TRANSPORTATION LAWS A carrier is a person or corporation who undertakes to transport

or convey goods or persons from one place to another,

Jose Glenn C. Capanas gratuitously or for hire. (Sps. Pereña)
November 12, 2016 • Who are common carriers?
• CC v. PC (“acts” or “holds out” as CC)
Bar Exam Coverage Tramp Service – the operation of a contract carrier which has no
regular and fixed routes and schedules but accepts cargo
2016 wherever and whenever the shipper desires, is hired on a
• (A) CC; (B) Vigilance over Goods; (C) Safety of contractual basis, or chartered by any one or few shippers under
Passengers; (D) Bill of Lading; (E) Maritime Commerce mutually agreed terms and usually carries bulk or break bulk
[CP, Liabilities, Accidents and Damages, COGSA]; (F) cargoes (RA 9515)
Warsaw Convention Ferry services as part of resort operations (Sps. Cruz)
• Same coverage in 2015, 2014, 2013, 2012 (except PSA – Freight Forwarder – “firm holding itself out to the general public
PU, CPC [requisites, prior operator rule, fixing of rate], (other than as a pipeline, rail, motor, or water carrier) to provide
unlawful arrangements [boundary system, kabit transportation of property for compensation, etc. (UTI)
system], approval of sale, etc.), 2011 (same exceptions • Effect of CP on character of carrier?
in 2012) • Kabit system – registered owner rule applies
• Boundary System vis-à-vis registered owner rule
Bar Exam Questions
Duties of CC
2015
• Discuss 3-fold character of a B/L • Acceptance
• What is a “Jason Clause” in a CP? Goods which are improperly packed or with defective containers
• Are common carriers liable for injuries to passengers may be refused; CC may choose to transport but may limit
even if they have observed ordinary diligence and care? liability
2014 Note of Art. 1742 (even if LDD of goods should be caused by the
• Applicability of COGSA to arrastre operator character of the goods or packing of containers, CC must exercise
due diligence to forestall or lessen the loss
2013 • Delivery
Essay: Time of delivery:
• Causes of action against airline and pilots Special contract
• Who are to be impleaded? No special contract
• How to handle the passenger ran over by an ambulance Effects of delay:
and the airline employee allowed to hitch a ride? Art. 1740 (natural disaster shall not free CC from liability; Art.
MCQ: 1747 (limitation of liability by CC cannot be availed of)
• Shipment of goods from Japan to Cebu City (governing Abandonment by consignee: requisites (a) fault of CC; (b) must be
law; consignee failed to file claim, can he still file an exercised between the time of delay and the moment before the
action to recover damages?) arrival of goods at place of delivery; (c) communicate to CC in
2012 writing
• Liability of CC for negligence or willfull acts of Diligence Required
employees
• Other names of a B/L • ED
• Liability for loss of checked-in luggage under WC • Why?
• Registered owner rule vis-à-vis kabit system Nature of business and public policy (Art. 1733 NCC)
• Registered owner rule vis-a-vis boundary system Protect passengers from tragic mishaps (Code Commission)
Curb recklessness of drivers (Kapalaran Bus Lines)
2011 (MCQ) • When does the duty start? (Goods)
• Baggage “unconditionally placed in the possession of, and received by the
• Doctrine of Limited Liability carrier” (Art. 1736 NCC)
• Start of liability of CC on transportation of goods Compania Maritima
• Basis for Art. 1759 NCC What is the test that duty has started?
• When is deviation proper “Whenever the control and possession of goods passes to the
• When is the defense of ED proper carrier and nothing remains to be done by the shipper, then it can
• Intent to board vis-à-vis contractual breach be said with certainty that the relation of shipper and carrier has
• Power to approve provisional rates - discretionary been established.” (Compania Maritima)
• Effect of temporary unloading or storage: (Goods)
2010 Remains in full force even temporarily unloaded/stored in transit
• COGSA (off-season) unless shipper/owner has made use of right of stoppage in
• Averages transit (Art. 1737); so responsibility ceases but CC holds goods
• Types of averages as a warehouseman and liable as such – degree of diligence is
2009 reasonable care as owner of goods would exercise
• Jettison as averages? Stoppage in transit – act by which the unpaid vendor stops the
• Collision between buses (injured: stowaway, progress and resumes possession of the goods while they are in
pickpocket, mistress and free pass): breach of contract? the course of transit
Cause of action against the other bus? Valid defenses? When right of stoppage can be exercised? When buyer is or
becomes insolvent
Contract of Transportation Continues even during goods are stored in warehouse of CC at
destination until consignee has been advised of arrival and had
• What is a contract of transportation? reasonable opportunity to remove/dispose (Art. 1738;
Stowaway – a person who secretly boarded Servando)
• When is it perfected?
