Vous êtes sur la page 1sur 34

I.

GENERAL PRINCIPLES
Definition
A contract of transportation is one 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.
2.
3.
4.
5.

Common or Private
Goods or Passengers
For a fee (for hire) or Gratuitous
Land, Water/maritime, or Air
Domestic/inter-island/coastwise or International/foreign

Governing laws
Land Transportation
1. Common Carriers
a. New Civil Code (NCC) primary
b. Code of Commerce suppletory
2. Private Carriers
a. Object is a merchandise
- Code of Commerce primary
- NCC suppletory
b. Object is non-commercial
Law on deposit if object is property
Law on contracts if passenger
Transportation by Sea
1. Coastwise
1. NCC primary
2. Code of Commerce suppletory
3. Carriage of Goods by Sea Act (COGSA) does not apply even if the parties
expressly provide for it
2. Philippine port to foreign ports law of the country of destination
3. Foreign ports to Philippine ports
a.
NCC primary
b.
Code of Commerce
c.
COGSA
d. Philippine laws still apply even if the collision actually takes place in foreign
waters.
Air Transportation
1. Domestic NCC; Code of Commerce
2. International Warsaw Convention
Parties to contract of transportation:
(1) shipper or consignor- one who gives rise to the contract of transportation by agreeing to
deliver the things or news to be transported, or to present his own person or those of other
or others in the case of transportation of passengers
(2) carrier or conductor- one who binds himself to transport persons, things, or news as the
case may be; one employed in or engaged in the business of carrying goods for other for
hire

1 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

(3) consignee - the party to whom the carrier is to deliver the things being transported; one
to whom the carrier may lawfully make delivery in accordance with its contract of carriage
(NOTE: the shipper and the consignee may be one person)
Freight defined - The term has been defined as the price or compensation paid for the
transportation of goods by a carrier, at sea, from port to port. But the term is also used to
denote:
1) the hire paid for the carriage of goods on land from place to place, or on inland
streams or lakes.
2) the goods or merchandise transported at sea, on land, or inland streams or lakes.
Thus the term is used in 2 senses: to designate the price for the carriage, also called
freightage, or to designate the goods carried.
Meaning of Public use. It is not confined to privileged individuals, but is open to the
indefinite public; there must be a right which the law compels the owner to give to the
general public. Public use is not synonymous with public interest. The true criterion is
whether the public may enjoy it by right or only by permission.

Art. 1732 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 (sideline).

It also avoids distinction between offering transportation service on a regular or


scheduled basis, and on an occasional, episodic or unscheduled basis.

Neither does it distinguish between a carrier offering its services to the general
public (general community or population) and one who offers services only from a
narrow segment of the 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)

A grantee of pipeline concession under the Petroleum Act is considered a common


carrier (First Phil. Industrial vs. CA, supra)

1. A common carrier shall remain as such, notwithstanding the charter of the whole or
portion of a vessel, provided the charter is limited to the ship only, as in the case of a
time or voyage charter.
It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise, that a common carrier becomes private (Planters Products vs. CA, 226
SCRA 476)

2 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

2.

A travel agency is not a common carrier. Its services include procuring


tickets and facilitating travel permits or visas as well as booking customers for tours
(Crisostomo vs. CA, GR No. 138334, Aug. 25, 2003)

I.

COMMON CARRIERS

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or goods or both, by land, water or air,
for compensation, offering their services to the public.

Carriers defined. Persons or corporations who undertake to transport or convey goods,


property or persons, from one place to another, gratuitously or for hire, and are classified as
private or special carriers, and common or public carriers
Private carriers defined. 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)
COMMON CARRIER
holds himself out in
common, that is, to all
persons who choose to
employ him, as ready
to carry for hire

PRIVATE CARRIER
agrees
in
some
special case with
some
private
individual to carry for
hire

bound to carry all who


offer such goods as it
is accustomed to carry
and tender reasonable
compensation
for
carrying them

not bound to carry


for
any
reason,
unless it enters into
a special agreement
to do so

subject
to
regulation

not
subject
regulation
as
common carrier

State

to
a

Requires exercise of
extraordinary diligence

Only
ordinary
diligence is required

Parties may not agree on


limiting
the
carriers
liability
except
when
provided by law

Parties may limit the


carriers
liability,
provided
it
is
not
contrary to law, morals
or good customs

There is a presumption of
fault or negligence

No presumption of fault
or negligence

Governed by the law on


common carriers

Governed by the law on


obligations
and
contracts

3 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

TOWAGE

ARRASTRE

STEVEDORI
NG

A vessel is hired to bring


another vessel to another place
A contract for unloading of
goods from a vessel.
Services are not maritime.
They are in fact no different
from those of a depositary or
warehouseman.
Loading and unloading of
coastwise vessels calling at the
port

Characteristics of common carriers:


1. The common carrier undertakes to carry for all people indifferently; he holds himself out
as ready to engage in the transportation of goods for hire as a public employment and
not as a casual occupation, and he undertakes to carry for all persons indifferently,
within the limits of his capacity and the sphere of the business required of him, so that
he is bound to serve all who apply and is liable for refusal, without sufficient reason, to
do so (Lastimoso vs. Doliente, October 20, 1961);
2. The common carrier cannot lawfully decline to accept a particular class of goods for
carriage to the prejudice of the traffic in those goods
Exception : for some sufficient reason, where the discrimination in such goods is
reasonable and necessary (substantial grounds)
3. No monopoly is favored - the Commission has the power to say what is a reasonable
compensation to the utility and to make reasonable rules and regulations for the
convenience of the traveling public and to enforce them (Batangas Trans. vs.
Orlanes, 52 PHIL 455);
4. Public convenience - for the best interests of the public
Test for a common carrier:
1.

He must be engaged in the business of carrying goods for


others as a public employment, and must hold himself out as ready to engage in the
transportation of goods for persons generally as a business, and not a casual occupation.

2.

He must undertake to carry goods of the kind to which his


business is confined.

3.

He must undertake to carry by the methods by which his


business is conducted, and over his established roads.

4.

The transportation must be for hire. (First Phil. Industrial vs. CA,

300 SCRA 661)


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.

II.

DILIGENCE REQUIRED

Art. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and for

4 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

the safety of the passengers transported by them, according to the circumstances of each
case.
Such extraordinary diligence in the vigilance over the goods is further expressed in
Articles 1734, 1735, and 1745, Nos. 5,6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in Articles 1755 and 1756.

COVERAGE
1. Vigilance over goods (Arts. 1734-1754); and
2. Safety of passengers (Arts. 1755-1763).
Rendition of service with the greatest skill and utmost foresight. (Davao Stevedore Co. v.
Fernandez)
Rationale:
1. From the nature of the business and for reasons of public policy (Art. 1733)
2. Relationship of trust
3. Business is impressed with a special public duty
4. Possession of the goods
5. Preciousness of human life

A failure on the carrier to use extra-ordinary care in carrying goods or passengers


safely is a breach of contract and constitutes culpa contractual not culpa aquiliana.
While the liability of a carrier as an insurer is not recognized in this jurisdiction, a
carrier is liable for damages suffered by goods carried if such damages arise from its
negligence. The carrier is also liable even in those cases where the cause of the loss
or damage is unknown.

