TRANSPORTATION

pointers & cases

larry p. ignacio ©

COMMON CARRIERS

• A common carrier may be considered as such despite its having a limited clientele
(Phil-Am Gen v. PKS Shipping, Co., 401 SCRA 222)
• A vessel operates as a common carrier if it transports goods indiscriminately for all
persons in the ordinary course of business (Planters Products v. CA, 226 SCRA 76 (1993)
• Art. 1732 makes no distinction between one whose principal business is the carrying
of persons or goods or both, and one who does the same only as an ancillary
activity or a sideline; or the business is regular or unscheduled; or even if its
activities are merely episodic, occasional or even if unscheduled (De Guzman v. CA, 168
SCRA 612)
• A carrier is still a common carrier even if it has no publicly known route and
terminals, with a limited clientele and issues no tickets (Asia Lighterage v. CA, 409 SCRA
340)
• A certificate of public convenience is not a requisite (Loadstar Shipping Co., Inc. vs. Court of
Appeals, 315 SCRA 339 (1999)
• A customs broker is a common carrier (Calvo v. UCPB Gen, 379 SCRA 510; AF Sanchez Brokerage v.
CA, 447 SCRA 427)
• A company which transports petroleum products from a refinery to a terminal by
means of a pipeline is a common carrier because it is transporting goods; A common
carrier is not limited to moving objects (First Philippine Industrial Pipeline vs. CA (300 SCRA 661)
• An arrastre operator is a common carrier (Westwind Shipping Corp. v. UCPB General Insurance Co.,
Inc., 710 SCRA 544, 25 November 2013)
• A school bus operator is a common carrier (Pereña v. Zarate, 679 SCRA 208, 29 August 2012).

 Where the charter is bareboat or demise, the vessel which is ordinarily a

common carrier, becomes a private carrier. (Planters Products, Inc. v. CA, 226 SCRA 476; Caltex
Phils. v. Sulpicio Lines, 315 SCRA 709)

*A beach resort operator who has boats (called Coco Beach boats) that ferry
resort guests and crew members is a common carrier.

The definition of a common carrier in Article 1732 of the Civil Code makes no
distinction between one whose principal business activity is the carrying of persons
or goods or both, and one who does such carrying only as an ancillary activity (in
local idiom, as “a sideline”). The ferry services are so intertwined with its main
business as to be properly considered ancillary thereto. The constancy of the ferry
services in the resort operations is underscored by its having its
own Coco Beach boats. And the tour packages offered, which include the ferry
services, may be availed of by anyone who can afford to pay the same. These
services are thus available to the public. That the operator does not charge a
separate fee or fare for its ferry services is of no moment. It would be imprudent to
suppose that it provides said services at a loss. The Court is aware of the practice
of beach resort operators offering tour packages to factor the transportation fee in
arriving at the tour package price. That guests who opt not to avail of the ferry
services pay the same amount is likewise inconsequential. These guests may only
be deemed to have overpaid. (Spouses Dante Cruz and Leonora Cruz v. Sun Holidays, Inc., G.R.
No. 186312, June 29, 2012)

True test for a common carrier

The true test for a common carrier is not the quantity or extent of the business
actually transacted, or the number and character of the conveyances used in the
activity, but whether the undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the general
business or occupation engaged in, as advertised and held out to the general public,
the individual or the entity rendering such service is a private, not a common, carrier.
The question must be determined by the character of the business actually carried
on by the carrier, not by any secret intention or mental reservation it may entertain or
TRANSPORTATION –18 July 2018 (l.p. ignacio) 2
assert when charged with the duties and obligations that the law imposes. (Pereña v.
Zarate, 679 SCRA 208, 29 August 2012).

NOT COMMON CARRIERS

• A travel agency is a NOT common carrier (Crisostomo v. CA, 409 SCRA 528)
• Stevedoring is NOT a common carrier (Mindanao Terminal v. Phoenix Assurance, 587 SCRA 429
(2009)
*(Stevedore: person employed in loading and unloading vessels)

******
UBER/GRAB TAXI

Uber is a taxi-hailing service mobile application that allows any smart phone user to hail
a for-hire vehicle without needing to physically be on the street. Founded in San
Francisco, California in 2009, the company has since expanded its operations to 300
cities in 58 countries. Using the Global Positioning System (“GPS”) on smartphones, the
application pairs passengers with drivers in a matter of minutes, hence eliminating the
uncertainty of when a vacant cab would arrive, if any at all. Additionally, all transactions
are managed by Uber – from charging the fare on the passenger’s credit card to taking
a portion for itself and depositing the remainder to the driver’s bank account – making
the transaction essentially cashless.

