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Transporation Law Notes | Kate Kimberly Delos Santos





A. Contract of Transportation

There is a contract of transportation where a person obligates himself to transport persons or property

from one place to another for consideration.

B. Parties

a. Carriage of Passengers

The parties in a contract of carriage of passengers are the common carrier and the passenger.

Passenger – is one who travels in a public conveyance by virtue of a contract, express or implied,

with the carrier as to the payment of fare or that which is accepted as an equivalent thereof.

b. Carriage of Goods

When the contract is for the carriage of goods, the parties are the shipper and carrier.

Shipper – is the person who delivers the goods to the carrier for transportation. He pays the

consideration or on whose behalf payment is made.

Consignee – is the person to whom the goods are to be delivered. He may be the shipper himself or

may be a third person who is not actually a party to the contract.

Nevertheless, there are instances when the third party consignee is bound by the agreement between

the shipper and the carrier.

C. Perfection

There are two types of contracts of carriage of passengers:

1. Contract to Carry – an agreement to carry the passenger at some future time. This contract is

consensual and is therefore perfected by mere consent.

2. Contract of Carriage or of Common Carriage Itself – considered as the real contract for not until

the facilities of the carrier are actually used can the carrier be said to have already assumed the

obligation of the carriage.

a. Aircraft

There is a perfected contract to carry passengers even if no tickets have been issued to said

passengers so long as there was already a meeting of minds with respect to the subject matter and the


There is a perfected contract of carriage between a passenger and an airline if it was established that

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Transporation Law Notes | Kate Kimberly Delos Santos







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 marine conveyance of persons and property.

This system of laws includes Book III of the Code of Commerce entitled Maritime Commerce Act,

Act No. 2616 otherwise known as the “Salvage Law,” Commonwealth Act No. 65 otherwise known

as the “Carriage of Goods by Sea Act,” Presidential Decree No. 1521 known as the “Ship Mortgage

Decree of 19978” and other special laws relating to maritime commerce.

However, the primary law on maritime commerce is still the New Civil Code provisions on common



A. Naturale and Rationale

The real and hypothecary nature of maritime laws means that the liability of the carrier in connection

with losses related to maritime contracts is confined to the vessel, which is hypothecated for such

obligations or which stands as the guaranty for their settlement. The liability of the vessel owner and

agent arising from the operation of such vessel were confined to the vessel itself, its equipment,

freight, and insurance.

Philippine maritime law is of Anglo-American extraction, and is governed by adherence to both

international maritime conventions.

This is highlighted by the following excerpts on the limited liability of vessel owners and/or agents:

“Section 183. The liability of the owner of any vessel xxx for any embezzlement, loss or destruction

by any person or any property xxx or for any loss, damage xxx without the privity or knowledge of

such owner or owners shall not exceed the amount or value of the interest of such owner in such

vessel xxx.” (US federal Limitation of Liability Act).

B. Statutory Provisions

The statutory provisions that provide for the limited liability rule are Arts. 587, 590, 643 and 837 of

the Code of Commerce

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Transporation Law Notes | Kate Kimberly Delos Santos


· Art. 587: “The ship agent shall also be civilly liable for the indemnities in favor of third persons

xxx but he may exempt himself therefrom by abandoning the vessel with all her equipments xxx.”

· Art. 590: “The co-owners of the vessel shall be civilly liable in the proportion of their contributions

xxx for the results of the acts of the captain xxx.

Each co-owner may exempt himself from this liability by the abandonment xxx.”

Art. 643: “If the vessel and her cargo should be totally lost by reason of capture or wreck, all rights

shall be extinguished xxx

Art. 837: “The civil liability incurred by the shipowners in the case prescribed in this section, shall

be understood as limited to the value of the vessel with all her appurtenances and freight earned

during the voyage.”

C. Coverage

Art. 837 applies the principle of limited liability in cases of collision. While Arts. 587 and 590

embody the universal principle of limited liability in all cases.

However, taken together, Arts. 837, 587, and 590 cover only:

(1) liability to third persons,

(2) acts of the captain, and

(3) collisions.

D. Exceptions

Exceptions to the limited liability rule:

(a) where the injury or death to a passenger is due either to the fault of the shipowner, or to the

concurring negligence of the shipowner and the captain

(b) where the vessel is insured

(c) in workmen's compensation claim

a. Negligence

The limited liability rule applies if the captain or the crew caused the damage or injury.

However, if the failure to maintain in the seaworthiness of the vessel can be ascribed to the shipowner

alone or the shipowner concurrently with the captain, then the limited liability principle cannot be


b. Insurance

The limited liability rule does not apply to insurance claims. The Supreme Court explained that the

total loss of a vessel does not extinguish the liability of the carrier's insurer. Its insurance answers for

the damages that a shipowner or agent, may be held liable for by reason of the death of its


c. Worker's compensation

The Supreme Court held that the limited liability rule have no room in the application of the Worker's

Compensation Act which seeks to improve, and aims at the amelioration of, the condition of laborers

and employees. Such compensation has nothing to do with the provisions of the Code of Commerce.

It is an item in the cost of production which must be included in the budget of any well-managed

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Transporation Law Notes | Kate Kimberly Delos Santos



The CAB as mandated under republic Act No. 776 and amended by PD No. 1462 is the agency

charged with the power to regulate the economic aspects of air transportation in the Philippines. It

shall have the general supervision and jurisdiction over air carriers as well as their properties,

property rights, equipment, and franchise.


The Air Transportation Office through its Air Safety Division has the following main functions:

1. establishes minimum safety standards on the operating methods, flight operations and maintenance

activities of foreign and domestic carrier;

2. issues certificate of registration and airworthiness of aircraft; air carrier operating certificate, air

agency certificates, and certificate of airmen licenses.

There are two(2) services in the Air Transportation Office:

1. Airways Navigation Service

2. Air Traffic Service


The powers of the MARINA as defined under EO No. 125 as amended by EO No. 125-A are:

1.)develop and formulate plans, policies, programs, projects, standards, promotions and development

of the maritime industry

2.)establish, prescribe and regulate routes, zones and/or areas of operations of particular operators of

public water services

3.) issue certificate of public convenience for the operation of domestic and overseas water carriers

4.)register vessels as well as issue certificates, licenses or document necessary or incident thereto

5.) undertake the safety regulatory functions pertaining to vessel construction and operation

6.) enforce laws, prescribe and enforce rules and regulations, including penalties for violations

thereof, governing water transportation and the Philippine merchant marine

7.) undertake the issuance of license to qualified seamen and harbor bay river pilots etc.


PD No. 601 issued on Dec. 09, 1974 otherwise known as the “Revised Coast Guard Law of 1974”

provides the objectives and basic functions of the Philippine Coast Guard. However, this is subject to

the changes brought about by EO No. 125 and EO No. 125-A and other special laws.

The objectives and powers of the Coast Guard are found in Sec. 2 and 5 of PD No. 601 which provide

as follows:

1.)enforce or assist in the enforcement of all applicable laws upon the high seas and territorial waters

of the Philippines

2.) enforce laws, promulgate and administer regulations for the promotion of safety of life and

property within the maritime jurisdiction of the Philippines

3)develop, establish, maintain and operate with due regard to the requirements of national defense

aids to maritime navigation for the promotion of safety on and over high seas and territorial waters of

the Philippines etc.

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