PRESUMPTION OF NEGLIGENCE
1. If the goods are lost, destroyed or deteriorated, common carriers are presumed to have
been at fault or to have acted negligently (Art. 1735)
2. Mere proof of the delivery of goods in good order to a common carrier and their arrival in
bad order at their destination makes for a prima facie case against the carrier
(Coastwise Lighterage Corp. vs. CA, 245 SCRA 796)
3. The court need not make an express finding of fault or negligence, the law imposes
liability upon common carriers, as long as it is shown that:
a. There is a contract between the shipper and common carrier
b. Loss or deterioration took place during the existence of contract

III.

VIGILANCE OVER GOODS

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packaging or in the containers;
(5) Order or act of competent public authority.

Carrier has duty to keep and care for goods carried

It is the duty of the common carrier to properly and carefully handle, carry, keep and
care for the goods carried and to exercise due care to ascertain and consider the nature
of the goods offered for shipment and to use such methods for their care during the

5 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

voyage as their nature requires. The carrier is liable for injury to, or loss of, cargo
resulting from the failure to properly care for and handle the cargo en route; and it is
required to provide adequate ventilation for the safe carriage of the cargo, and provide
reasonable and ordinary inspection and care in and about the transportation of cargo.

A vessel should not accept cargo unless it can be given the type of storage that its
character requires, for placing of conditions in a bill of lading does not relieve the vessels
of obligation to take appropriate care of the cargo.

Duty of carrier to deliver cargo in good condition as when loaded

There is no absolute obligation for a common carrier to accept cargo. It should not be
accepted unless it can be given the type of storage that its character requires.

Where a vessel accepts a cargo for shipment for valuable consideration, it takes the risk
of delivering it in good condition as when it was loaded. And if the fact of improper
packing is known to the carrier or his servants, or apparent upon ordinary observation,
but it accepts the goods notwithstanding such condition, it is not relieved of liability for
loss or injury resulting therefrom.

In the exercise of extra-ordinary diligence required by law, the common carrier must give
due regard to all circumstances and take all steps necessary to insure the safety of the
passengers and the goods given the circumstances.

A. DEFENSES OF A COMMON CARRIER IN THE CARRIAGE OF GOODS/EXEMPTING


CAUSES
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 (Art. 1740)
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. (Notes and Cases on the Law on Transportation and Public
Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p.120-122)
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. (Art. 1742)

6 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

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. (Southern Lines, Inc. v. CA, 4 SCRA 258)
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.
(Ganzon v. CA 161 SCRA 646)
Duty to Deliver Goods
Oft-Repeated Rule: In the absence of a special contract, a carrier is not an insurer against
delay in transportation of goods
Consequences of Delay:
a. A natural disaster shall not free carrier from responsibility (Art. 1740)
b. Contract limiting carrier's liability cannot be availed of in case of loss of goods (Art.
1747)
c. Excusable delays in carriage suspend, but do not generally terminate, the contract of
carriage, and when the cause is removed, the master must proceed with the voyage and
make delivery
d. During delay the vessel continues to be liable as a common carrier, not as a
warehouseman, and remains duty bound to exercise extraordinary diligence
e. Payment of indemnity:
i.
Stipulated in bill of lading
ii.
If no indemnity stipulated, then carrier shall be liable for damages incurred due to
delay
f. Consignee may:
i.
Leave goods transported in the hands of carrier (Abandonment) advising him
thereof in writing before their arrival at the point of destination. The carrier shall
pay the full value of goods as if they had been lost or mislaid.
ii.
If no abandonment was made indemnification shall not exceed the current price of
goods at the time it should have been delivered
Grounds for valid refusal to accept goods: (DUO-CIEDSF)
1. Dangerous objects or substances including dynamites and other explosives
2. Unfit for transportation
3. Acceptance would result in overloading
4. Contrabands or illegal goods
5. 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 diseases
8. Strike
9. Failure to tender goods in time
Due Diligence to lessen the loss
B. CONTRIBUTORY NEGLIGENCE
C. DURATION OF LIABILITY
Commencement: from the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation
Termination: actual or constructive delivery by the carrier to the consignee or to the person
who has the right to receive them (Art. 1736)

7 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

Liability remains:
a. Even when goods are temporarily unloaded or stored in transit unless the shipper or
owner has made use of the right of stoppage in transitu (Art. 1737)
b. And when goods are stored in the carriers warehouse at the place of destination until
the consignee has been advised of the arrival thereof and had reasonable opportunity
thereafter to remove or dispose them (Art. 1738)
c. Delivery to the customs authorities is not delivery to the consignee. However, the parties
may agree to limit the liability of carrier (Lu Do vs. Binamira, 101 Phil. 120)
Constructive delivery
Notice by the common carrier that the cargo had already arrived, placing them at the
disposal of the shipper or consignee releases the common carrier from extra-ordinary
responsibility. From such moment the consignee or shipper should exercise over the cargo
the ordinary control pertinent to ownership (should unload cargo from the common carrier).
D. STIPULATIONS FOR LIMITATION OF LIABILITY
1. As to degree of diligence
Common carrier and shipper may agree on carriers observance of diligence to a degree
less than extraordinary, provided it be:
1. In writing, signed by shipper or owner;
2. Supported by a valuable consideration other than the service rendered by carriers;
and
3. Reasonable, just and not contrary to public policy. (Art. 1744)
2. As to amount of liability
Valid Stipulations:
a. Carrier's liability limited to the value of goods appearing in the bill of lading, unless
the shipper or owner declares a greater value. (Art. 1749)
b. Fixing the sum to be recovered by the owner or shipper, if it is reasonable and just
under the circumstances and has been fairly and freely agreed upon. (Art. 1750)
c. Limiting carriers liability for delay on account of strikes or riots. (Art. 1748)
Invalid Stipulations: (RLNTD)
a. Goods are transported at the risk of the owner or shipper;
b. Carrier will not be liable for any loss of goods;
c. Carrier need not observe any diligence in the custody of goods;
d. Carrier shall exercise a degree of diligence less than that of a good father of a family;
e. Carrier shall not be responsible for the acts or omissions of his or its employees;
f. Carriers 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;
g. Carrier not responsible for the loss of goods on account of defective condition of car,
vehicle, ship or other equipment used in the contract of carriage. (Art. 1745)
Presumption despite stipulation
Even when there is an agreement limiting the liability, the common carrier is disputably
presumed to have been negligent in case of their loss. (Art. 1752)
The validity of stipulations limiting the carrier's liability is to be determined by their
reasonableness and their conformity to the sound public policy. It cannot lawfully stipulate
for exemption from liability unless such exemption is just and reasonable and unless the
contract is freely and fairly made. No contractual limitation is reasonable which is
subversive of public policy. Ysmael vs Barreto, 51 Phil 90

8 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

E. LIABILITY FOR BAGGAGE OF PASSENGERS


Rules on Passenger Baggage
Common carriers are bound to observe extraordinary diligence in the vigilance over the
goods of the passengers transported by them.

The rules concerning the responsibility of hotelkeepers shall be applicable to common


carriers.

The deposit of effects made by passengers in common carriers shall be regarded as


necessary. The common carrier shall be responsible for them as depositaries, provided
that notice was given to them, or to their employees, of the effects brought by the
passengers and that, on the part of the latter, they take the precautions which said
common carriers or their employees advised relative to the care and vigilance of their
effects.

The act of a thief or robber, who has entered the common carrier is not deemed force
majeure, unless it is done with the use of arms or through irresistible force.

The common carrier is not liable for compensation if the loss is due to the acts of the
passenger, or if the loss arises from the character of the things brought into the common
carrier

The common carrier cannot free himself from responsibility by posting notices to the
effect that he is not liable for the articles brought by the passenger. Any stipulation
between the common carrier and the passenger where the responsibility of the former is
suppressed or diminished shall be void.

Classes of baggage of passengers


The law makes a distinction between
(1)

baggage in the custody of the passengers or their employees (hand-carried baggage);


and

(2)

baggage not in such custody but in that of the common carrier (checked-in baggage)

Liability for baggage in custody of passenger


The baggage of passengers in their personal custody or in that of their EEs while being
transported shall be regarded as necessary deposits.
The common carrier shall be
responsible for such baggage as depositaries, provided that
(1) notice was given to them or to their EEs, of the baggage brought by their passengers,
and that
(2) the passengers take the precautions which said CCs advised relative to the care and
vigilance of their baggage.
Responsibility for acts of employees, thieves
A common carrier is responsible as a depositary for the loss of or injury to the baggage in
the personal custody of passengers, caused by the common carrier's servants or
employees but not those caused by force majeure.

The act of a thief or robber, who has entered the common carrier's vehicle is not deemed
force majeure, unless it is done with the use of arms or through irresistible force.

9 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

The common carrier is not liable if the loss of the baggage in the personal custody of the
passenger is due to the acts of the passengers, his family, servants or visitors, OR if the
loss arises from the character of the baggage.

Stipulations limiting liability

A common carrier cannot free himself from responsibility by posting notices to the effect
that he is not liable for the baggage brought by the passengers. Any stipulation
diminishing the responsibility required under 1998 to 2001 shall be void.

Liability for baggage not in custody of passenger


the provisions on carriage of goods shall apply (extraordinary diligence in the vigilance
over the goods).

the law immediately imposes on the common carrier extraordinary responsibility for the
loss thereof which lasts until the actual or constructive delivery of the effects to the
passenger as the person who has the right to receive them (presumption of negligence
exists but may be rebutted by proof of exercise of extraordinary diligence or causes
under 1734).

A common carrier is liable for the loss of baggage although not declared and the charges
not paid, if it accepted them for transportation

However, the carrier cannot limit its liability for injury to, or loss of, goods shipped where
such injury or loss was caused by its own negligence. (Shewaram vs. PAL, 17 SCRA 606)

HAND-CARRIED BAGGAGE

CHECKED-IN BAGGAGE

Necessary deposit
Common carrier
exercises diligence of
a depositary (ordinary
diligence)
Governed by Arts.
1998 and 2000-2003

Considered as goods
Requires extraordinary
diligence
Governed by Arts.
1733-1753

V.

SAFETY OF PASSENGERS

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious persons, with a due
regard for all circumstances.

A. PASSENGER
A passenger is a person who has entered into a contract of carriage, express or implied,
with the carrier. He is 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;

10 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

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 intended for passengers.

Ticket given to a passenger is a written contract


Ticket given to passenger is a written contract with the ff. elements: (1) the consent of
the contracting parties manifested by the fact that the passenger boards the ship and
the shipper consents or accepts him in the ship for transportation; (2) cause or
consideration which is the fare paid by the passenger as stated in the ticket; (3) object,
which is the transportation of the passenger from the place of departure to the place of
destination which are stated in the ticket.
B. DILIGENCE REQUIRED
Extraordinary diligence in carrying passengers
Art. 1755 shows clearly the high degree of care and extraordinary diligence required of a
common carrier with respect to its passengers.
Duty of extraordinary diligence extends also to crew members
The duty to exercise the utmost diligence on the part of common carrier is for the safety
of passengers as well as for the members of the crew or the complement operating the
carrier. This must be so for any omission, lapse or neglect thereof will certainly result to
the damage, prejudice, injuries or even death to all aboard the plane.
How presumption of negligence is overcome
To overcome such presumption, it must be shown that the common carrier had observed
the required extraordinary diligence or that the accident was caused by fortuituos event.
In order to constitute caso fortuito that would exempt a person from responsibility, it is
necessary that :
1. The event must be independent of human will;
2. The occurrence must render it impossible for the obligor to fulfill his obligation in a
normal manner;
3. The obligor must be free of a concurrent or contributory fault or negligence.
[Estrada vs Consolacion, 71 SCRA 523]

"Last clear chance" rule NOT applicable to contracts of carriage


The principle of last clear chance applies only in a suit between the owners and drivers
of two colliding vehicles; it does not apply where a passenger demands responsibility
from the common carrier to enforce its contractual obligation; it would be iniquitous to
exempt the driver and his employer on the ground that the other driver was also
negligent.
C. DURATION OF LIABILITY
The duty of a common carrier to provide safety to its passengers so obligates it not only

11 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

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).
D. LIABILITY FOR ACTS OF OTHERS
Acts of other passengers
The common carrier is not ordinarily liable for injuries to passengers due to fires or
explosions caused by articles brought into conveyance by other passengers. For the
carrier to be liable, he must be aware, through its employees, of the nature of the article
or must have had some reason to anticipate danger therefrom (circumstances must
show that there are causes for apprehension that the passenger's baggage is dangerous
and that the common carrier fails to act in the fact of such evidence) [Nocum vs
Laguna Bus Co., 1969]
Acts of employees

Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carrier.
The liability of the common carrier does not cease upon proof that they exercised all
the diligence of a good father of a family in the selection and supervision of their
employees.

The carrier is liable when its personnel allowed a passenger to drive the vehicle causing
it to collide with another vehicle resulting to the injuries suffered by the other
passengers. (MRR vs. Ballesteros, 16 SCRA 641)
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 quasi-delicts under Art. 2176. (Del Prado v.
Manila Electric Co., 52 Phil 900)
Acts of Manufacturer defective equipment
A passenger is entitled to recover damages from a common carrier for an injury resulting
from a defect in an appliance purchased from a manufacturer, whenever it appears that
the defect would have been discovered by the common carrier if it had exercised the
degree of care which under the circumstances was incumbent upon it, with regard to
inspection and application of the necessary tests; for the purposes of this doctrine, the
manufacturer is considered as being in law the agent or servant of the common carrier,
as far as regards the work of constructing the appliance.

12 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

FOR ACTS OF ITS EMPLOYEES

Liability of a common carrier for death or injuries to passengers


FOR ACTS OF OTHER
PASSENGERS OR
STRANGERS

Required diligence and defense


Extraordinary
Ordinary diligence
diligence
Nature of liability
Tort; however, The Not
absolute;
employee must be on limited by Art. 1763
duty at the time of the
act.
(Maranan
v.
Perez)

E. STIPULATIONS LIMITING LIABILITY


Valid stipulation
Stipulation limiting liability when a passenger is carried gratuitously, but not for willful
acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability. (Art.
1758)
Under 1758 (2), the reduction of fare does not justify any limitation of the CC's
liability -- the law requires gratuitous passage.
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)
F. 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 (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 (Art. 2180, NCC)

Defense of due diligence in the selection and supervision of employees is available.


Exception: maritime tort resulting in 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 (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)

G. CONTRIBUTORY NEGLIGENCE OF PASSENGERS

13 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

Art. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence of
the common carrier, but the amount of damages shall be equitably reduced.

Diligence required of passenger


Diligence of a good father of a family to avoid injury to himself.
Effect of contributory negligence of passenger
If THE proximate cause of death or injury
- the common carrier is exempted from liability

If NOT the proximate cause of death or injury


- he or his heirs are not barred from recovery of damages, provided that the
common carrier is the proximate cause of his death or injury

The conduct of plaintiff in undertaking to alight while the train was yet slightly underway
was not characterized by imprudence and that he was not guilty of contributory
negligence. The circumstances show that it was no means so risky for him to get off
while the train was yet moving. It is not negligence per se for a traveler to alight from a
slowly moving train. (Cangco vs MRR 38 Phil 768)
By placing his left arm on the window, the passenger is guilty of contributory negligence,
and although contributory negligence cannot relieve the carrier but can only reduce his
liability (Art. 1762), this is a circumstance which militates against plaintiff's position. It is
negligence per se for passengers to protrude any part of his body and that no recovery
can be had for an injury.
In this case, the bus driver had done what a prudent man could have done to avoid the
collision. The injury was due to passenger's fault. (Isaac vs A. L. Ammen)

VI.

BILL OF LADING

A bill of lading may defined as a written acknowledgment of the receipt of goods and an
agreement to transport and to deliver them at a specified place to a person named or on his
order. It comprehends all methods of transportation.
A. 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 honored by the
second and other interested carriers who do not issue their own bills.

14 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

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.
B. THREE-FOLD CHARACTER
1. A receipt for the goods shipped.
2. A contract which the three parties (shipper, carrier, consignees) undertake specific
responsibilities and assume stipulated obligations.
3. A legal evidence of the contract between the shipper and the carrier. Its contents
shall decide all disputes which may arise with regard to their execution and
fulfillment. (Magellan Manufacturing v. CA, 201 SCRA 2021)
In the absence of a bill of lading, their respective claims may be determined by legal proofs
which each of the contracting parties may present in conformity with law.
C. OBLIGATIONS OF THE CARRIER
a) Duty to Accept Goods
b) Duty to Deliver Goods to (i) person indicated in bill of lading; or (ii) any person to
whom bill of lading was validly transferred or negotiated
c) Duty to exercise extraordinary diligence
D. DELIVERY OF GOODS
Duty to deliver
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. (Fisher vs. Yangco Steamship Co. 31 Phil 1).
The common carrier has the duty to deliver the goods in the same condition in which
according to the bill of lading they were found at the time they were received, without
damage or impairment; otherwise, the common carrier is liable for damages (Art. 363)
Instances when the carrier may validly refuse to accept the goods
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. (Notes and Cases on the Law on Transportation and
Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p.68)
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. (PAL vs. CA)
Combined carrier agreement (Art. 373)
General rule: In case of a contract of transportation of several legs, each carrier is

15 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

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.

E. PERIOD FOR 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 carriers liability cannot
be availed of in case of loss or deterioration of the goods (Art.1747)
F. RIGHT OF CONSIGNEE TO ABANDON THE GOODS
1. Partial non-delivery, where goods are useless with others (Art. 363 Code of
Commerce)
2. Goods rendered useless for sale or consumption for purposes for which they are
properly destined (Art. 365)
3. In case of delay through the fault of carrier (Art. 371)
G. 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

COGSA Sec.3 (6)


Applicability
1. Domestic/inter1. International/overs
island/coastwise
eas/ foreign (from
transportation
foreign country to
2. Land, water, air
Phils.)

16 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

transportation
3. Carriage of goods

Note: subject to the


rule on Paramount
Clause
2. Water/maritime
transportation
3. Carriage of goods

Notice of damage
1. Condition
1. Not a condition
precedent
precedent
2. 24-hour period for
2. 3-day period for
claiming latent
claiming latent
damage
damage
Prescriptive period
None provided; Civil One year from the
Code applies.
date
of
delivery
(delivered
but
damaged goods), or
date when the vessel
left port or from the
date of delivery to the
arrastre (non-delivery
or loss).

VIII. MARITIME COMMERCE


A. GENERAL CONCEPT
Maritime laws 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)

B. CHARTER PARTIES
Contract by which an entire ship, or some principal part thereof is let by the owner to
another person for a specified time or use for the conveyance of goods, in consideration of
the payment of freight (Caltex Phils. vs. Sulpicio Lines, 315 SCRA 709)
LEASE
If for a definite
period, lessee
cannot give up
lease by paying a
portion of the
amount agreed
upon
If the leased
property is sold to
one who knows of
the existence of the
lease, the new
owner must respect
the lease

CHARTER PARTY
Charterer may
rescind charter
party by paying half
of freightage agreed
upon
The new owner is
not compelled to
respect the charter
party so long as he
can load the vessel
with his own cargo

17 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

If the leased
property is sold to
one who knows of
the existence of the
lease, the new
owner must respect
the lease

The new owner is


not compelled to
respect the charter
party so long as he
can load the vessel
with his own cargo

Classes of Charter Parties


1. Bareboat or Demise Charter
Charterer provides crew, food and fuel. The charterer is liable as if he were the
owner, except when such arises from the unworthiness of the vessel
Owner pro hac vice a demise charterer, in spite of the fact that somebody else is
the owner of the vessel, is treated as the owner of the chartered vessel, just for that
one particular purpose only.
Effect: charterer assumes customary rights and liabilities of the ship-owner to third
persons and is held liable for the expense of the voyage and the wages of the
seamen
2. Contract of Affreightment
Owner leases the boat or part of it for the carriage of goods
1.
Time charter vessel is chartered for a period of time or duration of
voyage
2.
Voyage or trip charter contract for hire of vessel for one or series of
voyages
BAREBOAT OR DEMISE
CHARTER

CONTRACT OF
AFFREIGHTMENT

Charterer becomes
liable to others caused
by its negligence

Owner remains liable


as carrier and must
answer for any
breach of duty
Charterer is not
regarded as owner

Charterer regarded as
owner pro hac vice for
the voyage
Owner of vessel
relinquishes
possession, command
and navigation to
charterer
Common carrier
becomes private

Owner retains
possession,
command and
navigation of the ship
Common carrier
remains as such

Freight Parties may fix the manner or form in which the charter price shall be satisfied
Lay days period when vessel will be delayed in the port for loading and unloading
Primage bonus to be paid to the captain after the successful voyage
Deadfreight where the charterer failed to occupy the leased portion of the vessel, he may
thereby be made liable by the ship-owner
Demurrage sum due, by express contract, for the detention of the vessel, in loading and
unloading, beyond the time allowed in the contract of affreightment, and to any other
improper detention or delay beyond the time set for loading
Persons who may make a charter
1. Owner or owners of the vessel, either in whole or in majority part, who have legal control

18 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

and possession of the vessel


2. Charterer may subcharter entire vessel to 3 rd person only if not prohibited in original
charter. (Art.679)
3. Ship agent if authorized by the owner/s or given such power in the certificate of
appointment. (Art.598)
4. Captain in the absence of the ship agent or consignee and only if he acts in accordance
with the instructions of the agent or owner and protects the latters interests. (Art.609)
Requisites of a valid charter party
1.
Consent of the contracting parties
2.
Existing vessel which should be placed at the disposition of the shipper
3.
Freight
4.
Compliance with Art. 652 of the Code of Commerce
Rights and Obligations of Parties
SHIPOWNER OR SHIP
CHARTERER
AGENT
1. If the vessel is
chartered wholly,
not to accept
cargo from others;
2. To observe
represented
capacity;
3. To unload cargo
clandestinely
placed
4. To substitute
another vessel if
load is less than
3/5 of capacity;
5. To leave the port if
the charterer does
not bring the
cargo within the
lay days and extra
lay days allowed;
6. To place in a
vessel in a
condition to
navigate;
7. to bring cargo to
nearest neutral
port in case of war
or blockade. (Arts.
669-678)