Contract to Carry (British Airways) • When does the duty end? (Goods)
Contract of Carriage (Ganzon) “delivery, actually or constructively, by the carrier to the
• Importance of perfection: Applicable Law, Standard of consignee, or to the person who has a right to receive them,
Diligence and Burden of Proof without prejudice to the provisions of Article 1738” (Art. 1736
Bus (Dangwa Transportation) NCC)
Airplane (Korean Airlines) Phil. Servando (consignee has taken delivery of part of goods)
Train (LRTA) Nedlloyd (delivery to arrastre operator does not terminate
• Is a consignee a party? Agency relation or when he responsibility of CC)
demands fulfillment of a stipulation in contract (Everett Delsan Transport (responsibility does not cease when discharge
Steamship and MOF) of oil products to depot has not yet been finished)
Westwind (responsibility continues since delivery of containers
Common Carriers covered by 1 B/L has not been finished

• Who are carriers? • Start of duty to passengers:

When a person purchases a ticket and presents himself at proper
place and proper manner; bonafide intention to use facilities
(LRTA)
When the bus is not in motion there is no necessity for a person
who wants to ride the same to signal his intention to board. A
public utility bus, once it stops, is in effect making a continuous
offer to bus riders. Hence, it becomes the duty of the driver and
the conductor, every time the bus stops, to do no act that would
have the effect of increasing the peril to a passenger while he was
attempting to board the same. The premature acceleration of the
bus in this case was a breach of such duty. (Dangwa)
By stepping and standing on the platform of the bus, a person is
already considered a passenger and is entitled to all the rights
and protection pertaining to such a contractual relation. Hence, it
has been held that the duty which the carrier of passengers owes
to its patrons extends to persons boarding the cars as well as to
those alighting therefrom (Del Prado)
• Termination of duty to passengers:
until a passenger has, after reaching destination, safely alighted
from conveyance or has reasonable opportunity to leave carrier’s
premises
Aboitiz Shipping (a person who already disembarked and one
hour after, returned to the vessel to retrieve baggage)
La Mallorca (bus moved although the conductor has not yet
signalled the driver to start)
• Cases on ED:
Negligence or lack of diligence is considered as proof of failure to
exercise ED:
Juntilla: jeepney was running fast
Eastern Shipping Lines v. IAC:
when the smoke was noticed, fire was already big which must
have started 24 hours before the same was noticed;
After the cargoes were stored in hatches, no regular inspection
was made as to their condition during voyage
Baritua: bus was overloaded; over-speeding
Loadstar v. CA:
consisted in proceeding with voyage despite knowledge of
approaching typhoon; vessel was not sufficiently manned
Negros Navigation: overloading
Phil Home Assurance:
Eastern Shipping was negligent as a cylinder should not have
been stored in the accommodation area near the engine room
where the heat generated therefrom could cause the cylinder to
explode by reason of combustion
Accommodation area is reserved for passengers so by storing it
there, vessel has exposed passengers to grave danger
Sulpicio v. First Lepanto:
falling of the crate during the unloading is evidence of negligence
in handling the cargo;
ED requires CC to know and follow the required precaution for
avoiding damage
Vector Shipping:
negligence was present because officers were carrying expired
license and not properly manned;
There was defect in ignition of vessel and no proof whether
repairs were undertaken before ship set to sea
 Lack of requisites in the defense is considered a
failure to exercise ED:
Belgian Overseas:
SC:
“While words “metal envelope rust stained & slightly dented”
were noted on bill of lading, there was no showing that
petitioners exercised due diligence to lessen the loss since
defense here is improper packing (Art. 1734 [3])
Having been in service for several years, master of vessel should
have known that metal envelopes would eventually deteriorate
when not properly stored while in transit.
Equipped with proper knowledge of nature of steel and proper
way of transporting them, master and crew should have
undertaken measures to avoid possible deterioration”
 Failure to present all possible details is
considered a failure to exercise ED:
Juntilla:
no evidence was presented that accident was due to adverse
conditions of the road; the sudden blowing up of the tire could
have been caused by too much air pressure coupled with
overloading and speeding
Aboitiz v. Insurance Co. of North America:
to prove ED, petitioner must do more than merely showing the
possibility that some party could be responsible. It must prove
that it used all reasonable means to ascertain the nature and
characteristic of goods and that it exercised due care in handling.
