DOCTRINE OF LIMITED LIABILITY

Also called the “no vessel, no liability doctrine,” it provides that liability of ship owner is limited
to ship owner’s interest over the vessel. Consequently, in case of loss, the ship owner’s liability
is also extinguished.
Limited liability likewise extends to ship’s appurtenances, equipment, freightage, and insurance
proceeds. The ship owner’s or agent’s liability is merely co-extensive with his interest in the
vessel, such that a total loss of the vessel results in the liability’s extinction. The vessel’s total
destruction extinguishes maritime liens because there is no longer any res to which they can
attach. (Monarch Insurance v. CA, G.R. No. 92735, June 8, 2000)
What are the exceptions to the doctrine of limited liability?
1. Repairs and provisioning of the vessel before the loss of the vessel; (Art. 586)
2. Insurance proceeds. If the vessel is insured, the proceeds will go to the persons entitled to
claim from the shipowner; (Vasquez v. CA, G.R. No. L-42926, Sept. 13, 1985)
3. Workmen’s Compensation cases (now Employees’ Compensation under the Labor Code);
(Oching v. San Diego, G.R. No. 775, Dec. 17, 1946)
4. When the shipowner is guilty of fault or negligence; Note: But if the captain is the one who is
guilty, doctrine may still be invoked, hence, abandonment is still an option.
5. Private carrier; or
6. Voyage is not maritime in character
COMMON CARRIER
person, corporation, firm, association engaged in the business of carrying or transporting
passengers, goods or both, by land, water, air, for compensation, offering services to the public;
must exercise extraordinary diligence .
he holds himself out as engaged in public service to all persons indifferently
PRIVATE CARRIER
is not engaged in the business of carrying for the public
requires only ordinary diligence
carries only for persons with whom he has initial contract and assumes no obligation to carry
for the others
SECTION 4. - Common Carriers (n)
SUBSECTION 1. - General Provisions
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.
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 the safety
of the passengers transported by them, according to all 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.

SUBSECTION 2. - 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 of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.

Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding
article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as required in Article 1733.
Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods
are unconditionally placed in the possession of, and received by the carrier for transportation
until the same are delivered, actually or constructively, by the carrier to the consignee, or to
the person who has a right to receive them, without prejudice to the provisions of Article 1738.
Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods
remains in full force and effect even when they are temporarily unloaded or stored in transit,
unless the shipper or owner has made use of the right of stoppage in transitu.
Art. 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of them.
Art. 1739. In order that the common carrier may be exempted from responsibility, the natural
disaster must have been the proximate and only cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize loss before, during and after the
occurrence of flood, storm or other natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is
incumbent upon the common carrier in case of an act of the public enemy referred to in Article
1734, No. 2.
Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural
disaster shall not free such carrier from responsibility.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration
of the goods, the proximate cause thereof being the negligence of the common carrier, the
latter shall be liable in damages, which however, shall be equitably reduced.

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the loss.
Art. 1743. If through the order of public authority the goods are seized or destroyed, the
common carrier is not responsible, provided said public authority had power to issue the order.
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the
liability of the former for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common
carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust
and contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the
goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father
of a family, or of a man of ordinary prudence in the vigilance over the movables transported;

(5) That the common carrier shall not be responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not
act with grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of
goods on account of the defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper
or owner if the common carrier refused to carry the goods unless the former agreed to such
stipulation.
Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract limiting the common carrier's liability cannot
be availed of in case of the loss, destruction, or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or
riots is valid.
Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the
loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.
Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part
thereof, to which the contract refers shall be taken into consideration on the question of
whether or not a stipulation limiting the common carrier's liability is reasonable, just and in
consonance with public policy.

Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the
vigilance over the goods, the common carrier is disputably presumed to have been negligent in
case of their loss, destruction or deterioration.
Art. 1753. The law of the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction or deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which
is not in his personal custody or in that of his employee. As to other baggage, the rules in
Articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be
applicable.

SUBSECTION 3. - 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 the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
Art. 1757. The responsibility of a common carrier for the safety of passengers as required in
Articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.
Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's
liability for negligence is valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability.

Art. 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or wilful 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 carriers.
This liability of the common carriers 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.
Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be
eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or
otherwise.
Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury
to himself.
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.
Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of
the wilful acts or negligence of other passengers or of strangers, if the common carrier's
employees through the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission