San Beda College of Law: 1 M A C L

San Beda College of Law
1
MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ CARRIAGE
A contract whereby a person, natural or juridical, obligates to transport persons, goods, or both, from
one place to another, by land, air or water, for a price or compensation.
Class!"a#ons$
1. Common or Private
2. Goods or Passengers
. !or a fee "for hire# or Gratuitous
$. %and, &ater'maritime, or Air
(. )omestic'inter*island'coastwise or +nternational'foreign
+t is a relationship which is imbued with the public interest.
COMMON CARRIER
Persons, corporations, ,rms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, o-ering their services to the public
"Art. 1.2, Civil Code#.
Art. 1.2 of the /ew Civil Code avoids any distinction between one whose principal business activity is
the carrying of persons or goods or both and one who does such carrying only as an ancillary activity
"sideline#. +t also avoids a distinction between a person or enterprise o-ering transportation service on a
regular or scheduled basis and one o-ering such service on an occasional, episodic or unscheduled basis.
/either does the law distinguish between a carrier o-ering its services to the general public that is
the general community or population and one who o-ers services or solicits business only from a narrow
segment of the general population.
A person or entity is a common carrier even if he did not secure a Certi,cate of Public Convenience
")e Gu0man vs. CA, 112 3C4A 112#.
+t ma5es no distinction as to the means of transporting, as long as it is by land, water or air. +t does
not provide that the transportation should be by motor vehicle. "!irst Philippine +ndustrial Corporation vs.
CA#
6ne is a common carrier even if he has no ,7ed and publicly 5nown route, maintains no terminals, and
issues no tic5ets "Asia %ighterage 3hipping, +nc. vs. CA#.
C%a&a"#e&s#"s$
1. 8nderta5es to carry for all people indi-erently and thus is liable for refusal without su9cient reason
"%astimoso vs. )oliente, 6ctober 2:, 1;11#<
2. Cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the
tra9c in these goods<
. /o monopoly is favored "=atangas >rans. vs. 6rlanes, (2 P?+% $((#<
$. Provides public convenience.
PRI'ATE CARRIER
6ne which, without being engaged in the business of carrying as a public employment, underta5es to
deliver goods or passengers for compensation. "?ome +nsurance Co. vs. American 3teamship Agency, 2
3C4A 2$#
TESTS W(ET(ER CARRIER IS COMMON OR PRI'ATE$
>he 3C in !irst Philippine +ndustrial Corporation vs. CA "1;;(# reiterated the following tests@
1. +t must be engaged in the business of carrying goods for others as a public employment and
must hold itself out as ready to engage in the transportation of goods generally as a business
and not as a casual occupation<
2. +t must underta5e to carry goods of the 5ind to which its business in con,ned<
. +t must underta5e to carry by the method by which his business is conducted and over its
established roads< and
$. >he transportation must be for hire.
+n /ational 3teel Corp. vs. CA "1;;.# the 3C 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.

COMMON CARRIER PRI'ATE
CARRIER
1. As to availability
?olds himself out for Contracts with
COMMERCIAL LAW COMMITTEE
C?A+4PA436/@ Garny %uisa Alegre A33>. C?A+4PA436/@ Bayson 6C3 4amos A)P@ =eatri7 +. 4amos 38=BAC> ?AA)3@
Darichelle )e Eera "/egotiable +nstruments %aw#< Bose !ernando %lave "+nsurance#< Aldrich )el 4osario ">ransportation
%aws#<
3hirley Dae >abangcura, =on Eincent Agustin "Corporation %aw#< Farl 3teven Co "3pecial %aws#< Bohn %emuel Gatdula
"=an5ing %aws#< 4obespierre C8 "%aw on +ntellectual Property#
)
all people
indiscriminately
particular individuals
or groups only
2. As to reGuired diligence
A7traordinary
diligence is reGuired
6rdinary diligence is
reGuired
. As to regulation
3ubject to 3tate
regulation
/ot subject to 3tate
regulation
$. 3tipulation limiting liability
Parties may not agree
on limiting the
carrierCs liability
e7cept when provided
by law
Parties may limit the
carrierCs liability,
provided it is not
contrary to law,
morals or good
customs
(. A7empting circumstance
Prove e7traordinary
diligence and Art.
1., /CC
caso fortuito, Art.
11.$ /CC
1.Presumption of negligence
>here is a
presumption of fault
or negligence
/o presumption of
fault or negligence
..Governing law
%aw on common
carriers
%aw on obligations
and contracts
GO'ERNING LAWS
A* Do+es#"/n#e&,sland/"oas#wse
Applicable to %and, &ater, and Air transportation
1. Civil Code * primary
2. Code of Commerce "Arts. $;, .;, (.*.$, (2:, 2:1*2$(# * suppletory
B* In#e&na#onal/fo&egn/o-e&seas .Fo&egn "o/n#&0 #o P%l11nes2
Applicable to &ater'maritime and Air transportation
>he law of the country of destination generally applies.
1. Civil Code * primary
2. Code of Commerce * suppletory
. 6thers * suppletory
a. &ater'maritime@ Carriage of Goods by 3ea Act "C6G3A#
b. Air@ &arsaw Convention
I* NEW CI'IL CODE
.A&#s* 134),13552
RE67IREMENT OF E8TRAORDINARY DILIGENCE
4endition of service with the greatest s5ill and utmost foresight. ")avao 3tevedore Co. v. !ernande0#
Rationale:
1. !rom the nature of the business and for reasons of public policy "Art. 1.#
2. 4elationship of trust
. =usiness is impressed with a special public duty
$. Possession of the goods
(. Preciousness of human life
A common carrier is not an absolute insurer of all ris5s of travel.
CO'ERAGE
1. Eigilance over goods "Arts. 1.$*1.($#< and
2. 3afety of passengers "Arts. 1.((*1.1#.
PASSENGER
A person who has entered into a contract of carriage, e7press or implied, with the carrier. >hey are
%aws#<
4
entitled to e7traordinary diligence from the common carrier.
>he following are not considered passengers, and are entitled to ordinary diligence only@
a. 6ne who has not yet boarded any part of a vehicle regardless of whether or not he has
purchased a tic5et<
b. 6ne who remains on a carrier for an unreasonable length of time after he has been a-orded
every safe opportunity to alight<
c. 6ne who has boarded by fraud, stealth, or deceit<
d. 6ne who attempts to board a moving vehicle, although he has a tic5et, unless the attempt be
with the 5nowledge and consent of the carrier<
e. 6ne who has boarded a wrong vehicle, has been properly informed of such fact, and on
alighting, is injured by the carrier<
f. +nvited guests and accommodation passengers. "%ara vs. Ealencia#
g. 6ne who rides any part of the vehicle which is unsuitable or dangerous or which he 5nows is not
designed or intended for passengers.