ED includes safeguarding from damage coming from natural
elements such as rainfall;
Petitioner failed to mention where exactly the goods were stored
and that the crate was properly stored indoors
• How to prove exercise of ED?
Totality of evidence (Mariano)
totality of evidence shows that death was caused by negligence of
driver of truck which lost its breaks and bumped the bus;
Police investigator testified that bus driver was about to unload
some passengers when bus was bumped, police checked the
truck and it lost its breaks;
Bus was on right lane and driver had every right to expect that
truck coming from opposite would stay on its proper lane. He was
not expected to know that the truck lost its breaks, swerving was
abrupt and driver of truck pleaded guilty to criminal case
Reasonableness of standards (Yrasegui)
Weight standards are reasonable to comply with the obligation of
being CC
To achieve safe transportation, PAL has to rely on its employees,
most particularly the cabin flight deck crew who are on board
 Compliance with law or duty
Republic v. Lorenzo Shipping
Although the original bills of lading remained with petitioner,
respondent's agents demanded from consignee the certified true
copies of the bills of lading. They also asked the latter and in his
absence, his designated subordinates, to sign the cargo delivery
receipts. These are in accord with Art. 353 of Code of Commerce
Victory Liner
It should be stressed that petitioner is a common carrier and, as
such, is obliged to exercise extra-ordinary diligence in
transporting its passengers safely. To allow the respondent to
drive the petitioner's bus under such uncertain condition would,
undoubtedly, expose to danger the lives of the passengers and the
property of the petitioner. This would place the petitioner in
jeopardy of violating its extra-ordinary diligence obligation and,
thus, may be subjected to numerous complaints and court suits. It
is clear therefore that the reinstatement of respondent not only
would be deleterious to the riding public but would also put
unreasonable burden on the business and interest of the
petitioner
 Following the rules on inspection
Bus (Nocum)
Duty to passenger:
Appellant not liable: “fairness demands that in measuring a
common carrier’s duty towards its passengers, allowance must
be given to the reliance that should be reposed on the sense of
responsibility of all the passengers in regard to their common
safety.”
Duty to baggage:
Inquiry may be verbally made as to nature of baggage when such
is not outwardly perceptible but beyond this, constitutional
boundaries are already in danger of being transgressed.
When there are sufficient indications that the representations of
passenger regarding the nature of baggage are not true,
assistance of police authorities may be solicited, not necessarily
to force passenger to open his baggage but to conduct needed
investigation consistent with rules.
When there is evidence of circumstances indicating cause or
causes for apprehension that the baggage is dangerous and the
CC failed to act, CC becomes liable
 Airplane (Saludo)
CC has right to require good faith on persons who deliver goods;
CC has the duty to make inquiry as general nature of goods and
right to accept shipper’s marks as to contents;
It is not the duty of CC to ask for repetition of statement and open
the box and see for itself;
However, if there is reasonable ground to suspect that the offered
goods are dangerous or illegal, CC has right to know the character
and to insist on inspection as condition of receiving and
transporting.
In this case, private respondents had no reason to doubt the truth
of shipper’s representations;
No iota of suspicion that the cargo presented was anything other
than that what was declared to be as would require more than
routine inspection or same be opened for scrutiny
Exempting Causes
Carriage of Goods
• Absolutory Causes (Art. 1734 NCC)
“exclusive list”
Requisites
Natural disaster/Public Enemy
Proximate and only cause (Central Shipping)
CC must exercise due diligence to prevent / minimize loss before,
during and after occurrence of disaster; (Lea Mer)
CC must be freed from negligence / misconduct
Act or omission of shipper or owner/improper packing or
character of goods
Proximate cause
Due diligence to lessen the loss
fire is not one of those enumerated under Art. 1734 (DSR-
Senator)
• Fortuitous Event/Exercise of ED
• Rules on Baggages:
Checked-in – baggage not in personal custody of passenger (Art.
1754) or baggage delivered to CC
1733 & 1734 (ED) applies
1736 (responsibility lasts until delivery)
1734 (presumption of negligence)
 Hand-carried – baggage in personal custody of
passengers
Art. 1998 NCC (baggage as necessary deposit: (a) notice to CC, (b)
passenger takes precaution upon advise of CC)
Art. 2000 NCC (CC is responsible for acts of employees /
strangers but not for force majeure):
Art. 2001 NCC (thief / robber not deemed force majeure unless
with use of arms or irresistible force):
Art. 2002 NCC (CC not liable due to acts of passengers, family,
servants, visitors or character of baggage)
Art. 2003 NCC (posting of notices that CC is not liable shall not
free CC from liability)
Carriage of Passengers
• Defenses
ED
Fortuitous event
Negligence of passenger
• Liabilities of CC
Absolute responsibility for acts of employees (Art. 1759 NCC)
 Acts of strangers or other passengers
To avoid liability, CC must observe due diligence to prevent or
stop the act or omission (Art. 1763 NCC)
Pilapil: stone-throwing by a bystander which caused injury to a
passenger, SC: injury sustained was in no way due to any defect
in the means of transport or method of transporting or negligent
or wilfull acts of employees
Tiu v. Arriesgado: cause was illegal parking of truck; SC: it is
inequitable to pass the fault to third party
Bacarro: jeepney was sideswiped by overtaking cargo truck; SC:
petitioner did not slacken his speed so he did not observe due
diligence
MRR v. Ballesteros: allowing stranger to drive bus; SC: MRR
liable under Art. 1763; MRR did not exercise due diligence
because they allowed a stranger to drive the vehicle and they
could have taken it over
• Effect of contributory negligence:
if proximate cause is negligence of passenger, CC is absolved
if merely contributory, equitable reduction of damages
Tabacalera: damages were mitigated to 40% which is the share
of consignee for the loss
Compania Maritima: 20% reduction of damages
Del Prado: From P10,000 damages award of RTC which was
appealed by Manila Electric to SC, damages were reduced to
P2,500
PNR: Moral damages were deleted
• Are these defenses available to a CC?
Absence of Contract or Perfected Contract
Notice of Claim
Prescription
Absolutory Causes
Fortuitous Event
ED
Negligence of Shipper or Passenger
Contributory Negligence of Shipper or Passenger
Doctrine of Last Clear Chance
Doctrine of Proximate Cause
Doctrine of Assumption of Risk
Bill of Lading
• Three-fold character: Receipt, Contract and Document
of Title (goods only)
• As a Receipt (also called shipping receipt, forwarder’s
receipt, receipt for transportation); Issuance raises
presumption that the goods were delivered to the CC
(Lorenzo Shipping)
• As a Contract:
Generally, terms are binding even if a contract of adhesion
Relationship is governed by law (Arts. 1733 to 1754 NCC)
Validity of contract
As a document – actionable document
The effect of admission of the genuineness and due execution of a
document means that the party whose signature it bears admits
that he voluntarily signed the document or it was signed by
another for him and with his authority (Eastern Shipping v. BPI)
Validity of stipulations (peculiar circumstances and nature of
term or condition)
 Cases where stipulations were
upheld
Servando (force majeure)
Ong Yiu (limited liability)
Provident Insurance (notice of claim)
Magellan Manufacturing (no ambiguities; terms plainly worded
and commonly understood in business)
 Cases where stipulations were not
upheld
Sweet Lines (venue)
Maersk Line (delivery)
 Prohibited stipulations (Art. 1745
NCC)
Transported at risk of owner, CC will not be liable for LDD, CC
need not observe any diligence, CC shall exercise a degree less
than of a GFF, CC shall not be responsible for acts or omission of
employees, CC’s liability for acts of thieves or of robbers who do
not act with grave or irresistible TVF is dispensed or diminished,
CC is not responsible for LDD of goods on account of defective
condition of car, etc.
 Limiting stipulations
Art. 1749 NCC:
“the itemized list of goods shipped to a buyer, stating quantities,
prices, shipping charges," and other details which may contain
numerous sheets” (Eastern Shipping v. BPI)
Art. 1750 NCC
Stipulation reducing diligence (goods – 3 requisites)
COGSA:
Belgian Overseas (a coil is a package)
Eastern Shipping v. IAC (cartons were considered as shipping
units and not the containers)
 Art. 1757 NCC (passengers)
General Rule: Responsibility of CC cannot be dispensed or
lessened:
By stipulation
By posting of notices
By statements on tickets
Or otherwise
So CC and passengers cannot enter into an agreement:
Absolutely exempting CC from liability
Lessening the ED required to ordinary diligence
 Art. 1758 NCC (passengers)
Exception: where CC and passenger may validly stipulate
limiting the liability where passenger is carried gratuitously
So that even where passenger is carried gratuitously, parties
cannot stipulate to entirely eliminate the liability of CC
After compliance with contract of transportation, B/L is
supposed to be returned to CC (Art. 353 CC)
 Substantial compliance due to
delivery receipts (Republic v.