TNC & TNVS

The Department of Transportation and Communication (“DOTC”), through Secretary

Jun Abaya, issued Department Order No. 2015-011 (“D.O. 2015-011”) which amended
D.O. 97-1097, effectively amending the classification of public transport conveyances.
The 2015 D.O. provided nationwide regulations for app-based transport services. The
D.O. introduced a new type of classification called Transportation Network Vehicle
Service (“TNVS”) that allows Transportation Network Companies (“TNC”) such as
Uber to conform within the present regulatory framework.

Borrowing from the California Transportation Commission, TNC is defined by the

D.O. as an “organization, whether a corporation, partnership, sole proprietor, or
other form, that provides pre-arranged transportation services compensation
using an internet-based technology application or digital platform technology to
connect passengers with drivers using their personal vehicles.”

To be clear, a TNC is the entity (in this case, Uber) that provides a platform
for the transportation service. On the other hand, the TNVS refers to the vehicle
owners who provide transportation services. Both the TNC and the TNVS provider
need separate registrations with the LTFRB.

TNVS

The concept of TNVS is envisioned to be an equivalent of the taxi industry,

wherein TNCs are the taxi operators and the TNVS providers are the drivers. To
streamline the operations of TNVS providers, the LTFRB issued two memorandum
setting forth the Implementing Guidelines on the Acceptance of Applications for a
Certificate of Public Convenience to Operate a Transportation Network Vehicle Service.

TNVS, not the TNCs, are common carriers

Potential Uber applicants are given a choice between being a “Partner-Driver,” wherein
one will drive his/her own registered car, or a “Partner-Operator,” where a car owner
hires another person to drive.
TRANSPORTATION –18 July 2018 (l.p. ignacio) 3

VIGILANCE OF COMMON CARRIER OVER GOODS

Law of Destination
Under 1753 of the Civil Code, 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 (Phil-am Insurance Co., Inc. (now Chartis Philippines Insurance, Inc.) v. Heung-A Shipping Corp., 730 SCRA
512, 23 July 2014; Eastern Shipping Lines vs. IAC, 150 SCRA 464 [1984]).

 does NOT APPLY if the goods were NEVER transported

 If the UNPAID SELLER exercises his RIGHT OF STOPPAGE IN TRANSITU,

the new destination will be the country of the seller.

Commencement, Duration and Termination of carrier’s responsibility over the

goods (Arts. 1736-1738)

*When does a contract of carriage begin?

*When does a contract of carriage end?

 From the time the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered actually or
constructively by the carrier to the consignee or to the person who has the right
to receive them. (Art. 1736)

 It remains in full force and effect even when they are temporarily unloaded or
stored in transit unless the shipper or owner has made use of the right of
stoppage in transitu. (Art. 1737)

 It continues to be operative even during the time the goods are stored in a
warehouse of the carrier at the place of destination until the consignee has been
advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them. (Art. 1738)

 Delivery of goods to the custom authorities is not delivery to the consignee. (Lu
Do v. Binamira, 101 Phil 120). The contract of carriage remains in full force and effect even
after the delivery of the goods to the port authorities; the only delivery that
releases it from their obligation to observe extraordinary care is the delivery to
the consignee or his agents (Nedlloyd Lijnen B.V. Rotterdam v. Glow Laks Enterprises, Ltd., 740 SCRA 592, 19
Nov. 2014).

• The extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or constructively,
by the carrier to the consignee, or to the person who has a right to receive them.
There is actual delivery in contracts for the transport of goods when possession
has been turned over to the consignee or to his duly authorized agent and a
reasonable time is given him to remove the goods. (Westwind Shipping Corp. v. UCPB General
Insurance Co., Inc., 710 SCRA 544, 25 November 2013; Eastern Shipping Lines v. BPI/MS Insurance Corp., 745 SCRA
98, 12 January 2015).

• While surrender of the original bill of lading is not a condition precedent for the
common carrier to be discharged from its contractual obligation, there must be, at
the very least, an acknowledgment of the delivery by signing the delivery receipt,
if surrender of the original copies of the bills of lading is not possible (ibid.).

