Adrian C.

Cabana

TRANSPORTATION LAW
Term Paper
Atty. Rodolfo Rabaja

CONTRACT OF TRANSPORTATION CARRIAGE

A contract whereby a person, natural or juridical, obligates to transport persons,
goods, or both, from one place to another, by land, air or water, for a price or
compensation.

Classifications:
1. Common or Private
2. Goods or Passengers
3. for a fee (for hire) or Gratuitous
4. Land, Water/maritime, or Air
5. Domestic/inter-island/coastwise or
International/foreign

It is a relationship which is imbued with the public interest.

COMMON CARRIER
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 (Art. 1732, Civil Code).

Art. 1732 of the New Civil Code avoids any 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 (sideline). It also avoids a
distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does the law distinguish between a
carrier offering its services to the general public that is the general community or
population and one who offers services or solicits business only from a narrow
segment of the general population. A person or entity is a common carrier even if
he did not secure a Certificate of Public Convenience (De Guzman vs. CA, 168
SCRA 612).

It makes no distinction as to the means of transporting, as long as it is by land,

water or air. It does not provide that the transportation should be by motor
vehicle. (First Philippine Industrial Corporation vs. CA) One is a common carrier
even if he has no fixed and publicly known route, maintains no terminals, and
issues no tickets (Asia Lighterage Shipping, Inc. vs. CA).

Characteristics:
1. Undertakes to carry for all people indifferently and thus is liable for refusal
without sufficient reason (Lastimoso vs. Doliente, October 20, 1961);
2. Cannot lawfully decline to accept a particular class of goods for carriage to the
prejudice of the traffic in these goods;
3. No monopoly is favored (Batangas Trans. vs. Orlanes, 52 PHIL 455);
4. Provides public convenience.

PRIVATE CARRIER
One which, without being engaged in the business of carrying as a public
employment, undertakes to deliver goods or passengers for compensation.
(Home Insurance Co. vs. American Steamship Agency, 23 SCRA 24)

TESTS WHETHER CARRIER IS COMMON OR PRIVATE:

The SC in First Philippine Industrial Corporation vs. CA (1995) reiterated the
following tests:
1 It must be engaged in the business of carrying goods for others as a public
employment and must hold itself out as ready to engage in the transportation of
goods generally as a business and not as a casual occupation;

2. It must undertake to carry goods of the kind to which its business in confined;

3. It must undertake to carry by the method by which his business is conducted

and over its established roads; and

4. The transportation must be for hire. In National Steel Corp. vs. CA (1997) the
SC held that the true test of a common carrier is the carriage of goods or
passengers provided it has space for all who opt to avail themselves of its
transportation for a fee.

PASSENGER
A person who has entered into a contract of carriage, express or implied, with the
carrier. They are entitled to extraordinary diligence from the common carrier.
The following are not considered passengers, and are entitled to ordinary
diligence only: a. One who has not yet boarded any part of a vehicle regardless
of whether or not he has purchased a ticket; b. One who remains on a carrier for
an unreasonable length of time after he has been afforded every safe opportunity
to alight; c. One who has boarded by fraud, stealth, or deceit; d. One who
attempts to board a moving vehicle, although he has a ticket, unless the attempt
be with the knowledge and consent of the carrier; e. One who has boarded a
wrong vehicle, has been properly informed of such fact, and on alighting, is
injured by the carrier; f. Invited guests and accommodation passengers. (Lara vs.
Valencia) g. One who rides any part of the vehicle which is unsuitable or
dangerous or which he knows is not designed or

DEFENSES OF A COMMON CARRIER IN

THE CARRIAGE OF GOODS

1. CASO FORTUITO/FORCE MAJEURE

Requisites:
a. Must be the proximate and only cause of the loss
b. Exercise of due diligence to prevent or minimize the loss before, during or after
the occurrence of the disaster (Art. 1739)
c. Carrier has not negligently incurred in delay in transporting the goods

 Fire is not considered a natural disaster or calamity as it arises almost

invariably from some act of man. (Eastern Shipping Lines Inc. vs. IAC)
 Mechanical defects are not force majeure if the same was discoverable by
regular and adequate inspections

2. ACTS OF PUBLIC ENEMY

Requisites: a. Must be the proximate and only cause of the loss b. Exercise of
due diligence to prevent or minimize the loss before, during or after the act
causing the loss, deterioration or destruction of the goods (Art. 1739)

3. NEGLIGENCE OF THE SHIPPER OR OWNER

a. Sole and proximate cause: absolute defense

b Contributory: partial defense. (Art. 1741)

4. CHARACTER OF THE GOODS OR DEFECTS IN THE PACKING OR IN THE

CONTAINER
Even if the damage should be caused by the inherent defect/character of the
goods, the common carrier must exercise due diligence to forestall or lessen the
loss.

