY OF THE AIR CARRIER UNDER THE WARSAW CONVENTION of
alleges that the are governed by Oct. 12, 1929
cause of action the Civil Code.
has already Art. 17. The carrier shall be liable for damages sustained in the event of death or
prescribed (2 yrs wounding of a passenger or any other bodily injury suffered by a passenger, if the
according to the accident which caused the damage so sustained took place on board the aircraft or in
Convention). the course of any of the operations of embarking or disembarking.
United Uy sued UA for The suit may An action for
Airlines v. damages arising prosper because damages may still Art. 18 (1) The carrier shall be liable for damage sustained in the event of the
Uy from ill treatment although one of be pursued despite destruction or loss of, or of damage to, any checked baggage, or any goods, if the
and loss of his the causes of the lapse of the 2- occurrence which caused the damage so sustained took place during the
belongings. UA action (loss of year prescriptive transportation by air.
argues that the belongings) has period under the
suit is already already Convention, (2) The transportation by air within the meaning of the preceding paragraph
barred by prescribed, the provided that the shall comprise the period during which the baggage or goods are in the charge of the
prescription, not other (ill same is governed carrier, whether in an airport or on board an aircraft, or, in case of a landing outside
having been filed treatment) has by other laws such an airport, in any place whatsoever.
within the 2-year not as the latter as the Civil Code.
period. is governed by (3) The period of the transportation by air shall not extend to any
the Civil Code transportation by land, by sea, or by river performed outside an airport. I, however,
and not the such transportation takes place in the performance of a contract for transportation by
Convention. air, for the purpose of loading, delivery, or transshipment, any damage is presumed,
subject to proof to the contrary, to have been the result of an event which took place
(Robert Beltejar) during the transportation by air.
Agbayani Annotation:
Art. 19. The carrier shall be liable for damage occasioned by delay in the
45a Air carrier can terminate services of pilot for serious misconduct and transportation by air of passengers, baggage or goods.
drunkenness, because of its duty of extraordinary diligence
PERTINENT CASE: Northwest Airlines Inc. v. Cuenca
- Where PAL pilot (a captain) ordered 2 subordinates to drink 6 bottles of beer - Petitioner’s Argument: Based on the provisions of the Warsaw Convention,
each w/in 30 minutes at 10:30 pm, they being scheduled to fly the following an air carrier is liable only in the event of a passenger’s death or injury
morning at 7:30 am, and when they failed to do so, boxed them in the suffered by him, or of destruction or loss of, or damage to any checked
stomach, and further where he was also charged with violation of the baggage or any goods, or of delay in the transport by air of passengers,
company liquor ban, the Court found him guilty of serious misconduct and baggage, or goods.
violation of the liquor ban, and granted the application of PAL for authority - SC: The petitioner’s contention is not supported by the language of the
to terminate the services of the pilot, instead of merely a six months Warsaw Convention’s articles; they merely declare the carrier liable for
demotion as held by the National Labor Relations Board. The Court justified damages in the enumerated cases IF the conditions specified therein are
its decision as follows: The business of PAL is such that whenever a present.
passenger dies or is injured the presumption is it is at fault notwithstanding o Neither said provisions nor others in the Warsaw Convention
the fact that it has exercised due diligence of a good father of a family in the regulate or exclude liability for other breaches of contract by the
selection and supervision of its employees. Thus, extraordinary measures carrier.
and diligence should be exercised by it for the safety of its passengers and o Petitioner’s theory that an air carrier would be exempt from any
their belonging. Needless to state, a pilot must be sober all the time for he liability for damages in the event of its absolute refusal in bad faith
may be called upon to fly a plane even before his regular scheduled hours, to comply with a contract of carriage is absurd.
otherwise so many lives will be in danger if he is drunk. It would be unjust
for an employer like petitioner PAL to be compelled to continue with the EXTENT OF LIABILITY OF AIR CARRIER FOR DEATH OF PASSENGER
employment of a person whose continuance in the service is obviously
inimical to its interests. PERTINENT CASE: Davila v. PAL (1975)

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Quick Facts: D, Jr. was one of the passengers of PAL. The plane crashed, and all
crew members and passengers were killed. The pilot did not follow the route
prescribed for his flight (between Romblon and Manila). Such failure to follow the
route was concluded to be intentional (he probably wanted to fly on a straight line to
Manila). It was a violation of air-traffic rules to which the accident may be
attributable. The parents of D, Jr. filed a complaint against PAL for damages.