Safety of passengers (Arts. 1755-1763)

Carrier not an insurer against all risk

 the law does not make the common carrier an insurer of the absolute safety of its
passengers.
TRANSPORTATION –18 July 2018 (l.p. ignacio) 4
 It is imperative for a party claiming against a common carrier to show that
the injury or death to the passenger/s arose from the negligence of the
common carrier and/or its employees in providing safe transport to its
passengers.

• Since the passenger’s death was caused by a co-passenger, the applicable

provision is Article 1763 of the Civil Code, which states that "a common carrier is
responsible for injuries suffered by a passenger on account of the willful acts or
negligence of other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission." Notably, for this obligation, the
law provides a lesser degree of diligence, i.e., diligence of a good father of a
family, in assessing the existence of any culpability on the common carrier's part.
(GV Florida v. Heirs of Battung, Sr., GR No. 208802, 14 October 2015)

Caravan Travel v. Abejar GR No. 170631, 10 February 2016 (Leonen, J.)

Caravan Travel is the registered owner of a van driven by Bautista that hit a
pedestrian, Reyes, causing her hospitalization and death. Abejar, the paternal aunt of
Reyes, filed a case for damages against Caravan and Bautista. Bautista was eventually
dropped as a party-defendant as he is nowhere to be found and summons cannot be
served. The complaint is anchored on an employer's liability for quasi-delict provided in
Article 2180, in relation to Article 2176 of the Civil Code.
Abejar claims that since Caravan is the registered owner of the van, it is directly,
primarily, and solidarity liable for the tortious acts of Bautista, its driver.
Caravan contends that it is not liable since there is no proof that Bautista, the
driver, acted "within the scope of his assigned tasks" when the accident occurred.
Caravan alleged that Bautista’s tasks only pertained to the transport of company
personnel or products, and when the accident occurred, he had not been transporting
personnel or delivering products of and for the company. Caravan adds that it should
not be held solidarily liable with Bautista since Bautista was already dropped as a party.
The trial court found Bautista negligent and directed Caravan and Bautista jointly
and solidary liable to pay Abejar.

Art. 2180 and the registered owner rule

 Article 2180 (Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their assigned
tasks, even though the former are not engaged in any business or industry)
requires proof of two things:

first, an employment relationship between the driver and the owner; and
second, that the driver acted within the scope of his or her assigned tasks.

 On the other hand, the registered-owner rule only requires proof that the
employer is the registered owner of the vehicle.

Whether or not there is a need to establish that the driver acted within the scope of his
assigned tasks (pursuant to Art. 2180 in relation to Art. 2176) to render the registered
owner liable.
There is NO need.
In cases where both the registered-owner rule and Article 2180 apply, the plaintiff
must establish that the employer is the registered owner of the vehicle in
question. Once the plaintiff successfully proves ownership, there arises a
disputable presumption that the requirements of Article 2180 have been proven.
As a consequence, the burden of proof shifts to the defendant to show that no
liability under Article 2180 has arisen.
TRANSPORTATION –18 July 2018 (l.p. ignacio) 5
Whether or not the driver/employee is required to be impleaded as a party in the case
to render the registered owner liable.
There is no need to implead the driver/employee in the case. The liability
imposed on the registered owner is direct and primary. It does not depend on the
inclusion of the negligent driver in the action. Otherwise, it would render impotent
the rationale of the motor registration law in fixing liability on a definite person.
The employer's interest and liability is distinct from that of its driver. Regardless
of the employer-employee relationship, liability attaches to the employer on
account of its being the registered owner of a vehicle that figures in a mishap.
This alone suffices. A determination of its liability as owner can proceed
independently of a consideration of how the employee conducted himself as a
driver. While certainly it is desirable that a determination of the driver’s liability be
made alongside that of the owner of the vehicle he was driving, his non-inclusion
in the case does not absolutely hamper a judicious resolution of the victim’s plea
for relief.

Main aim of the registered owner rule.

To identify the owner so that if any accident happens, or that any damage or injury is
caused by the vehicle on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner.
******

Sudden emergency rule

• An individual who suddenly finds himself in a situation of danger and is required

to act without much time to consider the best means that may be adopted to
avoid the impending danger, is not guilty of negligence if he fails to undertake
what subsequently and upon reflection may appear to be a better solution, unless
the emergency was brought by his own negligence.
• It is dictated not exclusively by the suddenness of the event which absolutely
negates thoughtful care, but by the over-all nature of the circumstances (Valenzuela
v. Court of Appeals, 323 Phil. 374, 389 [1996]; Engada v. CA, G.R. No. 140698, June 20, 2003; Marikina Autoline v.
People, GR No. 152040, 31 March 2006).