The carrier which, knowing the fact of improper packing of the goods upon
ordinary observation, still accepts the goods notwithstanding such condition, is
not relieved of liability or loss or injury resulting therefrom

5. ORDER OR ACT OF PUBLIC AUTHORITY

Said public authority must have the power to issue the order (Art. 1743).
Consequently, where the officer acts without legal process, the common carrier
will be held liable.

Diligence in the selection and supervision of employees under Article 2180 of the
Civil Code cannot be interposed as a defense by the common carrier because
the liability of the carriers arises from the breach of the contract of carriage. The
defense under said articles is applicable to negligence in quasidelicts under Art.
2176.

CARRIAGE OF GOODS

Parties

1. Common carrier
2. Shipper
3. Consignee

Cause of liability

Delay in delivery, loss, destruction, or deterioration of the goods

Duration of liability

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 bee 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)

Presumption of negligence

Art.1735 Civil Code Reason: As to when and how goods were damaged in
transit is a matter peculiarly within the knowledge of the carrier and its
employees. (Mirasol v. Dollar, 53 PHIL 124)

Mere proof of delivery of goods to a carrier in good order and the subsequent
arrival of the same goods at the place of destination in bad order makes for a
prima facie case against the carrier. (Coastwise Lighterage Corp. v. CA, 245
SCRA 796)

Defenses

1. Ordinary circumstance: Exercise of extraordinary diligence (Art. 1735)

2. Special circumstances:
a. Flood, storm, earthquake, lighting, or other natural disaster or calamity (plus
force majeure)
b. Act of the public enemy in war, whether international or civil
c. Act or omission of the shipper or the owner of goods
d. The character of the goods or defects in the packing or in the containers e.
Order or act of competent public authority (Art. 1734)

Valid stipulations

1. Reduction of degree of diligence to ordinary diligence, provided it be: a)In

writing, signed by the shipper or owner; b)Supported by a valuable consideration
other than the service rendered by the carriers; and c)Reasonable, just and not
contrary to public policy. (Art. 1744)
2. Fixed amount of liability: A contract fixing the sum to 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. (Art. 1750)
3. Limited liability for delay: An agreement limiting the common carrier’s liability
for delay on account of strikes or riots (Art. 1748)
4. Stipulation limiting liability to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value. (Art. 1749)

The diligence required in the carriage of the goods may be reduced by only one
degree, from extraordinary to ordinary diligence or diligence of a good father of a
family. (Art. 1744, Art. 1745, no. 4)

Void stipulations

1. That the goods are transported at the risk of the owner or shipper;
2. That carrier will not be liable for any loss, destruction or deterioration of the
goods;
3. That the carrier need not observe any diligence in the custody of the goods;
4. That the carrier shall exercise a degree of diligence less than that of a good
father of a family over the movable transported;
5. That the carrier shall not be responsible for the acts or omissions of his or its
employees;
6. That the carrier’s liability for acts committed by thieves or robbers who do not
act with grave or irresistible threat, violence or force is dispensed with or
diminished;
7. That the carrier is not responsible for the loss, destruction or deterioration of
the goods on account of the defective condition of the car, vehicle, ship or other
equipment used in the contract of carriage. (Art. 1745)

CARRIAGE OF PASSENGERS

Parties

1. Common carrier
2. Passenger

Cause of liability

Death or injury to the passengers

Duration of liability
The duty of a common carrier to provide safety to its passengers so obligates it
not only during the course of the trip, but for so long as the passengers are within
its premises and where they ought to be in pursuance to the contract of carriage.
(LRTA v. Navidad, [2003])

All persons who remain on the premises within a reasonable time after leaving
the conveyance are to be deemed passengers, and what is a reasonable time or
a reasonable delay within this rule is to be determined from all the
circumstances, and includes a reasonable time to see after his baggage and
prepare for his departure. (La Mallorca v. CA, 17 SCRA 739 ; Abiotiz Shipping
Corporation v. CA, 179 SCRA 95)
It is the duty of common carriers of passengers to stop their conveyances a
reasonable length of time in order to afford passengers an opportunity to enter,
and they are liable for injuries suffered from the sudden starting up or jerking of
their conveyances while doing so. The duty which the carrier of passengers owes
to its patrons extends to persons boarding the cars as well as to those alighting
therefrom (Dangwa Trans Co., Inc. vs. CA 202 SCRA 574)

Presumption of negligence

Article 1755 Civil Code

Reason: The contract between the passenger and the carrier imposes on the
latter the duty to transport the passenger safely; hence the burden of explaining
should fall on the carrier.