Ruling: PAL liable even if the cause of death was an accident because there was no
satisfactory explanation on the part of PAL as to how and why the accident occurred.
The presumption is that PAL was at fault, under Civil Code Art. 1756.
PAL’s liability for lost earnings of the deceased passenger are his net earnings during
his expected length of life based on accepted mortality tables. PAL is not liable for
exemplary damages since, according to Civil Code Art. 2332, in contracts and quasi-
contracts, the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. The failure of PAL to
exercise extraordinary diligence does not amount to anyone of the circumstances
under Art. 2332.
PROVISION IN THE PASSAGE TICKET THAT CARRIAGE BY SUCCESSIVE AIR
CARRIERS IS TO BE REGARDED AS A SINGLE OPERATION IS TO MAKE
TICKET-ISSUING CARRIER LIABLE FOR TORTUOUS CONDUCT OF OTHER
CARRIERS
PERTINENT CASE: KLM Royal Dutch Airlines v. CA
RM, his wife and their daughter and niece were issued KLM tickets for a trip abroad
including a trip to Lourdes, France. However, their coupon for the Aer Lingus portion
was marked RQ (on request). In Germany, they went to a KLM office and obtained
confirmation from Aer Lingus of seat reservations on flight 861.
Respondents then went to the Barcelona Airport. The manager of Aer Lingus directed
them to check in, and they were accepted for passage. However, subsequently, they
were off-loaded on orders of Aer Lingus manager who shoved them aside and
shouted invectives at them. They then merely look a train to Lourdes. After they got
back to the Philippines, they filed a case against KLM.
KLM sought to evade liability by saying that the air tickets issued to respondents
stipulate the carriage is subject to the Warsaw Convention to which the Philippine
Gov’t is a party by adherence and which provides that “the passenger or his
representative can take action only against the carrier who performed the
transportation during which the accident or the delay occurred, save in the case
where, by express agreement, the first carrier assumed liability for the whole
journey.”
KLM also reasoned that on the inside front cover of each ticket, under the Conditions
of Contract, it is stated that the liability of the carrier for damages shall be limited to
occurrences on its own line, except in case of checked baggage as to which the
passenger also has a right of action against the first or last carrier. A carrier issuing a
ticket or checking baggage for carriage over the lines of other does so only as agent.
SC RULING: Art. 30 of the Warsaw Convention which KLM used to escape liability
(limiting the action to the carrier which undertook the transportation) and which KLM
cited above is not applicable because it presupposes the occurrence of either an
accident or a delay, neither of which took place at the Barcelona airport. What
happened here instead was that Aer Lingus via its manager, refused to transport the
respondents to their contracted destination.
The provision limiting liability of the carrier to occurrences on its line is not applicable
since the respondents are not bound by the provisions. That condition was printed in
letter so small that one would have to use a magnifying glass to read the words. It
would be unfair and inequitable to charge the respondents with automatic knowledge
or notice of the said condition as to preclude any doubt that it was fairly and freely
agreed upon by the respondents when they accepted the passage tickets issued to
them by KLM. As the airline which issued those tickets with the knowledge that the
respondents would be flown on the various legs of their journey by different air
carriers, the KLM was chargeable with the duty of specifically informing the
respondents of conditions prescribed in their tickets or at least to ascertain that the
respondents read them before they accepted their passage tickets.
As regards the nature of the carriage involved in this case, it is to be considered as a
single operation. The respondents dealt exclusively with KLM which issued them
tickets for their entire trip and which in effect guaranteed to them that they would
have sure space in Aer Lingus flight 861. The respondents under assurance of KLM
naturally had the right to expect that their tickets would be honored by Aer Lingus to
which the KLM had indorsed and in effect guaranteed the performance of its principal
engagement to carry out the respondents’ scheduled itinerary previously and
mutually agreed upon by the parties.
AIR TRANSPORTATION IS COMMERCIAL
- A contract of transportation by air may be regarded as commercial. Air
transportation is clearly similar or analogous to land and water transportation. The
obvious reason for its non-inclusion in the Code of Commerce was that at the time of
its promulgation, transportation by air on a commercial basis was not yet known. In
the U.S. where air transportation has reached its highest development, an airline
company engaged in the transportation business is regarded as a common carrier.