1. To pay the agreed


charter price;
2. To pay freightage
on unboarded
cargo;
3. To pay losses to
others for loading
uncontracted cargo
and illicit cargo;
4. To wait if the
vessel needs
repair;
5. To pay expenses
for deviation. (Arts.
679-687)

Rescission of a Charter Party


At charterers
request
(Art 688)

At shipowners
request
(Art. 689)

Fortuitous causes
(Art. 690)

1. By abandoning
the
charter
and
paying

1. If the
extra lay
days
terminate
without
the cargo

1. War or
interdiction
of
commerce;
2. Blockade;
3. Prohibition

19 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

2.
3.

4.

5.

half of
the
freightag
e;
Error in
tonnage
or flag;
Failure to
place the
vessel at
the
charterer
s
disposal;
Return of
the
vessel
due to
pirates,
enemies
or bad
weather;
Arrival at
a port
for
repairs.

being
placed
alongside
the
vessel;
2. Sale by
the
owner of
the
vessel
before
loading
by the
charterer;

to receive
cargo;
4. Embargo;
and
5. Inability of
the vessel to
navigate.

C. LIABILITY OF SHIPOWNER/SHIP AGENTS


Shipowner (proprietario)
Person who has possession, control and management of the vessel and the
consequent right to direct her navigation and receive freight earned and paid, while
his possession continues.
Ship agent (naviero)
Person entrusted with provisioning and representing the vessel in the port in which it
may be found; also includes the shipowner.
Not a mere agent under civil law; he is solidarily liable with the ship owner.
Powers and functions:
1. Capacity to trade;
2. Discharge duties of the captain, subject to Art.609;
3. Contract in the name of the owners with respect to repairs, details of equipment,
armament, provisions of food and fuel, and freight of the vessel, and all that
relate to the requirements of navigation;
4. Order a new voyage, make a new charter or insure the vessel after obtaining
authorization from the shipowner or if granted in certificate of appointment.
Civil Liabilities of the Shipowner And Ship Agent
1. Acts of the captain (Art. 618)
2. All contracts of the captain, whether authorized or not, to repair, equip and provision the
vessel provided that the amount claimed was invested for the benefit of the vessel (Art.
586);
3. Loss and damage to the goods loaded on the vessel without prejudice to their right to
free themselves from liability by abandoning the vessel to the creditors. (Art. 587)
Solidary Liabilities of the Ship Agent/Shipowner for Acts Done by the Captain
towards Passengers and Cargoes
1. Damages to vessel and to cargo due to lack of skill and negligence;
2. Thefts and robberies of the crew;
3. Losses and fines for violation of laws;

20 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

4.
5.
6.
7.
8.

Damages due to mutinies;


Damages due to misuse of power;
For deviations;
For arrivals under stress;
Damages due to non-observance of marine regulations. (Art. 618)

Duty of Ship Agent to Discharge the Captain and Members of the Crew
If the seamen contract is not for a definite period or voyage, he may discharge them at
his discretion. (Art. 603)
If for a definite period, he may not discharge them until after the fulfillment of their
contracts, except on the following grounds:
a. Insubordination in serious matters;
b. Robbery;
c. Theft;
d. Habitual drunkenness;
e. Damage caused to the vessel or to its cargo through malice or manifest or proven
negligence. (Art. 605)
A ships captain must be accorded a reasonable measure of discretionary authority to decide
what the safety of the ship and of its crew and cargo specifically requires on a stipulated
ocean voyage (Inter-Orient Maritime Enterprises Inc. vs. CA).
D. DOCTRINE OF LIMITED LIABILITY (HYPOTHECARY RULE)
General rule
The liability of ship owners 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)
No vessel, no liability
Interest extends to:
a. Vessel itself
b. Equipments
c. Freightage
d. Insurance proceeds (Chua v. IAC, 166 SCRA 183)
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
Exceptions to limited liability
1. Where injury or damage is due to ship owners fault
2. Vessel is insured
3. Claims under Workmens Compensation
4. Expenses for repair on vessel before loss
5. In case there is no total loss and the vessel is not abandoned;
6. Vessel is not abandoned
7. 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).

21 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

Right of shipowner or ship agent to abandon vessel


1. In case of civil liability from indemnities to third persons (Art. 587);
2. In case of leakage of at least of the contents of a cargo containing liquids (Art. 687);
and
3. In case of constructive loss of the vessel (Sec. 138, Insurance Code).

E. ACCIDENTS AND DAMAGES IN MARITIME COMMERCE


1. Average
An extraordinary or accidental expense incurred during the voyage in order to
preserve the cargo, vessel or both, and all damages or deterioration suffered by the
vessel from departure to the port of destination, and to the cargo from the port of
loading to the port of consignment. (Art. 806)
The person whose property has been saved must contribute to reimburse the
damage caused or expense incurred if the situation constitutes general average.
Classes of Average
Particular or Simple Average

damage or expenses caused to the vessel or cargo that did not inure to
common benefit, and (ii) borne by respective owners (Art. 809)
only the vessel or only the cargo is saved
Gross or General Average
a. Damage or expenses deliberately caused in order to save the vessel, its cargo or
both from real and known risk (Art. 811)
b. All the persons having an interest in the vessel and the cargo therein at the time
of the occurrence of the average shall contribute to satisfy this average (Art. 812)
c. Requisites:
1.
Common danger present
2.
Arising from accidents of sea, disposition of authority
3.
Peril imminent and ascertained
4.
Part of vessel or cargo deliberately sacrificed
5.
Intended to save vessel or cargo or both
6.
Successful saving of vessel or cargo
7.
Proper legal steps and authority taken
PARTICULAR OR SIMPLE
GROSS OR GENERAL
Definition
Damages or
Damages or
expenses caused to
expenses
the vessel or cargo
deliberately caused
that did not inure to
in order to save the
the common benefit,
vessel, its cargo or
and borne by
both from real and
respective owners.
known risk. (Art.
(Art. 809)
811)
Requisites
1. common danger;
2. deliberate
sacrifice;
3. success;
4. proper formalities
and legal steps.
Liability
The owner of the
All the persons
goods which gave
having an interest in
rise to the expense
the vessel and the
or suffered the
cargo therein at the

22 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

damage shall bear


this average. (Art.
810)

time of the
occurrence of the
average shall
contribute to satisfy
this average. (Art.
812)
The insurers
(Art.859) and lenders
on bottomry and
respondentia shall
likewise contribute.
(Art.732).
Number of interests involved
Only one interest
Several interests
involved
involved
Share in the damage or expense
100% share
In proportion to the
value of the owners
property saved
Right to recover
No reimbursement
There may be
reimbursement
Kinds (not exclusive)
Art. 809
Art. 811
Procedure for recovery
1. Assembly and
deliberation
2. Resolution of the
captain
3. Entry of the
resolution in the
logbook
4. Detailed minutes
5. Delivery of the
minutes to the
maritime judicial
authority of the
first port, within
24 hours from
arrival,
6. Ratification by
captain under
oath. (Arts. 813814)

Expenses incurred to refloat a vessel, which accidentally ran aground, in order to continue
its voyage, do not constitute general average. Not only is there absence of a marine peril,
common safety factor, and deliberateness. It is the safety of the property, and not the
voyage, which constitutes the true foundation of general average. (A. Magsaysay, Inc. vs.
Agan, G.R.No. L-6393, Jan. 31, 1955)
Goods not covered by general average even if sacrificed
1. Goods carried on deck. (ART.855)
2. Goods not recorded in the books or records of the vessel. (ART.855 (2))
3. Fuel for the vessel if there is more than sufficient fuel for the voyage. (Rule IX, YorkAntwerp Rule)
Jettison
Act of throwing cargo overboard in order to lighten the vessel.
Order of goods to be cast overboard:

23 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

1. Those which are on the deck, preferring the heaviest one with the least utility and
value;
2. Those which are below the upper deck, beginning with the one with greatest weight
and smallest value. (Art. 815)
Jettisoned goods are not res nullius nor deemed abandoned within the meaning of civil law
so as to be the object of occupation by salvage. (Pandect of Commercial Law and
Jurisprudence, Justice Jose Vitug, 1997 ed.)
In order that the jettisoned goods may be included in the gross or general average, the
existence of the cargo on board should be proven by means of the bill of lading. (Art. 816)
Arrival under stress (arribada)
The arrival of a vessel at the nearest and most convenient port instead of the port of
destination, if during the voyage the vessel cannot continue the trip to the port of
destination.
When
lawful

When
unlawful

Who
bears
expenses:

The inability
to continue
voyage is
due to lack of
provisions,
well-founded
fear of
seizure,
privateers,
pirates, or
accidents of
the sea
disabling it to
navigate.
(Art. 819)

1. Lack of
provisions due
to negligence
to carry
according to
usage and
customs;
2. Risk of
enemy not
well known or
manifest
3. Defect of
vessel due to
improper
repair; and
4. Malice,
negligence,
lack of
foresight or
skill of
captain. (Art.
820)

The shipowner
or ship agent
is liable in
case of
unlawful
arrival under
stress. But
they shall not
be liable for
the damages
caused by
reason of a
lawful arrival.
(Art. 821)

It is the duty of the captain to continue the voyage without delay after the cause of the
arrival under stress has ceased failing in such duty renders him liable. However, in case the
cause has been risk of enemies, there must first be an assembly before departure. (Art. 825)
2. Collisions
Collision: impact of two vessels both of which are moving
Allision: striking of a moving vessel against one that is stationary
Nautical Rules to Determine Negligence
1. When two vessels are about to enter a port, the farther one must allow the nearer to
enter first; if they collide, the fault is presumed to be imputable to the one who
arrived later, unless it can be proved that there was no fault on its part.
2.
When two vessels meet, the smaller should give the right of way to
the larger one.

24 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

3.
4.
5.
6.

7.
8.
9.

A vessel leaving port should leave the way clear for another which
may be entering the same port.
The vessel which leaves later is presumed to have collided against
one which has left earlier.
There is a presumption against the vessel which sets sail in the night.
There is a presumption against the vessel with spread sails which
collides with another which is at anchor and cannot move, even when the crew of the
latter has received word to lift anchor, when there was not sufficient time to do so or
there was fear of a greater damage or other legitimate reason.
There is a presumption against an improperly moored vessel.
There is a presumption against a vessel which has no buoys to
indicate the location of its anchors to prevent damage to vessels which may
approach it.
Vessels must have proper look-outs or persons trained as such and
who have no other duty aside therefrom. (Smith Bell v. CA)

Nautical Rules as to Sailing Vessel and Steamship


1. Where a steamship and a sailing vessel are approaching each other from opposite
directions, or on intersecting lines, the steamship from the moment the sailing vessel
is seen, shall watch with the highest diligence her course and movements so as to be
able to adopt such timely means of precaution as will necessarily prevent the two
boats from coming in contact.
2. The sailing vessel is required to keep her course unless the circumstances require
otherwise.
Zones of Time in the Collision of Vessels
First zone all time up to the moment when risk of collision begins.
rule is as yet applicable for none is necessary.
Second zone time between moment when risk of collision begins and moment it
becomes a practical certainty.
It is in this period where conduct of the vessels is primordial. It is in this zone that
vessels must strictly observe nautical rules, unless a departure therefrom becomes
necessary to avoid imminent danger.
Third zone time when collision is certain and time of impact.
An error in this zone would no longer be legally consequential.
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
such sudden movement is wrong, no responsibility will fall on said faultless vessel.
(Urrutia and Co. v. Baco River Plantation Co., 26 PHIL 632)
Cases Covered By Collision and Allision
1. One vessel at fault
Vessel at fault is liable for damage caused to innocent vessel as well as damages
suffered by the owners of cargo of both vessels. (Art. 826)
2. Both vessels at fault
Each vessel must bear its own loss, but the shippers of both vessels may go
against the shipowners who will be solidarily liable. (Art. 827)
3. Vessel at fault not known
Each vessel must bear its own loss, but the shippers of both vessels may go
against the shipowners who will be solidarily liable. (Art. 828)
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

25 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

vessels.
4. Third vessel at fault
The third vessel will be liable for losses and damages. (Art. 831)
5. Fortuitous event/force majeure
No liability. Each bears its own loss. (Art. 830)
The doctrine of res ipsa loquitur applies in case a moving vessel strikes a stationary
object, such as a bridge post, dock, or navigational aid. (Far Eastern Shipping v. CA,
Luzon Stevedoring vs. CA)
Even if the cause of action against the common carrier is based on quasi-delict, the
defense of due diligence in the selection and supervision of employees is unavailing in
case of a maritime tort resulting in collision. It is not a civil tort governed by the Civil
Code but a maritime one governed by Arts. 826-839 of the Code of Commerce. (Manila
Steamship vs. Insa Abdulhaman)
Doctrine of Last Clear Chance and Rule on Contributory Negligence cannot be applied in
collision cases because of Art.827 of the Code of Commerce. (Notes and Cases on the
Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004
ed.)
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)
Cases applicable:
1. Collision (Art. 835);
2. Arrival under stress (Art. 612(8));
3. Shipwrecks (Arts. 612(15), 843);
4. Where the vessel has gone through a hurricane or when the captain believes that the
cargo has suffered damages or averages (Art. 624).
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)
Shipwreck
is the loss of the vessel at sea as a consequence of its grounding, or running against an
object in sea or on the coast. It occurs when the vessel sustains injuries due to a marine
peril rendering her incapable of navigation.
If the wreck was due to malice, negligence or lack of skill of the captain, the owner of the
vessel may demand indemnity from said captain. (Art. 841)
The rules on collision or allision, as may be pertinent, can equally apply to shipwrecks.

IX. CARRIAGE OF GOODS BY SEA ACT (COGSA)


26 REVIEWER FOR TRANSPORTATION LAW
BAR 2011

I.