Lorenzo)
 Orig B/L remains in possession of
notify party or consignee (Nedlloyd)
• Clauses in a B/L:
said to weigh clause: the shipper is solely responsible for the
loading while the carrier is oblivious of the contents of the
shipment (Asian Terminal)
shipper’s weight, quantity and quality unknown: that it was
transported with the carrier having been oblivious of the weight,
quantity, and quality of the cargo (Asian Terminal)
shipper’s load and count: that the shipper was solely responsible
for the loading of the container, while the carrier was oblivious to
the contents of the shipment. Protection against pilferage of the
shipment was the consignee's lookout (Marina Port); Rule: CC is
free of liability, Exception: Failure of ED
 Load and count: the shipment was packed,
arranged, prepared and fumigated exclusively
by the shipper in the container.
  Paramount clause: clause in the bill that
indicates the law that would apply, by choice
of parties, in the event of dispute concerning
carriage of goods.
 Arbitration provision: stipulation that in event
of dispute concerning carriage of goods,
controversy shall be referred to arbitration in
London, U.K., or New York, U.S.A
• Period for filing claims
Overland transpo and coastwise shipping (Art. 366 CC)
Immediately if damage is apparent
Within 24 hours from receipt if damage is not apparent
Mandatory
Does not apply to misdelivery
Period can be subject of stipulation
Period can be waived by the CC
COGSA (Sec. 3 [6])
If damage is apparent – immediately
If damage is not apparent – 3 days from delivery
Not mandatory
 WC29 (Art. 26)
“(2) In case of damage, the person entitled to delivery must
complain to the carrier forthwith after the discovery of the
damage, and, at the latest, within 3 days from the date of
receipt in the case of baggage and 7 days from the date of
receipt in the case of goods. In case of delay the complaint
must be made at the latest within 14 days from the date on which
the baggage or goods have been placed at his disposal.
(3) Every complaint must be made in writing upon the
document of transportation or by separate notice in writing
dispatched within the times aforesaid.
(4) Failing complaint within the times aforesaid, no action
shall lie against the carrier, save in the case of fraud on his part.
• Period for filing actions
Overland transpo and coastwise shipping
6 years if no written contract
10 years if there is a written contract
COGSA
1 year after delivery
WC29
2 years from date of arrival at the destination or from the date
the aircraft ought to have arrived or from the date on which
transportation stopped
Actions
• What action or actions to file?
• Concurrent causes of action?
• Alternative causes of action?
• What to allege?
• Consider possible defenses (i.e., parties, residence of
parties, prescription, notice of claim)
• Who are to be impleaded?
• Solidary liability
Art. 1207 NCC (There is solidary liability only when the
obligation expressly so states or when the law or the nature of
the obligation requires solidarity)
SC: “We have consistently held that where the injury is due to the
concurrent negligence of the drivers of the colliding vehicles, the
drivers and owners of the said vehicles shall be primarily,
directly and solidarily liable for damages and it is immaterial that
one action is based on quasi-delict and the other on culpa
contractual, as the solidarity of the obligation is justified by the
very nature thereof.” (Malayan Insurance, citing Gutierrez v.
Gutierrez)
Maritime Commerce Concepts
• What is this real and hypothecary nature in maritime
law?
the shipowner or ship agent's liability is held as merely co-
extensive with his interest in the vessel such that a total loss
thereof results in its extinction
• “No vessel, no liability rule”; “limited liability rule”
The shipowner's or agent's liability is merely coextensive with his
interest in the vessel such that a total loss thereof results in its
extinction. The total destruction of the vessel extinguishes
maritime liens because there is no longer any res to which it can
attach
Charter Parties
• Affreightment v. Bareboat
• Can a charterer invoke the provisions on limitation of
shipowner’s liabilities? (Dela Torre)
• “Slot Charter Party” (Phil Am Insurance case)
• “Jason Clause” in CP?
Liability of Ship Owners and Shipping Agents
• Who is a Ship Owner?
person primarily liable for damages sustained in the operation of
vessel (Standard Oil)
• Who is a Ship Agent?
person entrusted with the provisioning and representing the
vessel in the port which it may be found (Art. 586 CC)
• Liabilities for Acts of Captains (Art. 586 CC)
SO and SA are civilly liable
If Captain acts in excess of authority, SO and SA are liable if the
proceeds of an obligation redounded to the benefit of the vessel
• Why SO is made liable? actual control over conduct of
voyage and who has most capital
• If vessel is leased – different authorities (majority is:
having control based on registration, if allowed, owners
can easily circumvent by lease)
• Charterer has no liability for damages under Philippine
Maritime laws (Caltex)
CP is affreightment
“If the charter is a contract of affreightment, which leaves the
general owner in possession of the ship as owner for the voyage,
the rights and the responsibilities of ownership rest on the
owner. The charterer is free from liability to third persons in
respect of the ship”
• Exceptions to limited liability:
4 exceptions
Negligence of shipowner or concurrent negligence of the
shipowner and captain
(a) Shipowner was negligent for allowing vessel to depart late
and for not installing radar so Art 587 is inapplicable and NCC
was applied (De los Santos v Compania Maritima)
(b) Shipowner was held not negligent despite captain’s
knowledge of typhoon before hand and applied Art 587 (Yangco
v Laserna).