(Roe Anuncio)
B. Passenger Rights
Relevant law:
Joint DOTC-DTI A.O. No. 01, Series of 2012:
Section 1. Title of Regulation. This Regulation shall be known and cited as the “Air
Passenger Bill of Rights”.
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Section 3. Scope. This Regulation shall apply to all aspects of contracts of carriage
for flights or portions of a flight into, from, and within the territory of the Philippines
operated by Philippine air carriers, and flights or portions of a flight from the territory
of the Philippines operated by foreign air carriers. Provided, that the compensation
rules shall not apply to carriers flying into the territory of the Philippines, if the laws
of the country of origin provide similar or higher compensation. Otherwise, these
rules shall apply in full.
Section 4. Right to Full, Fair, and Clear Disclosure of the Service Offered and
All the Terms and Conditions of the Contract of Carriage. Every passenger
shall, before purchasing any ticket for a contract of carriage by the air carrier or its
agents, be entitled to the full, fair, and clear disclosure of all the terms and conditions
of the contract of carriage about to be purchased. The disclosure shall include,
among others, documents required to be presented at check-in, provisions on check-
in deadlines, refund and rebooking policies, and procedures and responsibility for
delayed and/or cancelled flights. These terms and conditions may include liability
limitations, claim-filing deadlines, and other crucial conditions.
o 4.1 An air carrier shall cause the disclosure under this Section to be printed
on or attached to the passenger ticket and/or boarding pass, or the
incorporation of such terms and conditions of carriage by reference.
Incorporation by reference means that the ticket and/or boarding pass shall
clearly state that the complete terms and conditions of carriage are available
for perusal and/or review on the air carrier’s website, or in some other
document that may be sent to or delivered by post or electronic mail to the
passenger upon his/her request.
o 4.2 The air carrier must also ensure that passengers receive an explanation
of key terms identified on the ticket from any location where the carrier’s
tickets are sold, including travel agencies. In case of online bookings, the air
carrier must establish a system wherein the purchaser is fully apprised of
the required disclosures under this Section twice prior to the final submission
of his/her online offer to purchase.
o 4.3 Aside from the printing and/or publication of the above disclosures, the
same shall likewise be verbally explained to the passenger by the air carrier
and/or its agent/s in English and Filipino, or in a language that is easily
understood by the purchaser, placing emphasis on the limitations and/or
restrictions attached to the ticket.
o 4.4 The key terms of a contract of carriage, which should include, among
others, the rebooking, refunding, baggage allowance and check-in policies,
must be provided to a passenger and shall substantially be stated in the
following manner and, if done in print, must be in bold letters:
(English)
“NOTICE:
The ticket that you are purchasing is subject to the following
conditions/restrictions:
1. _______________
2. _______________
3. _______________
Your purchase of this ticket becomes a binding contract on your part to
follow the terms and conditions of the ticket and of the flight. Depending on
the fare rules applicable to your ticket, non-use of the same may result in
forfeiture of the fare or may subject you to the payment of penalties and
additional charges if you wish to change or cancel your booking.
For more choices and/or control in your flight plans, please consider other
fare types.”
(Filipino)
“PAALALA:
Ang tiket na ito ay binibili ninyo nang may mga kondisyon/ restriksyon:
1. ________________
2. ________________
3. ________________
Sa pagpili at pagbili ng tiket na ito, kayo ay sumasang-ayon sa mga
kondisyon at restriksyon na nakalakip dito, bilang kontrata ninyo sa air
carrier. Depende sa patakarang angkop sa iyong tiket, ang hindi paggamit
nito ay maaaring magresulta sa pagwawalang bisa sa inyong tiket o sa
paniningil ng karagdagang bayad kung nais ninyong baguhin o kanselahin
ang inyong tiket.
Para sa mas maraming pagpipilian at malawak na control sa inyong flight,
inaanyayahan kayong bumili ng iba pang klase ng tiket galing sa air carrier.”
o 4.5 Any violation of the afore-stated provisions shall be a ground for the
denial of subsequent applications for approval of promotional fare, or for the
suspension or recall of the approval made on the advertised fare/rate.