DEFENSES OF A COMMON CARRIER IN T(E CARRIAGE OF GOODS
1. CA36 !64>8+>6'!64CA DABA84A
Re9/s#es$
a. Dust be the pro7imate and only cause of the loss
b. A7ercise of due diligence to prevent or minimi0e the loss before, during or after the occurrence
of the disaster "Art. 1.;#
c. Carrier has not negligently incurred in delay in transporting the goods "Art. 1.$:#
!ire is not considered a natural disaster or calamity as it arises almost invariably from some act of
man. "Aastern 3hipping %ines +nc. vs. +AC#
Dechanical defects are not force majeure if the same was discoverable by regular and adeGuate
inspections. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & ernando,
R.P. !""# ed. p.$!"%$!!&
2. AC>3 6! P8=%+C A/ADH
Re9/s#es$
a. Dust be the pro7imate and only cause of the loss
b. A7ercise of due diligence to prevent or minimi0e the loss before, during or after the act causing
the loss, deterioration or destruction of the goods "Art. 1.;#
. /AG%+GA/CA 6! >?A 3?+PPA4 64 6&/A4
a. 3ole and pro7imate cause@ absolute defense
b. Contributory@ partial defense. "Art. 1.$1#
$. C?A4AC>A4 6! >?A G66)3 64 )A!AC>3 +/ >?A PACF+/G 64 +/ >?A C6/>A+/A4
Aven if the damage should be caused by the inherent defect'character of the goods, the common
carrier must e7ercise due diligence to forestall or lessen the loss. "Art. 1.$2#
>he carrier which, 5nowing the fact of improper pac5ing of the goods upon ordinary observation, still
accepts the goods notwithstanding such condition, is not relieved of liability or loss or injury resulting
therefrom. "3outhern %ines, +nc. v. CA, $ 3C4A 2(2#
(. 64)A4 64 AC> 6! P8=%+C A8>?64+>H
3aid public authority must have the power to issue the order "Art. 1.$#. ConseGuently, where the
o9cer acts without legal process, the common carrier will be held liable. "Gan0on v. CA 111 3C4A 1$1#
)iligence in the selection and supervision of employees under Article 212: 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. >he defense under said articles is applicable to negligence in Guasi*
delicts under Art. 21.1. ")el Prado v. Danila Alectric Co., (2 Phil ;::#
LIABILITY OF A COMMON CARRIER FOR
DEAT( OR IN:7RIES TO PASSENGERS D7E TO ACTS OF ITS EMPLOYEES AND OT(ER
PASSENGERS OR STRANGERS
FOR ACTS OF ITS
EMPLOYEES
FOR ACTS OF
OT(ER
PASSENGERS OR
STRANGERS
4eGuired diligence and defense
A7traordinary
diligence
6rdinary diligence
%aws#<
;
/ature of liability
>ort< however,
>he employee must
be on duty at the
time of the act.
"Daranan v. Pere0#
/ot absolute< limited
by Art. 1.1
>he carrier is liable when its personnel allowed a passenger to drive the vehicle causing it to collide
with another vehicle resulting to the injuries su-ered by the other passengers. "D44 vs. =allesteros, 11
3C4A 1$1#
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS
Pa&#es
1. Common carrier
2. 3hipper
. Consignee
1. Common carrier
2. Passenger
Ca/se of la<l#0
)elay in delivery, loss, destruction, or
deterioration of the goods
)eath or injury to the passengers
D/&a#on of la<l#0
!rom the time the goods are unconditionally
placed in the possession of, and received by the
carrier for transportation until the same are
delivered actually or constructively by the
carrier to the consignee or to the person who
has the right to receive them. "Art. 1.1#
+t remains in full force and e-ect 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.
1..#
+t continues to be operative even during the
time the goods are stored in a warehouse of the
carrier at the place of destination until the
consignee has bee advised of the arrival of the
goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose
of them. "Art. 1.2#
)elivery of goods to the custom authorities is
not delivery to the consignee. "%u )o v.
=inamira, 1:1 Phil 12:#
>he duty of a common carrier to provide safety
to its passengers so obligates it not only during
the course of the trip, but for so long as the
passengers are within its premises and where
they ought to be in pursuance to the contract
of carriage. "%4>A v. /avidad, I2::J#
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. "%a Dallorca v. CA, 1. 3C4A .; <
Abioti0 3hipping Corporation v. CA, 1.; 3C4A
;(#
+t is the duty of common carriers of
passengers to stop their conveyances a
reasonable length of time in order to a-ord
passengers an opportunity to enter, and they
are liable for injuries su-ered from the sudden
starting up or jer5ing of their conveyances
while doing so. >he duty which the carrier of
passengers owes to its patrons e7tends to
persons boarding the cars as well as to those
alighting therefrom ")angwa >rans Co., +nc. vs.
CA 2:2 3C4A (.$#.
P&es/+1#on of neglgen"e
Art.1.( Civil Code
4eason@ As to when and how goods were
damaged in transit is a matter peculiarly within
the 5nowledge of the carrier and its employees.
"Dirasol v. )ollar, ( P?+% 12$#
Dere proof of delivery of goods to a carrier in
good order and the subseGuent arrival of the
same goods at the place of destination in bad
order ma5es for a prima facie case against the
carrier. "Coastwise %ighterage Corp. v. CA, 2$(
3C4A .;1#
Art.1.(( Civil Code
4eason@ >he contract between the passenger
and the carrier imposes on the latter the duty
to transport the passenger safely< hence the
burden of e7plaining should fall on the carrier.
%aws#<
=
Defenses
1. 6rdinary circumstance@ A7ercise of
e7traordinary diligence "Art. 1.(#
2. 3pecial circumstances@
a. !lood, storm, earthGua5e, lighting,
or other natural disaster or
calamity "plus force majeure#
b. Act of the public enemy in war,
whether international or civil
c. Act or omission of the shipper or
the owner of goods
d. >he character of the goods or
defects in the pac5ing or in the
containers
e. 6rder or act of competent public
authority "Art. 1.$#
1. A7ercise of e7traordinary diligence
"Art. 1.(1#
2. Caso fortuito
'ald s#1/la#ons
1. 4eduction of degree of diligence to ordinary
diligence, provided it be@
a# +n writing, signed by the shipper or
owner<
b# 3upported by a valuable consideration
other than the service rendered by the
carriers< and
c# 4easonable, just and not contrary to
public policy. "Art. 1.$$#
2. !i7ed amount of liability@ A contract ,7ing the
sum to be recovered by the owner or shipper for
the loss, destruction or deterioration of the
goods, if it is reasonable and just under the
circumstances and has been fairly and freely
agreed upon. "Art. 1.(:#
. %imited liability for delay@ An agreement
limiting the common carrierCs liability for delay
on account of stri5es or riots "Art. 1.$2#
$. 3tipulation limiting liability to the value of the
goods appearing in the bill of lading, unless the
shipper or owner declares a greater value. "Art.
1.$;#
>he diligence reGuired in the carriage of the
goods may be reduced by only one degree, from
e7traordinary to ordinary diligence or diligence
of a good father of a family. "Art. 1.$$, Art.
1.$(, no. $#
3tipulation limiting liability when a passenger is
carried gratuitously, but not for willful acts or
gross negligence. "Art. 1.(2#
'od s#1/la#ons
1. >hat the goods are transported at the ris5
of the owner or shipper<
2. >hat carrier will not be liable for any loss,
destruction or deterioration of the goods<
. >hat the carrier need not observe any
diligence in the custody of the goods<
$. >hat the carrier shall e7ercise a degree of
diligence less than that of a good father of a
family over the movable transported<
(. >hat the carrier shall not be responsible for
the acts or omissions of his or its employees<
1. >hat the carrierCs liability for acts
)ispensing with or lessening the e7traordinary
responsibility of a common carrier for the
safety of passengers imposed by law by
stipulation, by posting of notices, by
statements on tic5ets or otherwise. "Art. 1.(.#
%aws#<
5
committed by thieves or robbers who do not
act with grave or irresistible threat, violence or
force is dispensed with or diminished<
.. >hat the carrier is not responsible for the
loss, destruction or deterioration of the goods
on account of the defective condition of the
car, vehicle, ship or other eGuipment used in
the contract of carriage. "Art. 1.$(#
%aws#<
R7LES ON PASSENGERS> BAGGAGE
IN T(E C7STODY OF
T(E PASSENGERS
.(AND,CARRIED2
IN T(E C7STODY
OF T(E COMMON
CARRIER
.C(EC?ED,IN2
Legal na#/&e of #%e <aggage
/ecessary deposit Considered as
KgoodsL
Re9/&ed dlgen"e <0 #%e "o++on
"a&&e&
)iligence of a
depositary "ordinary
diligence#
A7traordinary
diligence
A11l"a<le &/les
Arts. 1;;2 and 2:::*
2::
Arts. 1.*1.(
CONC7RRING CA7SES OF ACTION ARISING
FROM T(E NEGLIGENT ACT OF T(E
COMMON CARRIER
1. Culpa contractual "breach of contract#
6nly the carrier is primarily liable and not the
driver, because there is no privity between the
driver and the passenger.