Note: GCC: the issue in Yangco is: “May the shipowner or agent,
notwithstanding the total loss of the vessel as a result of the
negligence of its captain, be properly held liable in damages for
the consequent death of its passengers?” It is not an issue here
whether such negligence of captain may also be considered as
negligence of shipowner.
• Shipowner was held guilty of negligence:
Failure to install radar; no explanation for four-hour late
departure; overloading of ship (Heirs of Amparo Santos)
In allowing the captain and crew to play mahjong during the
voyage; failing to maintain the ship seaworthy; allowing the ship
to carry more passengers than it was allowed (Negros
Navigation)
Sinking was due to unseaworthiness as at time of departure the
vessel was top heavy (Phil Am Gen)
• Who should prove absence of negligence?
“in cases involving the limited liability of shipowners, the initial
burden of proof of negligence or unseaworthiness rests on the
claimants. However, once the vessel owner or any party asserts
the right to limit its liability, the burden of proof as to lack of
privity or knowledge on its part with respect to the matter of
negligence or unseaworthiness is shifted to it” (Monarch)
• Relation with NCC?
“Where the shipowner fails to overcome the presumption of
negligence, the doctrine of limited liability cannot be applied”
(Aboitiz v. New India)
• Who can invoke this defense?
“person who could avail of this is the shipowner” (Dela Torre)
• Does CP have any effect on the right of shipowner to
invoke such defense?
“even if the contract is for a bareboat or demise charter where
possession, free administration and even navigation are
temporarily surrendered to the charterer, dominion over the
vessel remains with the shipowner. Ergo, the charterer or the
sub-charterer, whose rights cannot rise above that of the former,
can never set up the Limited Liability Rule against the very owner
of the vessel.” (Dela Torre)
Accidents and Damages
• What are averages?
Art 806 CC: (a) expenses – extraordinary or accidental and (b) • Discrepancy between description in B/L and actual
damages – “any” contents? If Shipper’s Load and Count Arrangement,
Where law on averages are not applicable: B/L prevails (Phil Am Ins v. Heung-a)
Negligence of the captains of the colliding vessel being the cause
of the collision, and the cargoes not being jettisoned to save some • Notice of Loss or Damage & Prescription
of the cargoes and the vessel, the trial court and the Court of Period to file claim (Sec. 3, [6]):
Appeals acted correctly in not applying the law on averages (NDC If damage is apparent – immediately
v. CA) If damage is not apparent – 3 days from delivery
“issue of negligence must first be addressed before the proper Not mandatory
provisions of the Code of Commerce on the extent of liability may Prescriptive period (Sec. 3 [6])
be applied” (American Home) 1 year after delivery
• General Average (4 requisites) Mandatory
“While the instant case may technically fall within the purview of “xxx the carrier and the ship shall be discharged from liability
the said provision, the formalities prescribed xxx were not from all liability in respect of loss or damage unless suit is
complied with” (Phil Home Assurance) brought within one year after delivery of the goods or when
goods should have been delivered xxx”
• Collisions
If a collision occurred in foreign waters but the cargo was from  One year computed from delivery to
abroad bound for the Philippines, what law will apply? (NDC v. arrastre operator (Union Carbide)
CA)  In a bill of lading where bank is the
Rules on Liability or Liability Rules consignee and buyer is notify party
Who is a look-out? One trained as such and given no other duty as there was a letter of credit, 1 year
save to act as a loo-out and stationed where he can see and hear was reckoned from delivery to notify
best and maintain good communication with the other officer in party (Asian Terminals)
charge of the vessel and who must be vigilant SC: “Xxx as the buyer of the Nissan CKD parts, should be
Factors constituting negligence: regarded as the person entitled to delivery of the goods.