Section 5. Right to Clear and Non-Misleading Advertisements of, and
Important Reminders Regarding Fares. Advertisements of fares shall
be clear and not misleading.
o 5.1 Major restrictions, such as those on rebookability or refundability, which
may be attached to certain fare types, shall be disclosed in full and in such a
way that the passenger may fully understand the consequences of
purchasing such tickets and the effect of non-use thereof.
o 5.2 Every air carrier causing the publication of fare advertisements in any
medium, shall likewise disclose the following:
(a) Conditions and restrictions attached to the fare type;
(b) Refund and rebooking policies, if any;
(c) Baggage allowance policies;
(d) Government taxes and fuel surcharges;
(e) Other mandatory fees and charges;
(f) Contact details of the carrier (i.e. phone number, website, e-mail, etc.);
and
(g) Other information necessary to apprise the passenger of the conditions
and the full/total price of the ticket purchased.
Provided, that, in case of promotional fares, the additional information shall
be included:
(h) Number of seats offered on a per sector basis;
(i) The duration of the promo; and
(j) The CAB Approval No. of Fares.
Provided, further, that, where there are differing conditions, such as fuel
surcharge in relation to the points of destinations or origin, the
advertisements of these carriers may provide only the range thereof and not
the actual surcharge of each route.
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 5.3 The above-mentioned required disclosures shall occupy not less than
one-third (1/3) of the advertising material. A copy of the same shall be
printed on or attached to the ticket in English and Filipino.
In the case of broadcast media, it shall be enough that the air carrier and/or
advertising agent incorporate the foregoing terms and conditions by
reference, as provided for in Section 4.1.
Section 6. Right Against Misleading and Fraudulent Sales Promotion
Practices. Consistent with the declared policy of the State to protect the interests of
the consumers, which includes protection from misleading and fraudulent sales
promotion practices, all sales promotion campaigns and activities of air carriers shall
be carried out with honesty, transparency and fairness, and in accordance with the
requirements of the Consumer Act of the Philippines, and its Implementing Rules and
Regulations.
Air carriers shall provide to DTI a copy of its promotional materials for post audit not
later than the publication, release, or launch date whichever is earlier.
It is understood that professional authorities for those engaged in advertising, sales
and promotion may impose additional standards or measures to regulate their
industry.
Section 7. Right to Transportation and Baggage Conveyance. Every passenger
is entitled to transportation, baggage conveyance and ancillary services, in
accordance with the terms and conditions of contract of carriage with the air carrier.
Thus, any violation of the terms and conditions of the contract of carriage due to the
fault or negligence of the air carrier shall entitle the passenger to compensation or
alternative arrangements, as provided in this Air Passenger Bill of Rights, which are
acceptable to the passenger.
Section 8. Right to be Processed for Check-In. In accordance with the usual air
carrier procedures, a passenger holding a confirmed ticket, whether promotional or
regular, with complete documentary requirements, and who has complied with the
check-in procedures, shall be processed accordingly at the check-in counter within
the check-in deadline. The airline shall, therefore, and subject to infrastructure
limitations, clearly designate the boundaries of its assigned check-in area/s or
counter/s.
A passenger within the air carrier’s cordoned or other designated check-in area as
herein defined at least one (1) hour before the published ETD shall not be considered
late or a no-show, and shall not be denied check-in. The carrier shall exert utmost
diligence in ensuring that passengers within the cordoned or other designated check-
in area and/or lined up at the check-in counters are checked in for their flights before
the check-in deadline.
A passenger who is late in accordance with the preceding paragraph may be denied
check-in and directed to a standby or rebooking counter, as the case may be, for
proper processing.
Any dispute under this Section shall be resolved by the air carrier on-site. For this
purpose, the air carrier must present to the passenger proof, including, but not
limited to, closed-circuit television monitor recordings, processing or number slips
issued at the entrance of the check-in area, and other applicable or available means,
that the latter failed to appear within the prescribed time for the check-in procedure.