Defenses

1. Exercise of extraordinary diligence (Art. 1756)

2. Caso fortuito

Valid stipulations

Stipulation limiting liability when a passenger is carried gratuitously, but not for
willful acts or gross negligence. (Art. 1758)

Void stipulations

Dispensing with or lessening the extraordinary responsibility of a common carrier

for the safety of passengers imposed by law by stipulation, by posting of notices,
by statements on tickets or otherwise. (Art. 1757)
CONCURRING CAUSES OF ACTION ARISING FROM THE NEGLIGENT ACT
OF THE COMMON CARRIER

1. Culpa contractual (breach of contract) Only the carrier is primarily liable

and not the driver, because there is no privity between the driver and the
passenger.  Basis: Art.1759, NCC. No defense of due diligence in the
selection and supervision of employees.

2. Culpa aquiliana (quasi-delict) The carrier and driver are solidarily liable as
joint tortfeasors.

Basis: Art. 2180, NCC. Defense of due diligence in the selection and
supervision of employees is available. Exception: maritime tort resulting in
collision. (See notes on Collision)

3. Culpa criminal (criminal negligence) the driver is primarily liable. The

carrier is subsidiarily liable only if the driver is convicted and declared
insolvent. Basis: Art. 100, RPC.

In case of injury to a passenger due to the negligence of the driver of the

bus on which he is riding and of the driver of another vehicle, the drivers as
well as the owners of the two vehicles are jointly and severally liable for
damages. It makes no difference that the liability of the bus driver and
owner springs from contract while that of the owner and driver of the other
vehicle arises from quasi-delict. (Fabre vs. CA)

SPECIAL RULES ON LIABILITES OF AIRLINE CARRIERS

1. In case of flight diversion due to bad weather or other circumstances beyond

the pilot’s control, the relation between the carrier and the passenger continues
until the latter has been landed at the port of destination and has left the carrier’s
premises. The carrier should necessarily exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of its stranded passengers
until they have reached their final destination. (Philippine Airlines vs. CA, 226
SCRA 423)

2. Even where overbooking of passengers is allowed as a commercial practice,

the airline company would still be guilty of bad faith and still be liable for
damages if it did not properly inform passenger that it could breach the contract
of carriage even if they were confirmed passengers. (Zalamea vs. CA, 228
SCRA 23)
3. An open-dated ticket constitutes a complete contract between the carrier and
passenger. Hence, the airline company is liable if it refused to confirm a
passenger’s flight reservation. (Singson vs. CA, 282 SCRA 149)

3. An airline company which issued a confirmed ticket to a passenger

covering successive trips on different airlines can be held liable for
damages occasioned by “bumping off” by one of the successive airlines.
(Lufthansa German Airlines vs. CA, 238 SCRA 290) 5. An airline ticket
providing that carriage by successive air carriers is to be regarded as a
“single operation” is to make the issuing carrier liable for the tortuous
conduct of the other carrier. A printed provision in the ticket limiting liability
only to its own conduct is not enough to rebut that liability. (KLM Royal
Dutch Airlines vs. CA, 65 SCRA 237)

CODE OF COMMERCE

A. OVERLAND TRANSPORTATION (Arts. 349-379)

Applicability
1. Domestic land and water/maritime transportation. (Pandect of Commercial
Law and Jurisprudence, Justice Jose Vitug, 1997 ed.)
2. Domestic Air Transportation. (Commercial Law Review, Cesar Villanueva,
2004)

IMPORTANT CONCEPTS:
1. Bill of lading
2. Obligations of the carrier
3. Right of abandonment
4. Notice of damage 5. Combined carrier agreement

BILL OF LADING

The written acknowledgment of receipt of goods and agreement to transport

them to a specific place to a person named or to his order.