Smith Bell: failure to comply with requirements of the Accordingly, for purposes of reckoning when notice of loss or
International Rules of the Road, failure to have a look-out, second damage should be given to the carrier or its agent, the date of
mate in command even if the captain is capable or qualified; delivery to Universal Motors is controlling” (Asian Terminals)
Mecenas v CA ("route observance" of the International Rules of  Prescriptive period may be
the Road will not relieve a vessel from responsibility if the suspended by agreement of parties
collision could have been avoided by proper care and skill on her (Universal Shipping)
part or even by a departure from the rules” SC: “exchange of correspondence between parties
shows that parties have mutually agreed to extend the time
 Principles and doctrines in civil tort not within which plaintiff may file suit” (Universal Shipping)
applicable: last clear chance, contributory
negligence and defense of diligence in  Presumed admission (allegation in
selection of employees: why? The laws of complaint that respondent agreed to
collisions in code of commerce are maritime extend the filing of claim was not
torts and not civil torts. specifically denied and there was
 Requirement of protest: Art. 835 CC: “The express admission in memorandum
action for the recovery of losses and damages filed by respondent under the
arising from collisions cannot be admitted if a heading “statement of the case”
protest or declaration is not presented within which says: “This case was filed by
24 hours before the competent authority ..” [the] plaintiff on 11 November 1990
 Art. 836 CC: “With respect to damages caused within the extended period agreed
to persons or to cargo, the absence of a protest upon by the parties to file suit” (Cua)
may not prejudice the persons interested who  Computation of the prescriptive
were not on board or were not in a condition period shall be reckoned from the
to make known their wishes” date of filing of amended complaint
 Cases where protest is required: AUS, insofar as the newly impleaded
Shipwrecked, maritime collisions defendant is concerned (Wallem
 Lopez v. Duruelo: small boats engaged in Phils.)
river and bay traffic, provision on collisions do  Fault of insurance company to
not apply. process claim: unreasonable demand
 Limited liability may apply for itemized list of damaged goods
and failure to formally reject demand
COGSA for claim (New World)

• Application  When prescriptive period was held

“xxx applicable to all contracts for the carriage of goods by to and inapplicable?
from Philippine ports in foreign trade xxx” (Sec. 1) Does not apply to misdelivery (Ang – loss contemplates that
Mitsui (Manila to France) goods had perished, gone out of commerce, disappeared or
Liao (New York to Manila) cannot be recovered)
The law of the country to which the goods are to be transported Action is premised on the liability of insurer based on contract of
shall govern the liability of the common carrier for their loss, insurance (Mayer Steel)
destruction or deterioration (Art. 1753 NCC) Action is premised on liability based on contract of carriage
“in all matters not regulated by this Code, the rights and (Mitsui) – “damages as physical loss or damage” v. “damages in
obligations of common carrier shall be governed by the Code of general sense” (i.e., depreciation in value); but see Liao
Commerce and by special laws” (Art. 1766 NCC) – Art. 1749 NCC
vis-à-vis sum of $500 as the maximum liability of the carrier per  Prescriptive period for
package in the absence of a higher valuation of goods indicated in filing a suit under the
the bill of lading (called Package Liability Limitation in Phil Am COGSA cannot be invoked
Ins v. Heung-a) by an arrastre operator
(Insurance Co. of North
• “contract of carriage” (Sec. 1 [b]): applies only to America):
contracts of carriage covered by a bill of lading or any Sec. 1 (Definitions)
similar document of title, insofar as such document  (a) The term "carrier"
relates to the carriage of goods by sea, including any bill includes the owner or the
of lading or any similar document as aforesaid issued charterer who enters into a
under or pursuant to a charter party from the moment contract of carriage with a
at which such bill of lading or similar document of title shipper.
regulates the relations between a carrier and a holder of  (b) The term "contract of
the same carriage" applies only to
• Does transshipment operate to remove application of contracts of carriage
COGSA? (American Insurance) Note: Manila to Cebu covered by a bill of lading
was not a separate transaction or any similar document of
 title, insofar as such
document relates to the
carriage of goods by sea,
including any bill of lading
or any similar document as
aforesaid issued under or
pursuant to a charter party
from the moment at which
such bill of lading or similar
document of title regulates
the relations between a
carrier and a holder of the
same.
 (c) The term "goods"
includes goods, wares,
merchandise, and articles of
every kind whatsoever,
except live animals and
cargo which by the contract
of carriage is stated as
being carried on deck and is
so carried.
 Limitation of liability:
Sec. 4:
“(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.”
 Limitation of liability was upheld
(Phil. Charter Insurance)
 lesser amount as limited liability is
allowed (Eastern & Australian
Steamship)
 Is a bigger amount as limited liability
allowed?