Section 9. Right to Sufficient Processing Time. Passengers shall be given enough
time before the published ETD within which to go through the check-in and final
security processes. For this purpose, air carriers operating in international airports
and in other airports designated by the DOTC shall open their check-in counters in
such airports at least two (2) hours before the ETD. In other airports, air carriers
shall open their check-in counters at least one (1) hour before the ETD.
o 9.1 Air carriers operating in international airports and in other airports
designated by the DOTC shall open a separate dedicated counter for a flight
nearing check-in deadline to facilitate the checking in of passengers at least
one (1) hour before the published ETD.
o 9.2 To ensure that PWDs and senior citizens shall have equal access to air
transportation services, air carriers shall at all times and in all instances
adhere to the mandate of Batas Pambansa Blg. 344, otherwise known as An
Act to Enhance the Mobility of Disabled Persons by Requiring Certain
Buildings, Institutions, Establishments and Public Utilities to Install Facilities
and Other Devices, the provisions of the Expanded Senior Citizens Act of
2010, and other related laws. Accordingly, an air carrier shall designate at
least one (1) check-in counter which will prioritize PWDs, senior citizens, and
persons requiring special assistance or handling. If this is not practicable,
the air carrier shall instead provide for priority handling and processing of
such passengers. The air carrier shall likewise coordinate with the
appropriate authorities for the use of proper airport equipment, entryways,
and/or aerobridges, as the case may be, when the same are available, to
facilitate transactions, movement, boarding, and/or disembarkation of
PWDs, senior citizens, and/or persons requiring special equipment, at the
airport.
o Persons accompanying a PWD, a senior citizen, or a person requiring special
assistance or handling should also be accommodated at the designated
check-in counter mentioned in the preceding paragraph. It is the duty of an
air carrier or its authorized agent to inform its passengers if additional costs
will be incurred for the use of facilities designed for passengers needing
special assistance in airports located in other countries.
o It is the responsibility of a PWD to declare his/her need for special
assistance or handling to the airline, upon booking his/her flight. If the PWD
fails to do so, the airline may not be held liable for any services it was not
able to provide the passenger and/or for any additional costs incurred for
the use of special assistance facilities.
Section 10. Right to Board Aircraft for the Purpose of Flight. A passenger
checked in for a particular flight has the right to board the aircraft for the purpose of
flight, except when there is legal or other valid cause, such as, but not limited to,
immigration issues, safety and security, health concerns, non-appearance at the
boarding gate at the appointed boarding time, or government requisition of space as
provided for in Section 10.2. Other than these causes, no passenger may be denied
boarding without his/her consent.
o 10.1 While it is an accepted practice for an air carrier to overbook its flights,
any expense, consequence, or inconvenience caused to affected passengers
must be borne by the air carrier, as follows:
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 (a) The air carrier shall determine the number of passengers in excess of the
actual seat capacity of the aircraft.
(b) The air carrier shall announce that the flight is overbooked, and that it is
looking for volunteers willing to give up their seats in exchange for air
carrier compensation.
(c) The air carrier shall provide the interested passengers or volunteers a list
of amenities and offers, which they can choose from, which list of amenities
shall always include the option to be given priority booking in the next flight
with available space or to be endorsed to another air carrier upon payment
of any fare difference, and provided that space and other circumstances
permit such accommodation, at the option of the passenger, and/or a cash
incentive.
(d) In case the number of volunteers is not enough to resolve the
overbooking, the air carrier shall increase the compensation package by
certain degrees or by adding more amenities/services until the required
number of volunteers is met.
o 10.2 Government agencies and/or officials wanting to acquire aircraft space
for official government purposes shall submit a written request justifying the
requisition to the CAB, which shall then make the request to the air carrier
concerned, detailing:
(a) The number, identities, and affiliation of the persons requesting for
space;
(b) The date and time (if applicable) of the flight; and
(c) The destination.
Should government requisition result in passengers having to forego their
confirmed space, the air carrier shall look for volunteers in accordance with
Section 10.1.
Provided, that the air carrier shall have the right to claim from the
requesting government entity the full-fare value of the seats requisitioned by
the latter.
o 10.3 The settling of compensation for passengers pursuant to this Section
shall not be an excuse for the undue delay of the flight’s ETD.