Rules:
1. It is not indispensable for the creation of a contract of carriage. (Compania
Maritima vs. Insurance Company of North America, 12 SCRA 213)

2. Ambiguity is construed against the carrier, the contract being one of adhesion.
3. The consignee, although the instrument is oftentimes drawn up only by the
consignor and carrier, becomes bound by all the stipulations contained therein by
making a claim for loss on the basis of said bill of lading. (Sea-Land Services
Inc. vs. IAC)

4. The right of a party to recover for loss of shipment consigned to him under a
bill of lading drawn up only by and between the shipper and the carrier, springs
from either a relation of agency between him and the shipper, or his status as
stranger in whose favor some stipulation is made in said contract, and who
becomes a party thereto when he demands fulfillment of that stipulation. (Art.
1311 (2), (Mendoza vs. PAL Inc.)

5 Acceptance of the bill of lading without dissent raises the presumption that all
the terms therein where brought to the knowledge of the shipper and agreed
to by him and, in the absence of fraud or mistake; he is estopped from
thereafter denying that he assented to such terms. (Notes and Cases on the
Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004
ed. p.261)

Kinds:

1. On board - issued when the goods have been actually placed aboard the ship
with very reasonable expectation that the shipment is as good as on its way.

2. Received - one in which it is stated that the goods have been received for
shipment with or without specifying the vessel by which the goods are to be
shipped.

3. Negotiable - one in which it is stated that the goods referred to therein will be
delivered to the bearer or to the order of any person named therein.

4. Non-negotiable - One in which it is stated that the goods referred to therein will
be delivered to a specified person.

5. Clean – One which does not indicate any defect in the goods.

6. Foul – One which contains a notation thereon indicating that the goods
covered by it are in bad condition.

7. Spent – One which covers goods that already have been delivered by the
carrier without a surrender of a signed copy of the bill.
8. Through – One issued by the carrier who is obliged to use the facilities of other
carriers as well as his own facilities for the purpose of transporting the goods
from the city of the seller to the city of the buyer, which bill of lading is honoured
by the second and other interested carriers who do not issue their own bills.

9. Custody – One wherein the goods are already received by the carrier but the
vessel indicated therein has not yet arrived in the port.

10. Port – One which is issued by the carrier to whom the goods have been
delivered, and the vessel indicated in the bill of lading by which the goods are to
be shipped is already in the port where the goods are held for shipment.

Functions:

1. Best evidence of the existence of the contract of carriage of cargo (Art. 353)

2. Document of title

3. Receipt of cargo

4. Contract to transport and deliver goods as stipulated

5. Symbol of the goods

OBLIGATIONS OF THE CARRIER

Duty to accept the goods

GENERAL RULE: A common carrier cannot ordinarily refuse to carry a particular
class of goods.

EXCEPTION: For some sufficient reason the discrimination against the traffic in
such goods is reasonable and necessary

Instances when the carrier may validly refuse to accept the goods include the ff:
1.) Goods sought to be transported are dangerous objects, or substances
including dynamite and other explosives
2.) Goods are unfit for transportation
3.) Acceptance would result in overloading
4.) Contrabands or illegal goods
5.) Goods are injurious to health
6.) Goods will be exposed to untoward danger like flood, capture by enemies and
the like
7.) Goods like livestock will be exposed to disease
8.) Strike
9.) Failure to tender goods on time.

 In case of carriage by railway, the carrier is exempted from liability if

carriage is insisted upon by the shipper, provided its objections are stated
in the bill of lading.
 However, when a common carrier accepts cargo for shipment for valuable
consideration, it takes the risk of delivering it in good condition as when it
was loaded.

Duty to deliver the goods

Not only to transport the goods safely but to the person indicated in the bill of
lading. The goods should be delivered to the consignee or any other person to
whom the bill of lading was validly transferred or negotiated

Time of delivery

Stipulated in Contract/Bill of Lading

1. Carrier is bound to fulfill the contract and is liable for any delay; no matter
from what cause it may have arisen.

No Stipulation
1. within a reasonable time.
2. Carrier is bound to forward them in the 1st shipment of the same or similar
goods which he may make to the point of delivery. (ART. 358 Code of
Commerce)

Effects of delay
a. Merely suspends and generally does not terminate the contract of carriage
b. Carrier remains duty bound to exercise extraordinary diligence
c. Natural disaster shall not free the carrier from responsibility (Art.1740) d. If
delay is without just cause, the contract limiting the common carrier’s
liability cannot be availed of in case of loss or deterioration of the goods
(Art.1747)

RIGHT OF CONSIGNEE TO ABANDON GOODS

Instances:
1. Partial non-delivery, where the goods are useless without the others
(Art. 363);
2. Goods are rendered useless for sale or consumption for the purposes
for which they are properly destined (Art. 365); and
 3. In case of delay through the fault of the carrier (Art. 371). NOTICE OF
DAMAGE

NOTICE OF DAMAGE (ART. 366)

Requisites for applicability:

1. Domestic/inter-island/coastwise transportation
2. Land/water/air transportation
3. Carriage of goods
4. Goods shipped are damaged

Rules:
a. Patent damage: shipper must file a claim against the carrier immediately upon
delivery (it may be oral or written)
b. Latent damage: shipper should file a claim against the carrier within 24 hours
from delivery.