APPLICATION
The transportation must be:
1. Water/maritime transportation (by sea);
2. for the carriage of goods;
3. to and from Philippine ports
4. in foreign trade
Application of COGSA in in domestic shipping
General Rule Not applicable
Exception- when parties agree to make it apply (clause paramount)
Application of COGSA in carriage of passengers
- NOT applicable

II. NOTICE OF DAMAGE (SEC. 3(6))


To recover loss or damage to cargo, notice and general nature thereof in writing
must be given by the shipper or consignee to the carrier or his agent at the port of
discharge or at the time of removal of the goods
Rules:
a. Patent damage: shipper should file a claim with the carrier immediately upon delivery
b. Latent damage: shipper should file a claim with the carrier within three days from
delivery.
Note: The filing of a notice of claim is not a condition precedent.
III. PRESCRIPTIVE PERIOD
1. To give notice if loss or damage is apparent notice in writing must be given to
carrier or agent at time of removal of goods by persons entitled to delivery.
2. To give notice if not apparent within 3 days from delivery.
3. To bring suits 1 year after delivery or when goods should have been delivered a suit
must be filed (whether notice of loss/damage is given), otherwise prescribed.
a. Stipulation reducing the 1 year period is null and void, but a written agreement to
suspend it is valid (Maritime Company of the Philippines vs. CA, 164 SCRA
593)
b. An extra-judicial demand does not suspend the period
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)
c. An insurer who is exercising its right of subrogation is also bound by the 1-year period
(Fil. Merchants vs. Alejandro 145 SCRA 42). It does not apply to a claim against
the insurer for the insurance proceeds. The claim against the insurer is based on
contract that expires in 10 years (Mayer Steel Pipe Corp. vs. CA 274 SCRA 432)
d. If there is no delivery in case of undelivered or lost cargo, the one-year period starts
to run from the day the vessel left port.
e. 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

27 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

f.

Delivery to the wrong person prescriptive period is (i) 10 years because there is a
breach of contract, or (ii) 4 years for quasi-delict (Ang v. American SS Agencies
(19 SCRA 631)
Delay or late delivery are not the damage or loss contemplated under the COGSA.
The goods are not actually lost or damaged. The applicable period is 10 years
(Mitsui vs. CA 287 SCRA 366)

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 vs.
American Steamship Agencies Inc.) and damage arising from delay or late delivery
(Mitsui O.S.K. Lines Ltd. vs. CA). In such instance the, Civil Code rules on prescription
shall apply.
Suspension of the one-year 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)
IV. AMOUNT OF CARRIERS LIABILITY
Under the Sec. 4(5), the liability limit is set at $500 per package or customary freight
unit unless the nature and value of such goods is declared by the shipper. This is
deemed incorporated in the bill of lading even if not mentioned in it. (Eastern
Shipping vs. IAC, 150 SCRA 463)

Nature and value of goods may be declared by shipper and inserted in bill of lading;
declaration is prima facie evidence and not conclusive on carrier

Shipper and carrier may agree on another maximum amount, but not more than the
amount of damage actually sustained

No Liability under COGSA:


1. Nature or value of goods knowingly and fraudulently misstated by shipper
2. Damage resulted from dangerous nature of shipment loaded without consent of
carrier
3. Unseaworthiness not due to negligence of carrier
4. Deviation was to save life or property at sea

X. WARSAW CONVENTION OF 1979


A. APPLICABILITY
The transportation must be:
1. International transportation;
2. Air transportation; and
3. Carriage of passengers, baggage or goods.

28 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

Note: Warsaw Convention prevails over the Civil Code, Rules of Court and all laws in the
Philippines since an international law prevails over general law.

International Transportation by Air any transportation in which the place of


departure and the place of destination are situated either:
1. Within the territories of two High Contracting Parties regardless of whether or not
there be a break in the transportation or transshipment
2. Within the territory of a single High Contracting Party, if there is an agreed stopping
place within a territory subject to the sovereignty, mandate or authority of another
power, even though that power is not a party to the Convention (round trip)

Note: Absence of agreement concerning stopping place transportation not deemed


international for purposes of the WC
When Not Applicable:
If there is willful misconduct on the part of the carriers employees (PAL v. CA, 257
SCRA 33)
When it contradicts public policy
If requirements under WC are not complied with
B. LIABILITY OF CARRIERS

1. Death or injury of a passenger if the accident causing it took place on board the aircraft
or in the course of its operations (Art. 17)

2. Destruction, loss or damage to any luggage or goods, if it took place during the carriage
(Art. 18)

3. Delay in the transportation of passengers, luggage or goods (Art. 19)


Note: The Hague Protocol amended the Warsaw Convention by removing the provision that
if the airline took all necessary steps to avoid the damage, it could exculpate itself
completely (Art. 20(1)) (Alitalia v. IAC, 192 SCRA 9)

C. 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
$1000/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.

29 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

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)
In PanAm v. IAC, the WC was applied as regards the limitation on the carriers 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 carriers liability, where there was satisfactory evidence of malice or bad faith
attributable to its officers and employees. (Alitalia vs. IAC)
D. SPECIAL RULES ON LIABILITES OF AIRLINE CARRIERS
1. In case of flight diversion due to bad weather or other circumstances beyond the
pilots 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 carriers 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 passengers
flight reservation. (Singson vs. CA, 282 SCRA 149)
4. 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)

X. PUBLIC SERVICE ACT


A. PUBLIC UTILITY DEFINED
A public utility is a business or service engaged in regularly supplying the public with
some commodity or service of public consequence such as electricity, gas, water,

30 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

transportation, telephone or telegraph service. Apart from statutes which define the
public utilities that are within the purview of such statutes, it would be difficult to
construct a definition of a public utility which would fit every conceivable case. As its
name indicates, however, the term public utility implies a public use and service to the
public. (Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)
Public Service - Includes any person who may own, operate, manage, or control in
the Philippines for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle,
steamboat, or steamship line, ferries, and water craft, shipyard, ice-plant, electric light,
heat and power or any public utility (Sec. 13(b) Commercial Act 146)
A casual or incidental service devoid of public character and interest is not brought
within the category. (Luzon Stevedoring vs. PSC, 156 SCRA 169)
NOTE: The Public Service Commission created under the Public Service Law has already
been abolished under P.D. No. 1 and other issuances. It has been replaced by the
following government agencies: LTO; LTFRB; ATO; BOE; NTC; NEA; ERB; NWRC; CAB; and
MIA.
B. CERTIFICATE OF PUBLIC CONVENIENCE
No public service shall operate without having been issued a certificate of public
convenience (no franchise is required by law, e.g. common carriers) or a certificate of
public convenience and necessity (a prior franchise is required by law, e.g. telephone
and other services) (Sec. 15 Comm. Act 146)
CERTIFICATE OF PUBLIC
CONVENIENCE (CPC)
An authorization
issued by the
appropriate
government agency
for the operation of
public services for
which no franchise,
either municipal or
legislative, is required
by law, e.g., common
carriers.

CERTIFICATE OF PUBLIC
CONVENIENCE AND
NECESSITY (CPCN)
An authorization
issued by the
appropriate
government agency
for the operation of
public service for
which a prior
franchise is required
by law; e.g.
telephone and other
services.

A CPC or a CPCN constitutes neither a franchise nor a contract, confers no property right,
and is a mere license or a privilege. The holder of said certificate does not acquire a
property right in the route covered thereby. Nor does it confer upon the holder any
proprietary right or interest or franchise in the public highways. Revocation of this
certificate deprives him of no vested right. New and additional burdens, alteration of the
certificate, or even revocation or annulment thereof is reserved to the State. (Luque vs.
Villegas, 30 SCRA 408)

1.

Requirements for granting certificate:


Citizen of the Philippines, or a corporation, etc. constituted and organized under the
laws of the Philippines at least 60% of its stock or paid-up capital must belong entirely to
citizens of the Philippines

31 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

2.

3.

Financially capable of undertaking the proposed service


Proof of public necessity, interest and convenience (KMU vs. Garcia, Jr., 239 SCRA
386)

C. PRIOR OPERATOR/OLD OPERATOR RULE


The rule allowing an existing franchised operator to invoke a preferential right within
the authorized territory as long as he renders satisfactory and economical service.

The policy is not to issue a certificate to a second operator to cover the same field
and in competition with a first operator who is rendering sufficient, adequate and
satisfactory service. The prior operator must first be given an opportunity to improve
its service, if inadequate or deficient.
-

Purpose: To prevent ruinous and wasteful competition in order that the interests
of the public would be conserved and preserved.
Ruinous competition means that because of the competition, the prior operators
income will be so reduced that it will not give him an adequate return on his
investment

It subordinates the prior applicant rule which gives the first applicant priority only if
things and circumstances are equal.

So long as the first operator keeps and performs his terms and conditions of its license
and complies with the reasonable demands of the public, it has more or less of a vested
and preferential right over another who seeks to acquire a later license to operate over
the same route. To carry out the purpose and intent for which the PSC was created, the
law contemplates that the first license will be protected in his investment and will not be
subjected to ruinous competition. (Batangas Transportation Co. vs Orlanes 52 Phil
455)

Exceptions to Prior Operator Rule


Where the operator either fails or neglects to make the improvement or
Failure to effect the increase in services, especially when given the opportunity
new operators should be given the chance to give the services needed by the public.
If operator abandons his service.
Prior applicant rule
Presupposes a situation when two interested persons apply for a certificate to operate a
public utility in the same community over which no person has as yet granted any
certificate. If it turns out, after the hearing, that the circumstances between the two
applicants are more or less equal, then the applicant who applied ahead of the other, will
be granted the certificate.
Registered Owner Rule
A registered owner of a vehicle (even if not used for public service) is the lawful operator
insofar as the public and third persons are concerned; consequently, it is directly and
primarily responsible for the consequences of its operation.
-

In contemplation of the law, the owner/operator of


record is the employer of the driver, the actual operator and employer being
considered as merely its agent (Equitable Leasing Corp. vs. Suyom, GR No.
143360. Sept. 5, 2002)

32 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

The registered owner cannot escape responsibility


by proving that a third person is the actual and real owner. He is liable to the injured
party subject to his right of recourse against the transferee or buyer.
o The registered owner is liable even if the vehicle was leased to another (BA
Finance Corp. vs. CA, 215 SCRA 715)
o

It would be absurd to hold liable


the
owner of a stolen vehicle for an accident caused by the person who stole the
vehicle (Duavit vs. CA, 173 SCRA 490)

D. FIXING OF RATE
The rate to be fixed must be just, founded upon conditions which are fair and
reasonable to both the owner and the public.

A rate is just and reasonable if it conforms to the following requirements:


1. One which yields to the carrier a fair return upon the value of the property
employed in performing the service; and
2.
One which is fair to the public for the service rendered.

Power to fix rate for public utility vehicles is lodged with the LTFRB.

E. UNLAWFUL ARRANGEMENTS
1. Kabit System
A system whereby a person who has been granted a certificate of public convenience
allows other persons who own motor vehicles to operate under such license, for a fee or
a percentage of such earnings. It is void under Art. 1409 NCC.
Effects:
The thrust of the law in enjoining the kabit system is to identify the person upon
whom responsibility may be fixed with the end in view of protecting the riding public
The registered owner is primarily liable for all the consequences of the operations of
the carrier.
The registered owner cannot recover from the actual owner and the latter cannot
obtain transfer of the vehicle to himself, both being in pari delicto (Teja Marketing vs.
IAC, 148 SCRA 347)
Both the registered owner and the actual owner are solidarily liable with the driver
(Zamboanga Tranportation Co. vs. CA, 30 SCRA 717)
The transfer, sale, lease or assignment of the privilege granted is valid between the
contracting parties but not upon the public or third persons (Gelisan vs. Alday, 152
SCRA 388)
Exceptions to kabit system:
When neither of the parties to the kabit system is being held liable for damages.
When the case arose from the negligence of another vehicle in using the public road
to whom no representation or misrepresntation as regards the ownership and
operation of passenger jeepney was made.
When the riding public was not bothered or inconvenienced at the very least by the
illegal arrangement. (Lim vs. CA, 373 SCRA 394)
2. Boundary System
The driver pays for the gasoline consumed and does not receive a fixed wage but
gets only the excess of the receipt of the fares collected by him over the amount he
has agreed to pay to the owner of the vehicle

33 REVIEWER FOR TRANSPORTATION LAW


BAR 2011

The owner cannot escape liability:


The owner is subsidiarily liable as employer in accordance with Art. 103 RPC
From the viewpoint of labor laws, he is an employee, being entitled to all privileges
going along with the employer-employee relationship
From the viewpoint of the NCC, the driver is a lessee because he pays a fixed amount
of rental for his use of the vehicle
From the viewpoint of the law on common carriers, he is an employee of the operator
for purpose of the latters liability to passengers
F. APPROVAL OF SALE, ENCUMBRANCE OR LEASE OF PROPERTY
It is a property and has a considerable value and can be the subject of sale or
attachment. (Cogeo-Cubao Operators and Drivers Assn. vs. CA, 207 SCRA 343,
Raymundo vs. Luneta Motor Co.)
CPCs have considerable material value. They are valuable assets. They are subject to
being sold for consideration as much as any other property. They are even more
valuable than ordinary properties, taking into consideration that they are not granted to
every one who applies for them but only to those who undertake to furnish satisfactory
and convenient service to the public. Though intangible, they are of value and are
considered properties which can be seized through legal process. (Raymundo vs
Luneta Motor 58 Phil 889)
This being the case, even if a sale has been executed before a tortious incident, the sale,
if unregistered, has no effect as to the right of the public and third persons to recover
from the registered owner (Equitable Leasing Corp. v. Suyom). The public has the
right to conclusively presume that the registered owner is the real owner, and may sue
accordingly (First Malayan Leasing and Finance Corp. v. Court of Appeals), as
cited
in
PCI Leasing And Finance, Inc., vs. UCPB General Insurance Co., Inc G.R. No.
162267, July 04, 2008]
Encumbrances of motor vehicles. - Mortgages, attachments, and other encumbrances of motor
vehicles, in order to be valid against third parties must be recorded in the Bureau (now the Land
Transportation Office). Voluntary transactions or voluntary encumbrances shall likewise be properly
recorded on the face of all outstanding copies of the certificates of registration of the vehicle concerned.
Cancellation or foreclosure of such mortgages, attachments, and other encumbrances shall likewise be
recorded, and in the absence of such cancellation, no certificate of registration shall be issued without
the corresponding notation of mortgage, attachment and/or other encumbrances. (Section 5 (e), RA
4136)

34 REVIEWER FOR TRANSPORTATION LAW


BAR 2011