Section 11. Right to Compensation and Amenities in Caseof Cancellation of
Flight. In case of cancellation of flights, the following shall be observed:
o 11.1 In case of flight cancellation attributable to the carrier, a passenger
shall have the right to:
(a) Be notified beforehand via public announcement, written/published
notice and flight status update service (text);
(b) Be provided with the following, if he/she is already at the airport at the
time of the announcement of the flight cancellation: sufficient refreshments
or meals (e.g. snacks consisting of at least a bottle of water and a sandwich,
or breakfast, lunch, or dinner, or a voucher for the same, as the case may
be); hotel accommodation (conveniently accessible from the airport);
transportation from the airport to the hotel, v.v.; free phone calls, text or e-
mails, and first aid, if necessary; and
(c) Reimbursement of the value of the fare, including taxes and surcharges,
of the sector cancelled, or both/all sectors, in case the passenger decides
not to fly the ticket or all the routes/sectors; or
(d) Be endorsed to another air carrier without paying any fare difference, at
the option of the passenger, and provided that space and other
circumstances permit such re-accommodation; or
(e) Rebook the ticket, without additional charge, to the next flight with
available space, or, within thirty (30) days, to a future trip within the period
of validity of the ticket. However, for rebooking made in excess of the
aforementioned thirty (30) days for a trip likewise within the validity of the
ticket, fees and/or fare difference shall apply.
Provided, that in case a carrier cancels a flight at least twenty-four (24)
hours before the ETD, it shall not be liable for the foregoing amenities,
except, it shall be obliged to notify the passenger, and, in accordance with
the preceding provisions, to rebook or reimburse the passenger, at the
option of the latter.
o 11.2 In case the air carrier cancels the flight because of force majeure,
safety and/or security reasons, as certified by the Civil Aviation Authority of
the Philippines, a passenger shall have the right to be reimbursed for the full
value of the fare.
o 11.3 The provisions of this Section shall be the minimum entitlement of a
passenger in case of cancellation, and shall not prohibit the air carrier from
granting more favourable conditions or recourses, as it may deem
appropriate.
Section 12. Right to Compensation and Amenities in Case of Flight Delay and
Exceptions Thereto.
o 12.1 In case of Terminal Delay of at least three (3) hours after the ETD,
whether or not such is attributable to the carrier, a passenger shall have the
right to:
(a) Be provided with refreshments or meals (sufficient snacks, breakfast,
lunch, or dinner, as the case may be), free phone calls, text or e-mails, and
first aid, if necessary; and
(b) Rebook or refund his/her ticket in accordance with the preceding Section
or be endorsed to another carrier, in accordance with the preceding Section.
o 12.2 In case such Terminal Delay extends to at least six (6) hours after the
ETD for causes attributable to the carrier, it shall be deemed cancelled for
the purpose of making available to the passenger the rights and amenities
required to be provided in case of actual cancellation, as provided for in
Section 11.1; and in addition, an affected passenger shall be given the
following:
(a) Additional compensation equivalent to at least the value of the sector
delayed or deemed cancelled to be paid in the form of cash or voucher, at
the discretion of the air carrier; and
(b) The right to board the flight if it takes place more than six (6) hours
after the ETD and the affected passenger has not opted to rebook and/or
refund. For this purpose, the air carrier is obliged to exert all efforts to
contact the passenger for the flight.
o 12.3 A passenger shall likewise have the right to be provided with sufficient
food and beverage, in cases of Tarmac Delay of at least two (2) hours after
the ETD, reckoned from the closing of the aircraft doors, or when the
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 aircraft is at the gate with the doors still open but passengers are not
allowed to deplane.
o 12.4 The provisions of this Section shall be the minimum entitlement of a
passenger in case of delay and shall not prohibit the air carrier from granting
more favourable conditions or recourses, as it may deem appropriate.
Section 13. Compensation under Section 10 as Liquidated Damages. The
compensation provided in Section 10, if accepted by the passenger, shall constitute
liquidated damages for all damages incurred by the passenger as a result of the air
carrier’s failure to provide the passenger with a confirmed reserved seat.
Provided that, while a confirmed reservation is necessary to make a passenger
eligible for compensation, a written confirmation issued by the air carrier or its
authorized agent qualifies the passenger in this regard, even if the air carrier cannot
find the reservation in the electronic records, as long as the passenger did not cancel
the reservation or miss a reconfirmation deadline.