AIR TRANSPORTATION

Commencement of air transportation

When an airline issues a ticket to a passenger, confirmed for a particular flight on

a certain date, a contract of carriage arises. The passenger has every right to expect
that he be transported on that flight and on that date and it becomes the carrier’s
obligation to carry him and his luggage safely to the agreed destination (JAL v. Asuncion, 449
SCRA 544, 28 January 2005).
The obligation of the airline to exercise extraordinary diligence commences upon
the issuance of the contract of carriage. Ticketing, as the act of issuing the contract of
carriage, is necessarily included in the exercise of extraordinary diligence (Manay, Jr. v. Cebu
Air, Inc. 788 SCRA 155, 04 April 2016).

The WARSAW CONVENTION (WC)

• It provides for rules applicable to international transportation by air (Mapa v. CA, 275
SCRA 286)
• It applies to all international transportation of persons performed by aircraft for
hire (Santos v. Northwest, 210 SCRA 256)
• The WC has the force and effect of a law in the PH being a treaty commitment
assumed by the Philippine government. However, the WC does not operate as
an exclusive enumeration of the instances for declaring a carrier liable for breach
of contract of carriage or as an absolute limit of the extent of liability (Mapa v. CA, 275
SCRA 286)
What is “INTERNATIONAL TRANSPORTATION BY AIR”?

• Two (2) categories

TRANSPORTATION –18 July 2018 (l.p. ignacio) 6

1) Where the place of departure and the place of destination are situated within the
territories of two (2) HIGH CONTRACTING PARTIES (HCP) regardless of
whether or not there be a break in the transportation or a transshipment; and
2) Where the place of departure and the place of destination are within the territory
of a HCP if there be an agreed stopping place within a territory subject to the
sovereignty, mandate or authority of another power, even though the power is
not a party to the WC.

 What is a HIGH CONTRACTING PARTY? A signatory to the WC

Where should an action for violation of a contract of international transportation by air

be brought?

• It must be brought, at the OPTION OF THE PLAINTIFF, in one of the territories

of the HCPs before:
•
1) the court of the domicile of the carrier
2) the court of the carrier’s principal place of business
3) the court where it has a place of business through which the contract had
been made
4) the court of the place of destination (Art. 28 [l], WC); (Santos v. Northwest, 210 SCRA
256)

 Allegations of tortious conduct committed against an airline passenger during the

course of the international carriage do not bring the case outside the ambit of the
WC (Lluillier v. British Airways, Inc., GR No. 171092, 15 March 2010).

LIMIT OF LIABILITY (Art. 22, as amended by Guatemala Protocol, 1971; Alitalia vs.
IAC)

1. Passengers
GENERAL RULE: $100,000 per passenger
EXCEPTION: Agreement to a higher limit
2. Checked-in baggage
GENERAL RULE: $20 per kilogram
EXCEPTION: In case of special declaration of value and payment of a
supplementary sum by consignor, carrier is liable to not more than the declared
sum unless it proves the sum is greater than actual value.

3. Hand-carried baggage
 $1,000/passenger

4. Goods to be shipped
GENERAL RULE: $20 per kilogram
EXCEPTION: In case of special declaration of value and payment of a
supplementary sum by consignor, carrier is liable to not more than the declared
sum unless it proves the sum is greater than actual value.

Rules on the liability

 An agreement relieving the carrier from liability or fixing a lower limit is null and void.
(Art. 23)

 Carrier is not entitled to the foregoing limit if the damage is caused by willful
misconduct or default on its part. (Art. 25)

 Thus, the WC does not operate as an exclusive enumeration of the instances of an

absolute limit of the extent of liability. It does not preclude the application of the Civil
Code and other pertinent local laws. It does not regulate or exclude liability for other
breaches of contract by the carrier, or misconduct of its employees, or for some
particular or exceptional type of damage. (Alitalia vs. CA)
TRANSPORTATION –18 July 2018 (l.p. ignacio) 7

 In PanAm v. IAC, the WC was applied as regards the limitation on the carrier’s
liability, there being a simple loss of baggage without any improper conduct on the part
of the officials or employees of the airline or other special injury sustained by the
passenger.