=asis@ Art.1.(;, /CC.
/o defense of due diligence in the selection
and supervision of employees.
2. Culpa aquiliana "Guasi*delict#
>he carrier and driver are solidarily liable as
joint tortfeasors.
=asis@ Art. 212:, /CC.
)efense of due diligence in the selection and
supervision of employees is available.
A7ception@ maritime tort resulting in collision.
"'ee notes on Collision#
. Culpa cri(inal "criminal negligence#
>he driver is primarily liable. >he carrier is
subsidiarily liable only if the driver is convicted
and declared insolvent.
=asis@ Art. 1::, 4PC.
+n 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. +t ma5es no di-erence 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 Guasi*delict.
"!abre vs. CA#
LIMITATIONS AS TO CARRIER>S LIABILITY
IN'ALID AS BEING
CONTRARY TO
P7BLIC POLICY
'ALID @
ENFORCEABLE
1. 6ne e7empting the
carrier from any and
all liability for loss or
damage occasioned by
its own negligence.
1. 6ne limiting the
liability of the
carrier to an agreed
valuation, unless
the shipper declares
2. An unGuali,ed
limitation of liability to
an agreed valuation.
a higher value and
pays a higher rate
of freight
"?.A. ?eacoc5
Company vs.
Dacondray M
Company +nc.#
?owever, 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.
"3hewaram vs. PA%, 1. 3C4A 1:1#
SPECIAL R7LES ON LIABILITES OF AIRLINE
CARRIERS
1. +n case of Night diversion due to bad weather
or other circumstances beyond the pilotCs
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 carrierCs premises. >he carrier should
necessarily e7ercise e7traordinary diligence in
safeguarding the comfort, convenience and
safety of its stranded passengers until they
have reached their ,nal destination. "Philippine
Airlines vs. CA, 221 3C4A $2#
2. Aven where overboo5ing of passengers is
allowed as a commercial practice, the airline
company would still be guilty of bad faith and
still be liable for damages if it did not properly
inform passenger that it could breach the
contract of carriage even if they were con,rmed
passengers. "Oalamea vs. CA, 222 3C4A 2#
. An open*dated tic5et constitutes a complete
contract between the carrier and passenger.
?ence, the airline company is liable if it refused
to con,rm a passengerCs Night reservation.
"3ingson vs. CA, 222 3C4A 1$;#
$. An airline company which issued a con,rmed
tic5et to a passenger covering successive trips
on di-erent airlines can be held liable for
damages occasioned by Kbumping o-L by one
of the successive airlines. "%ufthansa German
Airlines vs. CA, 22 3C4A 2;:#
(. An airline tic5et providing that carriage by
successive air carriers is to be regarded as a
Ksingle operationL is to ma5e the issuing carrier
liable for the tortuous conduct of the other
carrier. A printed provision in the tic5et limiting
liability only to its own conduct is not enough to
rebut that liability. "F%D 4oyal )utch Airlines vs.
CA, 1( 3C4A 2.#
II* CODE OF COMMERCE
A* O'ERLAND TRANSPORTATION
.A&#s* 4;A,43A2
A11l"a<l#0
1. )omestic land and water'maritime
transportation. (Pandect o) Co((ercial Law
and *urisprudence, *ustice *ose +itu,, $--. ed.&
B
2. )omestic Air >ransportation. (Co((ercial
Law Re/iew, Cesar +illanue/a, !""# ed.&

IMPORTANT CONCEPTS$
1. =ill of lading
2. 6bligations of the carrier
. 4ight of abandonment
$. /otice of damage
(. Combined carrier agreement
BILL OF LADING
>he written ac5nowledgment of receipt of
goods and agreement to transport them to a
speci,c place to a person named or to his order.
Rules:
1. +t is not indispensable for the creation of a
contract of carriage. "Compania Daritima vs.
+nsurance Company of /orth America, 12 3C4A
21#
2. Ambiguity is construed against the carrier,
the contract being one of adhesion.
. >he consignee, although the instrument is
oftentimes drawn up only by the consignor and
carrier, becomes bound by all the stipulations
contained therein by ma5ing a claim for loss on
the basis of said bill of lading. "3ea*%and
3ervices +nc. vs. +AC#
$. >he right of a party to recover for loss of
shipment consigned to him under a bill of lading
drawn up only by and between the shipper and
the carrier, springs from either a relation of
agency between him and the shipper, or his
status as stranger in whose favor some
stipulation is made in said contract, and who
becomes a party thereto when he demands
ful,llment of that stipulation. "Art. 111 "2#,
"Dendo0a vs. PA% +nc.#
(. Acceptance of the bill of lading without
dissent raises the presumption that all the
terms therein where brought to the 5nowledge
of the shipper and agreed to by him and, in the
absence of fraud or mista5e< he is estopped
from thereafter denying that he assented to
such terms. (Notes and Cases on the Law on
Transportation and Public Utilities, Aquino, T. &
ernando, R.P. !""# ed. p.!0$&
?nds$
1. 1n board * issued when the goods have
been actually placed aboard the ship
with very reasonable e7pectation that
the shipment is as good as on its way.
2. Recei/ed * 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.
. Ne,otiable * 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.
$. Non%ne,otiable * 6ne in which it is stated
that the goods referred to therein will be
delivered to a speci,ed person.
(. Clean 2 6ne which does not indicate any
defect in the goods.
1. 3oul P 6ne which contains a notation
thereon indicating that the goods
covered by it are in bad condition.
.. 'pent P 6ne which covers goods that
already have been delivered by the
carrier without a surrender of a signed
copy of the bill.
2. Throu,h P 6ne issued by the carrier who
is obliged to use the facilities of other
carriers as well as his own facilities for
the purpose of transporting the goods
from the city of the seller to the city of
the buyer, which bill of lading is honored
by the second and other interested
carriers who do not issue their own bills.
;. Custod4 P 6ne wherein the goods are
already received by the carrier but the
vessel indicated therein has not yet
arrived in the port.
1:. Port P 6ne which is issued by the carrier
to whom the goods have been delivered,
and the vessel indicated in the bill of
lading by which the goods are to be
shipped is already in the port where the
goods are held for shipment.
F/n"#ons$
1. =est evidence of the e7istence of the
contract of carriage of cargo "Art. (#
2. )ocument of title
. 4eceipt of cargo
$. Contract to transport and deliver goods
as stipulated
(. 3ymbol of the goods
OBLIGATIONS OF T(E CARRIER
A* D/#0 #o a""e1# #%e goods
56N6RAL RUL6: A common carrier cannot
ordinarily refuse to carry a particular class of
goods.
67C6PT81N: !or some su9cient reason the
discrimination against the tra9c in such goods
is reasonable and necessary. "!isher vs. Hangco
3teamship Co. 1 Phil 1#.
+nstances when the carrier may validly refuse
to accept the goods include the -@
1.# Goods sought to be transported are
dangerous objects, or substances including
dynamite and other e7plosives
2.# Goods are un,t for transportation
.# Acceptance would result in overloading
$.# Contrabands or illegal goods
(.# Goods are injurious to health
1.# Goods will be e7posed to untoward danger
li5e Nood, capture by enemies and the li5e
..# Goods li5e livestoc5 will be e7posed to
disease
2.# 3tri5e
%aws#<
A
;.# !ailure to tender goods on time. (Notes and
Cases on the Law on Transportation and Public
Utilities, Aquino, T. & ernando, R.P. !""# ed.
p.09&
+n case of carriage by railway, the carrier is
e7empted from liability if carriage is insisted
upon by the shipper, provided its objections are
stated in the bill of lading.
?owever, when a common carrier accepts
cargo for shipment for valuable consideration, it
ta5es the ris5 of delivering it in good condition
as when it was loaded. "PA% vs. CA#
B* D/#0 #o del-e& #%e goods
/ot only to transport the goods safely but to
the person indicated in the bill of lading. >he
goods should be delivered to the consignee or
any other person to whom the bill of lading was
validly transferred or negotiated.