Declaration by shipper
The amount declared is the real value of the goods
Warsaw Convention (WC29)
• Application
Applies to all:
(1) international transportation
(2) of persons, baggage or goods
 [“goods” refer to inanimate object
and excludes animals but courts have
applied this to live animals – racing
dogs and monkeys];
(3) performed by aircraft
 [“aircraft” any craft capable of
circulating in the air – helicopters,
balloons]
(4) for reward or gratuitously
 [where person or shipper pay for
transportation, it is for “hire”, if
without payment, it is “gratuitous”;
 persons covered (person flying with
free ticket; passengers taken aboard
against her will pursuant to
government expulsion order)
 persons not covered (airline
employees – mechanic whose job
was to travel to different airports
where his employer had no
mechanic, stowaway)
 What is an international carriage?
(Pan American)
 2 categories in international carriage
(Mapa)
The place of departure and the place of destination are within the
territories of 2 contracting parties regardless of whether or not
there was a break in the transportation or transhipment
The place of departure and the place of destination are within the
territory of a single contracting party if there is an agreed
stopping place within the territory subject to the sovereignty,
mandate or authority of another power even though the power is
not a party to the convention
 Allegations of emotional harm suffered as a
result of having been unreasonably and
unjustly prevented from boarding the plane
does not fall under WC29 (PAL v Savillo)
 SC: “xxx since the purported negligence on the
part of PAL did not occur during the
performance of the contract of carriage but
days before the scheduled flight” (PAL v.
Savillo)
 Note: 1999 Montreal Convention (MC99)
applicability to international carriage (persons, etc., by aircraft)
meaning of international carriage
carriage to be performed by successive carriers
there is still limitation of liability but standard is different
Art. 29 (Basis of Claims): “In the carriage of passengers, baggage
and cargo, any action for damages, however founded, whether
under this Convention or in contract or in tort or otherwise, can
only be brought subject to the conditions and such limits of
liability as are set out in this Convention without prejudice to the
question as to who are the persons who have the right to bring
suit and what are their respective rights. In any such action,
punitive, exemplary or any other non-compensatory damages
shall not be recoverable.”
• Limitation of liability (Art. 22):
French Gold Francs (FP) US Dollars
125,000 FP $10,000 passengers (death, injury, delay)
250 FP/kg $9.07/lb checked luggage and cargo (loss,
damage, delay)
5,000 FP $400.00 carry-on baggage (loss, damage
delay)
• When limitation is inapplicable: Willful Misconduct
(Art. 25)
Willful misconduct to be determined in accordance with the law
of the forum (Art. 25 [1]);
Examples of willful misconduct in other jurisdictions: weather
conditions, crew error, cargo thefts, delays and cargo losses;
Claimant must prove: cause of accident, alleged misconduct,
wrongdoer knew that damage would result, causal link between
the willful misconduct and damages, and damages.
• How SC ruled?
“xxx the Warsaw Convention does not operate as an exclusive
enumeration of the instances for declaring an airline liable for
breach of contract of carriage or as an absolute limit of the extent
of that liability” (Luna)
“xxx some special species of injury must have been caused”
(Alitalia; Cathay Pacific)
“The Convention's provision, in short, do not "regulate or exclude
liability for other breaches of contract by the carrier" or
misconduct of its officers and employees, or for some particular
or exceptional type of damage” (Northwest Airlines; Torres)
• Waiver of limitation of liability:
Carrier offered a higher amount than that provided in the ticket
(Lufthansa German Airlines)
Carrier’s lawyer failed to raise timely objections during trial
(British Airways)
• Article 30 as a defense vis-à-vis willful misconduct:
"ART. 30.xxx
"(2) In the case of transportation of this nature, 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 has assumed liability for the
whole journey." (emphasis supplied)
 embarrassment: “Article 30 of the Warsaw
provided that in case of transportation to be
performed by various successive carriers, the
passenger can take action only against the
carrier who performed the transportation
during which the accident or the delay
occurred presupposes the occurrence of either
an accident or delay in the course of the air
strip, and does not apply if the damage is
caused by the willful misconduct on the part of
the carrier's employee or agent acting within
the scope of his employment. (KLM)
 bumping-off is not covered (Lufthansa)
• Notice of Loss
Art. 26:
“(2) In case of damage, the person entitled to delivery must
complain to the carrier forthwith after the discovery of the
damage, and, at the latest, within 3 days from the date of
receipt in the case of baggage and 7 days from the date of
receipt in the case of goods. In case of delay the complaint
must be made at the latest within 14 days from the date on which
the baggage or goods have been placed at his disposal.
(3) Every complaint must be made in writing upon the
document of transportation or by separate notice in writing
dispatched within the times aforesaid.
(4) Failing complaint within the times aforesaid, no action
shall lie against the carrier, save in the case of fraud on his part.
 Condition precedent (Federal Express)