 In KLM Royal v. Tuller, the WC has invariably been held inapplicable, or as not
restrictive of the carrier’s liability, where there was satisfactory evidence of malice or
bad faith attributable to its officers and employees. (Alitalia vs. IAC)

ACTION FOR DAMAGES

1. Notice of claim
 A written complaint must be made within:
3 days from receipt of baggage
7 days from receipt of goods
In case of delay, 14 days from receipt of baggage/goods
 The complaint is a condition precedent. Without the complaint, the action is
barred except in case of fraud on the part of the carrier. (Art. 26)

2. Prescriptive period
 Action must be filed within 2 years from:
date of arrival at the destination
date of expected arrival
date on which the transportation stopped. (Art. 29)

 If the action is for tort including humiliation at the hands of the airline
employees, the case may be filed within four (4) years (United Airlines v. Uy, 19 Nov. 1999;
PAL v. Judge Savillo, 04 July 2008)

 In United Airlines vs. Uy (19 Nov. 1999) the two-year prescriptive period was
not applied where the airline employed delaying tactics.

When is the WC NOT applicable?

• The WC is not applicable if the damage is caused by the willful misconduct of

the carrier or by such default on its part which may be considered to be
equivalent to willful misconduct, or if the damage is similarly caused by any agent
of the carrier acting within the scope of his employment ( Sabena v. CA, 255 SCRA 38)
• The carrier’s liability may not be limited to that prescribed in the WC. The WC is
not an exclusive enumeration of the instances of an airline’s liability. The WC
should be deemed a limit of liability only in cases where the cause of death,
injury to a person, or destruction, loss or damage to property or delay in
transport, is not attributable to or attended by any willful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or
employee for which the carrier is responsible, and there is no special or
extraordinary form of resulting injury. (Northwest v. CA, 284 SCRA 408)
• The WC does not “regulate or exclude liability for other breaches of contract by
the carrier” or misconduct of its officers and employers, or for some particular or
exceptional type of damage (ibid.)

COGSA: Carriage of Goods by Sea Act

Contracts covered by COGSA

• The Carriage of Goods by Sea Act (COGSA) or Public Act No. 521 of the 74 th US
Congress, was accepted to be made applicable to all contracts for the carriage
of goods by sea to and from Philippine Ports in foreign trade by virtue of
TRANSPORTATION –18 July 2018 (l.p. ignacio) 8
Commonwealth Act (C.A.) No. 65 (Asian Terminals, Inc. v. Philam Insurance Co., Inc., 702 SCRA 88, 24
July 2013).
• The Carriage of Goods by Sea Act (COGSA), Public Act No. 521 of the 74 th US
Congress, was accepted to be made applicable to all contracts for the carriage of
goods by sea to and from Philippine ports in foreign trade by virtue of CA No. 65.

• Section 1, Title I of CA No. 65 defines the relevant terms in Carriage of Goods by

Sea x x x. It is noted that the term “carriage of goods” covers the period from
the time when the goods are loaded to the time when they are discharged
from the ship; thus, it can be inferred that the period of time when the goods
have been discharged from the ship and given to the custody of the arrastre
operator is not covered by the COGSA (Insurance Company of North America v. Asian
Terminals, Inc., GR No. 180784, 12 February 2012).

Prescriptive period to file a claim for loss or damage

 the suit must be brought within one year after delivery of the goods or the
date when the goods should have been delivered. (Section 3(6); Cua v. Wallem Phils.
Shipping, Inc., GR No. 171337, 11 July 2012; Phil-am Insurance Co., Inc. (now Chartis Philippines Insurance, Inc.) v.
Heung-A Shipping Corp., 730 SCRA 512, 23 July 2014).

***The filing of a notice of claim/loss is NOT a condition precedent
***It is NOT interrupted or tolled by an extrajudicial demand (DOLE Phils. v. Maritime
Co., 148 SCRA 118)

 Prescriptive period may be extended by agreement

Jurisprudence, however, recognized the validity of an agreement between the
carrier and the shipper/consignee extending the one-year period to file a claim
(Cua v. Wallem Phils. Shipping, Inc., GR No. 171337, 11 July 2012).

 A stipulation reducing the one (1) year prescriptive period is null and void.

Rules on the one-year prescriptive period

 The one-year prescriptive period is suspended by:

1) The express agreement of the parties (Universal Shipping Lines, Inc. vs. IAC, 188 SCRA 170)
2) The filing of an action in court until it is dismissed. (Stevens & Co. vs. Nordeutscher
Lloyd, 6 SCRA 180)

 The one-year period shall run from delivery of the last package and is not
suspended by extrajudicial demand. (Dole Phils.,Inc. vs. Maritime Co.,148 SCRA 118)
 The one-year period shall run from delivery to the arrastre operator and not
to the consignee. (Union Carbide Phils, Inc. vs. Manila Railroad Co.,SCRA 359)

 The insurer exercising its right of subrogation is bound by the one-year

prescriptive period. However, it does not apply to the claim against the
insurer for the insurance proceeds. (Fil. Merchants Ins. Co. vs. Alejandro; Mayer Steel Pipe Corp.
vs. CA)

“loss or damage” under the COGSA

 “Loss or Damage” as applied to the COGSA contemplates a situation where no

delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a way that their
existence is unknown or they cannot be recovered.

 Thus, it is inapplicable in case of misdelivery or conversion. (Ang v. American

Steamship Agencies, Inc., 19 SCRA 122; Art. 1189, Civil Code; par. 4, Sec 3[6], COGSA) and damage arising
TRANSPORTATION –18 July 2018 (l.p. ignacio) 9
from delay or late delivery (Mitsui O.S.K. Lines Ltd. vs. CA). In such instance the, Civil
Code rules on prescription shall apply.

When the prescriptive is not applicable

 Does NOT APPLY to conversions or misdeliveries (CIA Maritima v. Insurance Co. of

North America, 19 SCRA 1223; Ang v. CIA Maritima, 133 SCRA 600).
***In such cases the Civil Code provision on prescription will apply: ten (10)
years is there is a written contract or bill of lading; six (6) years if contract
is oral

 The one year prescriptive period for filing an action for the loss or damage of
goods may not be invoked by an arrastre operator. (Insurance Company of North
America v. Asian Terminals, Inc., GR No. 180784, 12 February 2012)

 (SHIPPER vs. INSURER) Where the shipper or the consignee files the
suit against the insurer for payment under the insurance policy, the one (1)
year period does not apply but the ten (10) year prescriptive period under the
Civil Code because the suit is not against the carrier arising from the contract
of carriage (Mayer Steel Pipe Corp. v. CA, 274 SCRA 432).

***(INSURER vs. CARRIER) If the suit is filed by an insurer under its

subrogatory rights, the one (1) year prescriptive period applies
(Fil- Merchants v. Alejandro, 145 SCRA 42)

Limit of liability

• Carriage of Goods by Sea Act (COGSA) provides under Section 4,

Subsection 5 that an amount recoverable in case of loss or damage shall not
exceed US$500.00 per package or per customary freight unless the nature
and value of such goods have been declared by the shipper before
shipment and inserted in the bill of lading. (Eastern Shipping Lines v. BPI/MS Insurance
Corp., 745 SCRA 98, 12 January 2015)

• The Carriage of Goods by Sea Act (COGSA) supplements the Civil Code by
establishing provision limiting the carrier’s liability in the absence of a
shipper’s declaration of a higher value in the bill of lading (Unsworth Transport
International (Phils.), Inc. v. Court of Appeals, 625 SCA 357, 26 July 2010).

Rule on inter-island shipping

• Notice of claim/loss is essential, a condition precedent to judicial action

*** to be filed IMMEDIATELY if damage is apparent

*** if not apparent, within twenty-four (24) hours (Art. 366, Code of Commerce)

 Prescriptive period to file judicial action

TEN (10) years from the accrual of the cause of action (from the denial of
the claim if there is a bill of lading or written contract); SIX (6)
years in case of oral contracts (Arts. 1144 & 1145, Civil Code)

Storms/Perils of the Sea

Not all instance of bad weather may be categorized as “storms” or “perils of the sea”
within the meaning of the provisions of the Civil Code and Carriage of Goods by Sea Act
(COGSA) on common carriers (Transimex Co. v. Mafre Asian Insurance Corp., 802 SCRA 667, 14 September
2016).

Strong winds and waves are not automatically deemed perils of the sea, if these
conditions are not unusual for that particular sea area at that specific time, or if they
could have been reasonably anticipated or foreseen (Ibid.).
TRANSPORTATION –18 July 2018 (l.p. ignacio) 10
There are no definite statutory standards for determining the existence of a “storm” or
“peril of the sea” that would exempt a common carrier from liability (ibid.).

MARITIME COMMERCE

DOCTRINE OF LIMITED LIABILITY

(HYPOTHECARY RULE)/ “no ship-no liability rule”

The real and hypothecary nature of maritime law means that the liability of the carrier in
connection with losses related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the guaranty for their settlement
(Aboitiz Shipping Co. v. General Accident Fire and Life Assurance Corp., G.R. No. 100446, January 21, 1993).

 Cases where applicable:

1. Art. 587 – civil liability for indemnities to third persons
2. Art. 590 – indemnities from negligent acts of the captain (not the
shipowner or ship agent)
3. Art. 837 – collision
4. Art. 643 – liability for wages of the captain and the crew and for advances
made by the ship agent if the vessel is lost by shipwreck or capture

 GENERAL RULE: The liability of shipowner and ship agent is limited to the amount of
interest in said vessel such that where vessel is entirely lost, the obligation is
extinguished (Luzon Stevedoring v. Escano, 156 SCRA 169). The interest extends to: 1) the
vessel itself; 2) equipment; 3) freightage; and 4) insurance proceeds. (Chua v. IAC,
166 SCRA 183)

 EXCEPTIONS:

1. Claims under Workmen’s Compensation (Abueg vs. San Diego 77 Phil

730);
2. Injury or damage due to shipowner or to the concurring negligence of the
shipowner and the captain;
3. The vessel is insured (Vasquez vs. CA 138 SCRA 553).
4. Expenses for repair on vessel completed before loss;
5. In case there is no total loss and the vessel is not abandoned;
6. Collision between two negligent vessels.

 Abandonment of the vessel is necessary to limit the liability of the shipowner.

The only instance were abandonment is dispensed with is when the vessel is
entirely lost (Luzon Stevedoring vs. CA 156 SCRA 169).

Person who can claim the limited liability rule: only the shipowner

• The only person who could avail of the Limited Liability Rule is the shipowner
—he is the very person whom the Rule has been conceived to protect—and
charterers cannot invoke this as a defense (de la Torre v. CA, 653 SCRA 714, 13 July 2011).

• Since the shipowner is the one who is supposed to be supported and

encouraged to pursue maritime commerce, it would be absurd to apply the
Limited Liability Rule against him who, in the first place, should be the one
benefitting from it (dela Torre v. CA, 653 SCRA 714, 13 July 2011).

• The charterer or sub-charterer, whose rights cannot rise above that of the
shipowner, can never set up the Limited Liability Rule against the very owner
of the vessel (de la Torre v. CA, 653 SCRA 714, 13 July 2011).

 Error in Extremis

• sudden movement made by a faultless vessel during the third zone of

collision with another vessel which is at fault during the 2nd zone. Even if
TRANSPORTATION –18 July 2018 (l.p. ignacio) 11
such sudden movement is wrong, no responsibility will fall on said faultless
vessel. (Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632)

• Where a navigator, suddenly realizing that a collision is imminent by no fault

of his own, in confusion and excitement of the moment, does something
which contributes to the collision or omits to do something by which the
collision might be avoided, such act or omission is ordinarily considered to be
in extremis and the ordinary rules of strict accountability does not apply. (Sulpicio
v. CA, GR No. 93291, 29 March 1999)

 Doctrine of Inscrutable Fault

In case of collision where it cannot be determined which between the two vessels was
at fault, both vessels bear their respective damage, but both should be solidarily liable
for damage to the cargo of both vessels.

MARITIME PROTEST

 Condition precedent or prerequisite to recovery of damages arising from collisions

and other maritime accidents.

 It is a written statement made under oath by the captain of a vessel after the
occurrence of an accident or disaster in which the vessel or cargo is lost or damaged,
with respect to the circumstances attending such occurrence, for the purpose of
recovering losses and damages.

 Excuses for not filing protest:

1) where the interested person is not on board the vessel; and
2) on collision time, need not be protested. (Art. 836)

 Who makes: Captain

 When made: within 24 hours from the time the collision took place.
 Before whom made: competent authority at the point of collision or at the first port of
arrival, if in the Philippines and to the Philippine consul, if the collision took place
abroad. (Art. 835)

*****
© LP ignacio