T+e of del-e&0
S#1/la#ed n
Con#&a"#/Bll of
Ladng
No s#1/la#on
1. Carrier is bound to
ful,ll the contract
and is liable for any
delay< no matter
from what cause it
may have arisen.
1. &ithin a
reasonable time.
2. Carrier is bound to
forward them in the
1
st
shipment of the
same or similar
goods which he may
ma5e to the point of
delivery. "A4>. (2
Code of Commerce#
ECe"#s of dela0
a. Derely suspends and generally does not
terminate the contract of carriage
b. Carrier remains duty bound to e7ercise
e7traordinary diligence
c. /atural disaster shall not free the carrier
from responsibility "Art.1.$:#
d. +f delay is without just cause, the contract
limiting the common carrierCs liability cannot be
availed of in case of loss or deterioration of the
goods "Art.1.$.#
RIG(T OF CONSIGNEE TO ABANDON
GOODS
Ins#an"es$
1. Partial non*delivery, where the goods are
useless without the others "Art. 1#<
2. Goods are rendered useless for sale or
consumption for the purposes for which they
are properly destined "Art. 1(#< and
. +n case of delay through the fault of the
carrier "Art. .1#.
NOTICE OF DAMAGE .ART* 4552
Re9/s#es fo& a11l"a<l#0$
1. )omestic'inter*island'coastwise
transportation
2. %and'water'air transportation
. Carriage of goods
$. Goods shipped are damaged
R/les$
a. Patent damage@ shipper must ,le a claim
against the carrier immediately upon
delivery "it may be oral or written#
b. %atent damage@ shipper should ,le a claim
against the carrier within 2$ hours from
delivery.
No#e$ >hese rules does not apply to
misdelivery of goods. "4oldan vs. %im Pon0o#
Purpose o) notice: >o inform the carrier that the
shipment has been damaged, and it is charged
with liability therefore, and to give it an
opportunity to ma5e an investigation and ,7
responsibility while the matter is fresh.
>he ,ling of notice of claim is a condition
precedent for recovery.
3horter period may be stipulated by the
parties because it merely a-ects the shipperCs
remedy and does not a-ect the liability of the
carrier. "P?+%ADGA/ vs. 3weetlines, +nc.#
P&es"&1#-e Pe&od
/ot provided by Article 11. >hus, in such
absence, Civil Code rules on prescription apply.
+f despite the notice of claim, the carrier
refuses to pay, action must be ,led in court.
1. /o bill of lading was issued@
within 5 0ea&s
2. =ill of lading was issued@
within 1D 0ea&s*
ARTICLE 455 COGSA Se"*4 .52
A11l"a<l#0
1. )omestic'inter*
island'coastwise
transportation
2. %and, water, air
transportation
. Carriage of goods
1. +nternational'
overseas'foreign
"from foreign
country to Phils.#
/ote@ subject to the
rule on Paramount
Clause
2. &ater'maritime
transportation
. Carriage of goods
No#"e of da+age
1. Condition
precedent
2. 2$*hour period for
claiming latent
damage
1. /ot a condition
precedent
2. *day period for
claiming latent
damage
P&es"&1#-e 1e&od
/one provided< Civil
Code applies.
6ne year from the
date of delivery
"delivered but
damaged goods#, or
date when the
vessel left port or
from the date of
delivery to the
arrastre "non*
delivery or loss#.
COMBINED CARRIER AGREEMENT .ART*
4342
56N6RAL RUL6: +n case of a contract of
%aws#<
1D
transportation of several legs, each carrier is
responsible for its particular leg in the contract.
67C6PT81N: A combined carrier agreement
where a carrier ma5es itself liable assuming the
obligations and acGuiring as well the rights and
causes of action of those which preceded it.
)* MA
RI
TI
ME
CO
M
ME
RC
E
.A&#s* =34,B5A2
IMPORTANT CONCEPTS$
1. Derchant vessel
2. Daritime lien and Preference of Credit
. )octrine of limited liability
$. Causes of revocation of voyage
(. Participants in maritime commerce
1. Charter party
.. %oans on bottomry and respondentia
2. Accidents in maritime commerce
MARITIME/ADMIRALTY LAW
+t is the system of laws which particularly
relates to the a-airs 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 & ernando, citin,
3rancisco, p.!:#&
Daritime laws apply only to maritime trade
and sea voyages. (Pandect o) Co((ercial Law
and *urisprudence, *ustice *ose +itu,, $--. ed.&
Arrastre service is not maritime in character.
+t refers to a contract for the unloading of goods
from a vessel. "+C>3+ vs. Prudential Guarantee,
2: 3C4A 2$$#
C(ARACTERISTICS OF MARITIME
TRANSACTION
1. Real * similar to transactions over real
property with respect to e-ectivity against third
persons which is done through registration.
"4ubiso vs. 4ivera, . Phil. .2#. >he evidence of
real nature is shown by@ 1# the limitation of the
liability of the agents to the actual value of the
vessel and the freight money< and 2# the right
to retain the cargo and embargo and detention
of the vessel "%u0on 3tevedoring Corp v. CA,
1(1 3C4A 11;#<
2. 4pothecar4 * the liability of the owner of the
value of the vessel is limited to the vessel itself
(;octrine o) Li(ited Liabilit4&.
>he real and hypothecary nature of maritime
law simply means that the liability of the carrier
in connection with losses related to maritime
contracts is con,ned to the vessel, which
stands as the guaranty for their settlement.
"Aboiti0 3hipping Corp. vs. General Accident !ire
and %ife Assurance Corp. 21. 3C4A (;#.
MERC(ANT 'ESSEL
Eessel engaged in maritime commerce,
whether foreign or otherwise. (<ar Re/iew
=aterials in Co((ercial Law, *or,e =ira/ite,
!""! ed.&
Constitutes property which may be acGuired
and transferred by any of the means recogni0ed
by law. >hey shall continue to be considered as
personal property. "Arts. (., (2(#
>hey are susceptible to (ariti(e liens such as
for the repair, eGuipping and provisioning of the
vessel in the preparation of a voyage, as well as
mortgage liabilities, in satisfaction of which a
vessel may be validly arrested and sold. "3hip
Dortgage )ecree of 1;.2#
MARITIME LIEN
+t constitutes a present right of property in the
ship, a jus in re, to be afterward enforced in
admiralty by process in rem. "P/= vs. CA, .
3C4A 21#
+f the maritime lien arose prior to the
recording of a preferred mortgage, it shall have
priority over the said mortgage lien. "P/= vs.
CA, . 3C4A 21#
ORDER OF PREFERENCE IN CASE OF SALE
OF 'ESSEL
R*A* 51D5 P*D* 1=)1
ECe"#-#0 da#e
1;1; 1;.2
A11l"a<l#0
6verseas shipping
only
=oth domestic and
overseas shipping
?nd of sale
Budicial Budicial and
e7trajudicial
O&de& of P&efe&en"e
A preferred
mortgage shall have
priority over all
claims against the
vessel, e7cept the
following
preferences in the
order stated@
1. Budicial costs of
the proceedings<
2. >a7es due the
Philippine
Government<
. 3alaries and
wages of the
Captain and Crew of
the vessel during its
last voyage<
>he preferred
mortgage lien shall
have priority over all
claims against the
vessel, e7cept the
following
preferences in the
order stated@
1. A7penses and
fees allowed and
costs ta7ed by the
court and ta7es due
to the Government<
2. CrewCs wages<
. General average<
$. 3alvage, including
contract salvage<
(. Daritime liens
%aws#<
11
$. General average
or salvage including
contract salvage,
bottomry loans, and
indemnity due
shippers for the
value of goods
transported but
which were not
delivered to the
consignee<
(. Costs of repair
and eGuipment of
the vessel, and
provisioning of food,
supplies and fuel
during its last
voyage< and
1. Preferred
mortgages
registered prior in
time.
arising prior in time
to the recording of
the preferred
mortgage<
1. )amages arising
out of tort< and
.. Preferred
mortgage registered
prior in time.