Section 14. Right to Compensation for Delayed, Lost, and Damaged
Baggage. A passenger shall have the right to have his/her baggage carried on the
same flight that such passenger takes, subject to considerations of safety, security, or
any other legal and valid cause.
o 14.1 In case a checked-in baggage has been off-loaded for operational,
safety, or security reasons, the air carrier shall inform the passenger at the
soonest practicable time and in such manner that the passenger will readily
know of the off-loading (i.e. that his/her baggage has been off-loaded and
the reason therefor). If the passenger’s baggage has been off-loaded, the
air carrier should make the appropriate report and give the passenger a
copy thereof, even if it had already announced that the baggage would be
on the next flight.
The air carrier shall carry the off-loaded baggage in the next flight with
available space, and deliver the same to the passenger either personally or
at his/her residence. For every twenty-four (24) hours of delay in such
delivery, the air carrier shall tender an amount of Two Thousand Pesos
(Php2,000.00) to the passenger, as compensation for the inconvenience the
latter experienced. A fraction of a day shall be considered as one day for
purposes of calculating the compensation.
For the purposes of this section, the twenty four (24)-hour period shall
commence one (1) hour from the arrival of the flight of the passenger
carrying such baggage.
o 14.2 Should such baggage, whether carried on the same or a later flight, be
lost or suffer any damage attributable to the air carrier, the passenger shall
be compensated in the following manner:
(a) For international flights, the relevant convention shall apply.
(b) For domestic flights, upon proof, a maximum amount equivalent to half
of the amount in the relevant convention (for international flights) in its Peso
equivalent.
o 14.3 For compensation purposes, a passenger’s baggage is presumed to
have been permanently and totally lost, if within a period of seven (7) days,
counted from the time the passenger or consignee should have received the
same, the baggage is not delivered to said passenger or consignee.
Section 15. Right to Compensation In Case of Death or Bodily Injury of a
Passenger. For international flights, in case of death or bodily injury sustained by a
passenger, the relevant Convention and inter-carrier agreement shall apply. However,
for an international carriage performed under the 1966 Montreal Inter-Carrier
Agreement, which includes a point in the United States of America as a point of
origin, a point of destination or agreed stopping place, the limit of liability for each
passenger for death, wounding or other bodily injury shall be the sum of Seventy-
Five Thousand United States Dollars (US$75,000.00), inclusive of legal fees and
costs. Provided, in the case of a claim brought in a state where a provision is made
for a separate award for legal fees and costs, the limit shall be the sum of Fifty-Eight
Thousand United States Dollars (US$58,000.00), exclusive of legal fees and costs.
For domestic flights, the compensation shall be based on the stipulated amount in the
relevant convention which governs international flights, the same to be given in Peso
denominations.
Section 16. Right to Immediate Payment of Compensation.An air carrier liable
for any and all compensations provided by these rules shall make the same available
to the affected passenger at the air carrier’s counters at the airport on the date when
the occasion entitling the passenger to compensation occurred, or at the main office
or any branch of the air carrier at the discretion of the passenger. The air carrier shall
tender a check for the amount specified, or cash, or the document necessary to claim
the compensation or benefits mentioned above; Provided, that such document shall
be convertible to cash within fifteen (15) days from the date when the occasion
entitling the passenger to such compensation occurred.
Section 17. Air Carrier and CAB Complaint and Assistance Desks. Air carriers
shall provide Customer Service Representatives who can address common problems,
such as arranging for meals and hotel rooms for stranded passengers, settling denied
boarding compensation, arranging luggage resolutions, and settling other routine
claims or complaints, on the spot. In addition, the CAB may provide Complaints and
Assistance Desks in all airports. These shall be manned by CAB or CAB-deputized
personnel, who shall assist passengers whose rights to the service have not been
fully satisfied by the air carrier. The said personnel shall assist in the filing and
prosecution of the complaints of passengers whose rights have been violated and
who wish to go after the concerned air carriers.
Section 18. Refund of Other Fees. Every air carrier must refund checked baggage
fees and other optional service fees (i.e. insurance, donation to WWF, seat selector
fee, etc.), if the passenger did not use his/her ticket provided, that the said ticket is
refundable and that the passenger is not at fault. Provided, further, that refund of
checked baggage fees will also apply, if the baggage was not delivered to the
passenger within twenty-four (24) hours from the arrival of flight, on top of the
compensation fee as mentioned in Section 14.1.
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