Note: These rules does not apply to misdelivery of goods.

Purpose of notice: To inform the carrier that the shipment has been damaged,
and it is charged with liability therefore, and to give it an opportunity to make an
investigation and fix responsibility while the matter is fresh.

The filing of notice of claim is a condition precedent for recovery.

Shorter period may be stipulated by the parties because it merely affects the
shipper’s remedy and does not affect the liability of the carrier.

Prescriptive Period
Not provided by Article 366. Thus, in such absence, Civil Code rules on
prescription apply. If despite the notice of claim, the carrier refuses to pay,
action must be filed in court.
1. No bill of lading was issued: within 6 years
2. Bill of lading was issued: within 10 years.

ARTICLE 366
Applicability
1. Domestic /inter-island /coastwise transportation
2. Land, water, air transportation
3. Carriage of goods

Notice of damage
1. Condition precedent
2. 24-hour period for claiming latent damage
 Prescriptive period
None provided; Civil Code applies.

COGSA Sec.3 (6)

Applicability
1. International / overseas/foreign (from foreign country to Phils.) Note:
subject to the rule on Paramount Clause
2. Water/maritime transportation
3. Carriage of goods

Notice of damage
Not a condition precedent 2.3-day period for claiming latent damage

Prescriptive period
1 year from the date of delivery (delivered but damaged goods), or date
when the vessel left port or from the date of delivery to the arrastre
(nondelivery or loss).

COMBINED CARRIER AGREEMENT (ART. 373)

 GENERAL RULE: In case of a contract of transportation of several legs,

each carrier is responsible for its particular leg in the contract.

 EXCEPTION: A combined carrier agreement where a carrier makes

itself liable assuming the obligations and acquiring as well the rights and
causes of action of those which preceded it.

MARITIME COMMERCE (Arts. 573-869)

IMPORTANT CONCEPTS:

1. Merchant vessel
2. Maritime lien and Preference of Credit
3. Doctrine of limited liability
4. Causes of revocation of voyage
5. Participants in maritime commerce
6. Charter party
7. Loans on bottomry and respondentia
8. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW

It is the system of laws which particularly relates to the affairs and business of
the sea, to ships, their crews and navigation, and to maritime conveyance of
persons and property. (Notes and Cases on the Law on Transportation and
Public Utilities, Aquino & Hernando, citing Francisco, p.254)

Maritime laws apply only to maritime trade and sea voyages. (Pandect of
Commercial Law and Jurisprudence, Justice Jose Vitug, 1997 ed.)

Arrastre service is not maritime in character. It refers to a contract for the

unloading of goods from a vessel. (ICTSI vs. Prudential Guarantee, 320 SCRA
244)

CHARACTERISTICS OF MARITIME TRANSACTION

1. Real - similar to transactions over real property with respect to effectivity

against third persons which is done through registration. (Rubiso vs. Rivera, 37
Phil. 72). The evidence of real nature is shown by: 1) the limitation of the liability
of the agents to the actual value of the vessel and the freight money; and 2) the
right to retain the cargo and embargo and detention of the vessel (Luzon
Stevedoring Corp v. CA, 156 SCRA 169);

2. Hypothecary - the liability of the owner of the value of the vessel is limited to
the vessel itself (Doctrine of Limited Liability).

The real and hypothecary nature of maritime law simply means that the liability of
the carrier in connection with losses related to maritime contracts is confined to
the vessel, which stands as the guaranty for their settlement. (Aboitiz Shipping
Corp. vs. General Accident Fire and Life Assurance Corp. 217 SCRA 359).

MERCHANT VESSEL

Vessel engaged in maritime commerce, whether foreign or otherwise. (Bar

Review Materials in Commercial Law, Jorge Miravite, 2002 ed.)

Constitutes property which may be acquired and transferred by any of the means
recognized by law. They shall continue to be considered as personal property.
(Arts. 573, 585)
They are susceptible to maritime liens such as for the repair, equipping and
provisioning of the vessel in the preparation of a voyage, as well as mortgage
liabilities, in satisfaction of which a vessel may be validly arrested and sold. (Ship
Mortgage Decree of 1978)