A-ect of sale@ All pre*e7isting claims in the
vessel are terminated. >hey will then be
satis,ed from the proceeds of the sale subject
to the order of preference.
DOCTRINE OF LIMITED LIABILITY
.(YPOT(ECARY R7LE2
Cases where applicable@
1. Art. (2. P civil liability for indemnities
to third persons
2. Art. (;: P indemnities from negligent
acts of the captain "not the shipowner
or ship agent#
. Art. 2. P collision
$. Art. 1$ P liability for wages of the
captain and the crew and for advances
made by the ship agent if the vessel is
lost by shipwrec5 or capture
56N6RAL RUL6: >he liability of shipowner and
ship agent is limited to the amount of interest in
said vessel such that where vessel is entirely
lost, the obligation is e7tinguished. "%u0on
3tevedoring v. Ascano, 1(1 3C4A 11;# >he
interest e7tends to@ 1# the vessel itself< 2#
eGuipments< # freightage< and $# insurance
proceeds. "Chua v. +AC, 111 3C4A 12#
67C6PT81N':
1. Claims under &or5menCs Compensation
"Abueg vs. 3an )iego .. Phil .:#<
2. +njury or damage due to shipowner or to
the concurring negligence of the shipowner
and the captain<
. >he vessel is insured "EasGue0 vs. CA 12
3C4A ((#.
$. A7penses for repair on vessel completed
before loss<
(. +n case there is no total loss and the vessel
is not abandoned<
1. Collision between two negligent vessels<
Abandonment of the vessel is necessary to
limit the liability of the shipowner. >he only
instance were abandonment is dispensed with
is when the vessel is entirely lost "%u0on
3tevedoring vs. CA 1(1 3C4A 11;#.
RIG(T OF S(IPOWNER OR S(IP AGENT TO
ABANDON 'ESSEL
+nstances@
1. +n case of civil liability from indemnities to
third persons "Art. (2.#<
2. +n case of lea5age of at least Q of the
contents of a cargo containing liGuids "Art. 12.#<
and
. +n case of constructive loss of the vessel
"3ec. 12, +nsurance Code#.
RIG(T OF ABANDONMENT
S(IPOWNER OR
S(IP AGENT
CONSIGNEE
W%a# +a0 <e a<andoned
Eessel Goods shipped
Ins#an"es
1. +n case of civil
liability from
indemnities to third
persons "Art. (2.#<
2. 3ec. 12,
+nsurance Code<
. +n case of lea5age
of at least Q of the
contents of a cargo
containing liGuids
"Art. 12.#
1. Partial non*
delivery, where the
goods are useless
without the others
"Art. 1#<
2. Goods are
rendered useless for
sale or consumption
for the purposes for
which they are
properly destined
"Art. 1(#< and
. +n case of delay
through the fault of
the carrier "Art.
.1#.
ECe"#s
1. >ransfer of
ownership of the
vessel from the
shipowner to the
shippers or insurer.
2. +n case of "2#, the
insurer must pay the
insured as if there
was actual total loss
of the vessel.
1. >ransfer of
ownership on the
goods from the
shipper to the
carrier.
2. Carrier should
pay the shipper the
mar5et value of the
goods at the point of
destination.
CA7SES OF RE'OCATION OF 'OYAGE
1. &ar or interdiction of commerce<
2. =loc5ade<
. Prohibition to receive cargo at destination<
$. Ambargo<
(. +nability of the vessel to navigate. "Art.
1$:#
Te&+s$
1. +nterdiction of commerce P A governmental
prohibition of commercial intercourse
%aws#<
1)
intended to bring about an entire cessation
for the time being of all trade whatever.
2. =loc5ade P A sort of circumvallation of a
place by which all foreign connection and
correspondence is, as far as human power
can e-ect it, to be cut o-.
. Ambargo P A proclamation or order of a
state, usually issued in time of war or
threatened hostilities, prohibiting the
departure of ships or goods from some or
all the ports of such state until further
order.
PARTICIPANTS IN MARITIME COMMERCE
A. 3hipowners and ship agents
=. Captains and masters of the vessel
C. 69cers and crew of the vessel
). 3upercargoes
A. Pilot
A* S(IPOWNERS AND S(IP AGENTS
S%1owne& .1&o1&e#a&o2
Person who has possession, control and
management of the vessel and the conseGuent
right to direct her navigation and receive freight
earned and paid, while his possession
continues.
S%1 agen# .na-e&o2
Person entrusted with provisioning and
representing the vessel in the port in which it
may be found< also includes the shipowner.
/ot a mere agent under civil law< he is
solidarily liable with the ship owner.
Powers and functions@
1. Capacity to trade<
2. )ischarge duties of the captain, subject to
Art.1:;<
. Contract in the name of the owners with
respect to repairs, details of eGuipment,
armament, provisions of food and fuel, and
freight of the vessel, and all that relate to
the reGuirements of navigation<
$. 6rder a new voyage, ma5e a new charter
or insure the vessel after obtaining
authori0ation from the shipowner or if
granted in certi,cate of appointment.
C-l La<l#es of #%e S%1owne& And S%1
Agen#
1. All contracts of the captain, whether
authori0ed or not, to repair, eGuip and
provision the vessel< "Art. (21#
2. %oss 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. (2.#
D/#0 of S%1 Agen# #o Ds"%a&ge #%e
Ca1#an and Me+<e&s of #%e C&ew
+f the seamen contract is not for a de,nite
period or voyage, he may discharge them at his
discretion. "Art. 1:#
+f for a de,nite period, he may not discharge
them until after the ful,llment of their
contracts, e7cept on the following grounds@
a. +nsubordination in serious matters<
b. 4obbery<
c. >heft<
d. ?abitual drun5enness<
e. )amage caused to the vessel or to its
cargo through malice or manifest or proven
negligence. "Art. 1:(#
B* CAPTAINS AND MASTERS
>hey are the chiefs or commanders of ships.
>he terms have the same meaning, but are
particularly used in accordance with the si0e of
the vessel governed and the scope of
transportation, i.e., large and overseas, and
small and coastwise, respectively.
/ature of position "*fold character#@
1. General agent of the shipowner<
2. >echnical director of the vessel<
. 4epresentative of the government of
the country under whose Nag he
navigates.
Ruali,cations@
1. !ilipino citi0en<
2. %egal capacity to contract<
. Dust have passed the reGuired
physical and mental e7aminations
reGuired for licensing him as such. "Art.
1:;#
+nherent powers@
1. Appoint crew in the absence of ship
agent<
2. Command the crew and direct the
vessel to its port of destination<
. +mpose correctional punishment on
those who, while on board vessel, fail
to comply with his orders or are
wanting in discipline<
$. Da5e contracts for the charter of
vessel in the absence of ship agent.
(. 3upply, eGuip, and provision the
vessel< and
1. 6rder repair of vessel to enable it to
continue its voyage. "Art. 11:#
3ources of funds to comply with the inherent
powers of the captain "in successive order#@
1. !rom the consignee of the vessel<
2. !rom the consignee of the cargo<
. =y drawing on the ship agent<
$. =y a loan on bottomry<
(. =y sale of part of the cargo. "Art. 111#
)uties@
1. =ring on board the proper certi,cate
and documents and a copy of the Code
of Commerce<
2. Feep a %og =oo5, Accounting =oo5 and
!reight =oo5<
. A7amine the ship before the voyage<
$. 3tay on board during the loading and
unloading of the cargo<
(. =e on dec5 while leaving or entering
the port<
%aws#<
14
1. Protest arrivals under stress and in
case of shipwrec5<
.. !ollow instructions of and render an
accounting to the ship agent<
2. %eave the vessel last in case of wrec5<
;. ?old in custody properties left by
deceased passengers and crew
members<
1:. Comply with the reGuirements of
customs, health, etc. at the port of
arrival<
11. 6bserve rules to avoid collision<
12. )emand a pilot while entering or
leaving a port. "Art. 112#
A shipCs captain must be accorded a
reasonable measure of discretionary authority
to decide what the safety of the ship and of its
crew and cargo speci,cally reGuires on a
stipulated ocean voyage "+nter*6rient Daritime
Anterprises +nc. vs. CA#.
/o liability for the following@
1. )amages caused to the vessel or to
the cargo by force majeure<
2. 6bligations contracted for the repair,
eGuipment, and provisioning of the
vessel unless he has e7pressly bound
himself personally or has signed a bill
of e7change or promissory note in his
name. "Art. 12:#
Solda&0 La<l#es of #%e S%1
Agen#/S%1owne& fo& A"#s Done <0 #%e
Ca1#an #owa&ds Passenge&s and Ca&goes
1. )amages to vessel and to cargo due to
lac5 of s5ill and negligence<
2. >hefts and robberies of the crew<
. %osses and ,nes for violation of laws<
$. )amages due to mutinies<
(. )amages due to misuse of power<
1. !or deviations<
.. !or arrivals under stress<
2. )amages due to non*observance of
marine regulations. "Art. 112#
C* OFFICERS AND CREW
1. 3ailing Date'!irst Date
2. 3econd Date
. Angineers
$. Crew
/o liability under the following circumstances@
1. +f, before beginning voyage, captain
attempts to change it, or a naval war with
the power to which the vessel was destined
occurs<
2. +f a disease brea5s out and be o9cially
declared an epidemic in the port of
destination<
. +f the vessel should change owner or
captain. "Art. 1$.#
Salng Ma#e/F&s# Ma#e
3econd chief of the vessel who ta5es the place
of the captain in case of absence, sic5ness, or
death and shall assume all of his duties, powers
and responsibilities. "Art. 12.#
)uties@
1. Provide himself with maps and charts
with astronomical tables necessary for
the discharge of his duties<
2. Feep the =innacle =oo5<
. Change the course of the voyage on
consultation with the captain and the
o9cers of the boat, following the
decision of the captain in case of
disagreement<
$. 4esponsible for all the damages
caused to the vessel and the cargo by
reason of his negligence. "Arts. 122 *
11#
Se"ond Ma#e
>a5es command of the vessel in case of the
inability or disGuali,cation of the captain and
the sailing mate, assuming in such case their
powers and responsibilities.
>hird in command
)uties@
1. Preserve the hull and rigging of the
vessel<
2. Arrange well the cargo<
. )iscipline the crew<
$. Assign wor5 to crew members<
(. +nventory the rigging and eGuipment of
the vessel, if laid up. "Art. 12#
Engnee&s
69cers of the vessel but have no authority
e7cept in matters referring to the motor
apparatus. &hen two or more are hired, one of
them shall be the chief engineer.
)uties@
1. +n charge of the motor apparatus,
spare parts, and other instruments
pertaining to the engines<
2. Feep the engines and boilers in good
condition<
. /ot to change or repair the engine
without authority of the captain<
$. +nform the captain of any damage to
the motor apparatus<
(. Feep an Angine =oo5<
1. 3upervise all personnel maintaining
the engine. "Art. 12#
C&ew
>he aggregate of seamen who man a ship, or
the shipCs company.
?ired by the ship agent, where he is present
and in his absence, the captain hires them,
preferring !ilipinos, and in their absence, he
may ta5e in foreigners, but not e7ceeding 1'( of
the crew. "Art. 1$#
Classes of Sea+an>s Con#&a"#s
1. =y the voyage<
%aws#<
1;
2. =y the month< and
. =y share of pro,ts or freightage.
:/s# Ca/ses fo& #%e Ds"%a&ge of Sea+an
W%le Con#&a"# S/<ss#s
1. Perpetration of a crime<
2. 4epeated insubordination, want of
discipline<
. 4epeated incapacity and negligence<
$. ?abitual drun5enness<
(. Physical incapacity<
1. )esertion. "Art. 1.#
R/les n "ase of Dea#% of a Sea+an
>he seamanCs heirs are entitled to payment as
follows@
1. +f death is natural@
a. compensation up to time of death if
engaged on wage
b. if by voyage * half of amount if death
occurs on voyage out< and full, if on
voyage in
c. if by shares * none, if before departure<
full, if after departure
2. if death is due to defense of vessel * full
payment<
. if captured in defense of vessel * full
payment<
$. if captured due to carelessness * wages up
to the date of the capture. "Art. 1$(#
Co+1le+en# of #%e 'essel
All persons on board, from the captain to the
cabin boy, necessary for the management,
maneuvers, and service, thus including the
crew, the sailing mates, engineers, sto5ers and
other employees on board not having speci,c
designations.
)oes not include the passengers or the
persons whom the vessel is transporting.
D* S7PERCARGOES
Persons who discharges administrative duties
assigned to him by ship agent or shippers,
5eeping an account and record of transaction as
reGuired in the accounting boo5 of the captain.
"Art. 1$;#
E* PILOT
A person duly Guali,ed, and licensed, to
conduct a vessel into or out of ports, or in
certain waters.
>he term generally connotes a person ta5en
on board at a particular place for the purpose of
conducting a ship through a river, road or
channel, or from a port.
Daster pro hac /ice for the time being in the
command and navigation of the ship.
&hile in e7ercising his functions a pilot is in
sole command of the ship and supersedes the
master for the time being in the command and
navigation of the ship, the master does not
surrender his vessel to the pilot and the pilot is
not the master. >here are occasions when the
master may and should interfere and even
displace the pilot, as when the pilot is obviously
incompetent or into7icated "!ar Aastern
3hipping Company vs. CA#.
Compulsory Pilotage P 3tates possessing
harbors have enacted laws or promulgated
rules reGuiring vessels approaching their ports
to ta5e on board pilots licensed under the local
laws. (Notes and Cases on the Law on
ernando, R.P. !""# ed. p. :$9&
La<l#0 of Plo#
56N6RAL RUL6@ 6n compulsory pilotage
grounds, the ?arbor Pilot is responsible for
damage to a vessel or to life or property due to
his negligence.
67C6PT:
1. Accident caused by force majeure or natural
calamity provided the pilot e7ercised prudence
and e7tra diligence to prevent or minimi0e
damages.
2. Countermand or overrule by the master of
the vessel in which case the registered owner of
the vessel is liable. "3ec.11, Art.+++ PPA Admin
6rder :*2(#
SPECIAL CONTRACTS OF MARITIME
COMMERCE
1. Charter party
2. =ill of lading
. Contract of transportation of
passengers on sea voyages
$. %oan on bottomry
(. %oan on respondentia
1. Darine insurance
C(ARTER PARTY
A contract by virtue of which the owner or
agent binds himself to transport merchandise or
persons for a ,7ed price.
A contract by which an entire ship, or some
principal part thereof is let'leased by the owner
to another person for a speci,ed time or use.
"Planters Products, +nc. vs. CA, 221 3C4A $.1#
Pa&#es$
1. 3hip owner or ship agent
2. Charterer
Classes$
1. =areboat or demise P >he charterer provides
crew, food and fuel. >he charterer is liable as if
he were the owner, e7cept when the cause
arises from the unworthiness of the vessel. >he
shipowner leases to the charterer the whole
vessel, transferring to the latter the entire
command, possession and conseGuent control
over the vesselCs navigation, including the
master and the crew, who thereby become the
charterCs servants. +t transforms a common
carrier into a private carrier.
>he charterer becomes the owner of the
vessel pro hac vice, just for that one
particular purpose only. =ecause the
charterer is treated as owner pro hac /ice,
%aws#<
1=
the charterer assumes the customary
rights and liabilities of the shipowner to
third persons and is held liable for the
e7pense of the voyage and the wages of
the seamen.
2. Contract of A-reightment E A contract
whereby the owner of the vessel leases part or
all of its space to haul goods for others.
>he shipowner retains the possession,
command and navigation of the ship, the
charterer merely having use of the space in
the vessel in return for his payment of the
charter hired.
Finds@
a. >ime charter P vessel is chartered for a
,7ed period of time or duration of
voyage.
b. Eoyage or trip charter P the vessel is
leased for one or series of voyages
usually for purposes of transporting
goods for charterer.
LEASE C(ARTER PARTY
+f for a de,nite
period, lessee cannot
give up the lease by
paying a portion of
the amount agreed
upon.
Charterer may
rescind charter party
by paying half of the
freightage agreed
upon.
+f the leased property
is sold to one who
5nows of the
e7istence of the
lease, the new owner
must respect the
lease.
>he new owner is not
compelled to respect
the charter party so
long as he can load
the vessel with his
own cargo. "Art. 12;#
Civil law concept Commercial law
concept
C(ARTER PARTY BILL OF LADING
An entire or complete
contract.
Dore li5e a private
receipt which the
captain gives to
accredit goods
received from
persons
Consensual contract 4eal contract
BAREBOAT OR
DEMISE C(ARTER
CONTRACT OF
AFFREIG(TMENT
.TIME OR 'OYAGE
C(ARTER2
Charterer becomes
liable to others
caused by its
negligence
6wner remains liable
as carrier and must
answer for any
breach of duty
Charterer regarded
as owner pro hac
vice for the voyage
Charterer is not
regarded as owner.
6wner of vessel
relinGuishes
possession,
command and
navigation to
charterer
>he vessel owner
retains possession,
command and
navigation of the ship
Common carrier is
converted to private
carrier.
Common carrier is
not converted to a
private carrier.
PERSONS W(O MAY MA?E A C(ARTER
1. 6wner or owners of the vessel, either
in whole or in majority part, who have
legal control and possession of the
vessel
2. Charterer may subcharter entire vessel
to
rd
person only if not prohibited in
original charter. "Art.1.;#
. 3hip agent if authori0ed by the owner's
or given such power in the certi,cate
of appointment. "Art.(;2#
$. 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
latterCs interests. "Art.1:;#
RE67ISITES OF A 'ALID C(ARTER PARTY
1. Consent of the contracting parties
2. A7isting vessel which should be placed
at the disposition of the shipper
. !reight
$. Compliance with Art. 1(2 of the Code
of Commerce
Cla/ses W%"% Ma0 Be In"l/ded In a
C%a&#e& Pa&#0
:ason "la/se Cla/se 1a&a+o/n#
o& 1a&a+o/n#
"la/se
A stipulation in a
charter party that in
case of a maritime
accident for which
the shipowner is not
responsible by law,
contract or
otherwise, the cargo
shippers, consignees
or owners shall
contribute with the
shipowner in general
average. "Pandect of
Commercial %aw and
Burisprudence, Bustice
Bose Eitug, 1;;. ed.#
A clause in a charter
party providing that
the C6G3A shall
apply, even though
the transportation is
domestic, subject to
the e7tent that any
term of the bill of
lading is repugnant to
the C6G3A or
applicable law, then
to the e7tent thereof
the provision of the
bill of lading is void.
"Pandect of
Commercial %aw and
Burisprudence, Bustice
Bose Eitug, 1;;. ed.#
%aws#<
15
Rg%#s and O<lga#ons of Pa&#es
S(IPOWNER OR
S(IP AGENT
C(ARTERER
1. +f the vessel is
chartered wholly, not
to accept cargo from
others<
2. >o observe
represented capacity<
. >o unload cargo
clandestinely placed
$. >o substitute
another vessel if load
is less than '( of
capacity<
(. >o leave the port
if the charterer does
not bring the cargo
within the lay days
and e7tra lay days
allowed<
1. >o place in a
vessel in a condition
to navigate<
.. to bring cargo to
nearest neutral port
in case of war or
bloc5ade. "Arts. 11;*
1.2#
1. >o pay the
agreed charter price<
2. >o pay
freightage on
unboarded cargo<
. >o pay losses to
others for loading
uncontracted cargo
and illicit cargo<
$. >o wait if the
vessel needs repair<
(. >o pay e7penses
for deviation. "Arts.
1.;*12.#
Res"sson of a C%a&#e& Pa&#0
A#
"%a&#e&e&>s
&e9/es#
.A&# 5BB2
A#
s%1owne&>
s &e9/es#
.A&#* 5BA2
Fo&#/#o/s
"a/ses
.A&#* 5AD2
1. =y
abandoning
the charter
and paying
half of the
freightage<
2. Arror in
tonnage or
Nag<
. !ailure to
place the
vessel at the
chartererCs
disposal<
$. 4eturn of
the vessel
due to
pirates,
enemies or
bad weather<
(. Arrival at a
port for
repairs.
1. +f the e7tra
lay days
terminate
without the
cargo being
placed
alongside the
vessel<
2. 3ale by
the owner of
the vessel
before
loading by
the
charterer<
1. &ar or
interdiction
of commerce<
2. =loc5ade<
. Prohibition
to receive
cargo<
$. Ambargo<
and
(. +nability of
the vessel to
navigate.
Te&+s$
1. Primage * bonus to be paid to the captain
after the successful voyage.
2. )emurrage P the sum ,7ed in the charter
party as a remuneration to the owner of
the ship for the detention of his vessel
beyond the number of days allowed by the
charter party for loading or unloading or for
sailing.
. )eadfreight P the amount paid by or
recoverable from a charterer of a ship for
the portion of the shipCs capacity the latter
contracted for but failed to occupy.
$. %ay )ays * days allowed to charter parties
for loading and unloading the cargo.
(. A7tra %ay )ays E days which follow after
the lay days have elapsed.
7S7AL FORMS OF CONS7MMATING
CONTRACTS
1. C.+.!. P cost, insurance and freight<
2. !.6.=. * free on board<
. !.A.3. * free alongside ship< and
$. C. M !. * cost and freight.
TRANSS(IPMENT OF GOODS
>he act of ta5ing cargo out of one ship and
loading it in another, or the transfer of goods
from the vessel stipulated in the contract of
a-reightment to another vessel before the
place of destination named in the contract has
been reached, or the transfer for further
transportation from one ship or conveyance to
another.
+t is not dependent on the ownership of the
transporting ships or in the change of carriers,
but rather on the fact of actual physical transfer
of cargo from one vessel to another.
+f done without legal e7cuse, however
competent and safe the vessel into which the
transfer is made, is a violation of contract and
infringement of right of shipper and subjects
carrier to liability if freight is lost event by cause
otherwise e7cepted. "Dagellan Danufacturing
vs. CA, 2:1 3C4A 1:2#
LOAN ON BOTTOMRY AND RESPONDENTIA
A real, unilateral, aleatory contract, by virtue
of which one person lends to another a certain
amount of money or goods on things e7posed
to maritime ris5s, which amount, with its
earnings, is to be returned if the things are
safely transported, and which is lost if the latter
are lost.
LOAN ON
BOTTOMRY
LOAN ON
RESPONDENTIA
)e,nition
%aws#<
13
%oan made by
shipowner or ship
agent guaranteed
by vessel itself and
repayable upon
arrival of vessel at
destination. "Art.
.1;#
%oan ta5en on
security of the cargo
laden on a vessel,
and repayable upon
safe arrival of cargo
at destination. "Art.
.1;#
&ho may contract
3hipowner or ship
agent. 6utside of
the residence of the
owners * the
captain.
6nly the owner of
the cargo.
Common elements@
1. A7posure of security to marine peril<
2. 6bligation of the debtor conditioned
only upon safe arrival of the security at
the point of destination.
!orms@
1. Public instrument
2. Policy signed by the contracting parties
and the bro5er ta5ing part therein
. Private instrument "Art. .2:#
Contents@
1. Find, name and registry of the vessel<
2. /ame, surname and domicile of the
captain<
. /ames, surnames and domiciles of the
borrower and the lender<
$. Amount of the loan and the premium
stipulated<
(. >ime for repayment<
1. Goods pledged to secure repayment<
.. Eoyage during which the ris5 is run
"Art..21#
BOTTOMRY/
RESPONDENTIA
ORDINARY LOAN
.M7T77M2
/ot subject to 8sury
%aw
3ubject to 8sury
%aw
%iability of the
borrower is
contingent on the
safe arrival of the
vessel or cargo at
destination
/ot subject to any
contingency
"absolute liability#
>he last lender is a
preferred creditor
>he ,rst lender is a
preferred creditor
W(EN LOAN ON BOTTOMRY OR
RESPONDENTIA REGARDED AS SIMPLE
LOAN
1. %ender loaned an amount larger than
the value of the object due to
fraudulent means employed by the
borrower. "A4>..21#
2. !ull amount of the loan is not used for
the cargo or given on the goods if all of
them could not have been loaded, the
balance will be considered a simple
loan. "A4>..2.#
. +f the e-ects on which the money is
ta5en is not subjected to any ris5.
"A4>..2;#
No#e@ 8nder e7isting laws, the parties to a loan,
whether ordinary or maritime, may agree on
any rate of interest. "C= Circular ;:(#
MARINE INS7RANCE LOAN ON
BOTTOMRY OR
RESPONDENTIA
+ndemnity is paid after
the loss has occurred
+ndemnity is paid
in advance by
way of a loan
+n case of loss of the
vessel due to a ris5
insured against, the
obligation of the insurer
becomes absolute
+n case of loss of
the vessel due to
a marine peril,
the obligation of
the borrower to
pay is
e7tinguished
Consensual contract 4eal contract
(01o#%e"a&0 Na#/&e of Bo##o+&0/
Res1onden#a
56N6RAL RUL6: >he obligation of the
borrower to pay the loan is e7tinguished if the
goods given as security are absolutely lost by
reason of an accident of the sea, during the
voyage designated, and if it is proven that the
goods were on board.
67C6PT81N':
1. %oss due to inherent defect<
2. %oss due to the barratry on the part of the
captain<
. %oss due to the fault or malice of the
borrower<
$. >he vessel was engaged in contraband<
and
(. >he cargo loaded on the vessel be di-erent
in from that agreed upon.
Con"/&&en"e of Ma&ne Ins/&an"e and Loan
on Bo##o+&0/Res1onden#a
1. >he insurable interest of the owner of
a ship hypothecated by bottomry is
only the e7cess of the value over the
amount secured by bottomry. "3ec.
1:1, +nsurance Code#
2. >he value of what may be saved in
case of shipwrec5 shall be divided
between the lender and the insurer in
proportion to the interest of each one.
"Art. .(#
%aws#<
1B
/ote@ +f a vessel is hypothecated by bottomry
only the e7cess is insurable, since a loan on
bottomry parta5es of the nature li5ewise of an
insurance coverage to the e7tent of the loan
accommodation. >he same rule would apply to
the hypothecation of the cargo by respondentia.
(Pandect o) Co((ercial Law and *urisprudence,
*ustice *ose +itu,, $--. ed.&
ACCIDENTS IN MARITIME COMMERCE
1. Averages
2. Arrival 8nder 3tress
. Collision
$. 3hipwrec5
A'ERAGE
An e7traordinary or accidental e7pense
incurred during the voyage in order to preserve
the cargo, vessel or both, and all damages or
deterioration su-ered 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. 2:1#
>he person whose property has been saved
must contribute to reimburse the damage
caused or e7pense incurred if the situation
constitutes general average.
Classes@
1. Particular or 3imple Average
2. Gross or General Average
&here both vessel and cargo are saved, it is
general average< where only the vessel or only
the cargo is saved, it is particular average.
A7penses incurred to reNoat a vessel, which
accidentally ran aground, in order to continue
its voyage, do not constitute general average.
/ot only is there absence of a marine peril,
common safety factor, and deliberateness. +t is
the safety of the property, and not the voyage,
which constitutes the true foundation of general
average. "A. Dagsaysay, +nc. vs. Agan, G.4./o.
%*1;, Ban. 1, 1;((#
PARTIC7LAR OR
SIMPLE
GROSS OR
GENERAL
De!n#on
)amages or e7penses
caused to the vessel
or cargo that did not
inure to the common
bene,t, and borne by
respective owners.
"Art. 2:;#
)amages or
e7penses
deliberately caused
in order to save the
vessel, its cargo or
both from real and
5nown ris5. "Art.
211#
Re9/s#es
1. common
danger<
2. deliberate
sacri,ce<
. success<
$. proper
formalities and
legal steps.
La<l#0
>he owner of the
goods which gave
rise to the e7pense or
su-ered the damage
shall bear this
average. "Art. 21:#
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.
212#
>he insurers
"Art.2(;# and
lenders on bottomry
and respondentia
shall li5ewise
contribute.
"Art..2#.
N/+<e& of n#e&es#s n-ol-ed
6nly one interest
involved
3everal interests
involved
S%a&e n #%e da+age o& eF1ense
1::S share +n proportion to the
value of the ownerCs
property saved
Rg%# #o &e"o-e&
/o reimbursement >here may be
reimbursement
?nds .no# eF"l/s-e2
Art. 2:; Art. 211
P&o"ed/&e fo& &e"o-e&0
1. Assembly and
deliberation
2. 4esolution of the
captain
. Antry of the
resolution in the
logboo5
$. )etailed minutes
(. )elivery of the
minutes to the
maritime judicial
authority of the ,rst
port, within 2$ hours
from arrival,
1. 4ati,cation by
captain under oath.
"Arts. 21*21$#
GOODS NOT CO'ERED BY GENERAL
A'ERAGE E'EN IF SACRIFICED
1. Goods carried on dec5. "A4>.2((#
2. Goods not recorded in the boo5s or
records of the vessel. "A4>.2(( "2##
. !uel for the vessel if there is more than
su9cient fuel for the voyage. "4ule +T,
Hor5*Antwerp 4ule#
:e##son
Act of throwing cargo overboard in order to
lighten the vessel.
6rder of goods to be cast overboard@
%aws#<
1A
1. >hose which are on the dec5,
preferring the heaviest one with the
least utility and value<
2. >hose which are below the upper dec5,
beginning with the one with greatest
weight and smallest value. "Art. 21(#
Bettisoned goods are not res nullius nor
deemed KabandonedL within the meaning of
civil law so as to be the object of occupation by
salvage. (Pandect o) Co((ercial Law and
*urisprudence, *ustice *ose +itu,, $--. ed.&
+n order that the jettisoned goods may be
included in the gross or general average, the
e7istence of the cargo on board should be
proven by means of the bill of lading. "Art. 211#
Yo&G,An#we&1 .Y,A2 R/les on De#e&+nng
La<l#0 fo& A-e&ages W#% Rega&d To De"G
Ca&go
1. )ec5 cargo is allowed only in
domestic'coastwise'inter*island shipping, and is
prohibited in international'overseas'foreign
shipping.
2. +f dec5 cargo is loaded with the consent of
the shipper on overseas trade, it must always
contribute to general average, but should the
same be jettisoned, it would not be entitled to
reimbursement because there is violation of the
H*A 4ules.
. +f dec5 cargo is loaded with the consent of
the shipper on coastwise shipping, it must
always contribute to general average and if
jettisoned would be entitled to reimbursement.
4eason@ +n domestic shipping, voyages are
usually short and the seas are generally not
rough. +n overseas shipping, the vessel is
e7posed for many days to perils of the sea.
DOMESTIC INTERNATIONAL
)ec5 cargo is allowed )ec5 cargo is not
allowed
&ith shipperCs consent
General average Particular average
&ithout shipperCs consent
Captain is liable Captain is liable
ARRI'AL 7NDER STRESS .ARRIBADA2
>he arrival of a vessel at the nearest and most
convenient port instead of the port of
destination, if during the voyage the vessel
cannot continue the trip to the port of
destination.
W%en
lawf/l
W%en
/nlawf/l
W%o <ea&s
eF1enses$
>he inability
to continue
voyage is
due to lac5
of provisions,
well*founded
1. %ac5 of
provisions
due to
negligence to
carry
according to
>he
shipowner or
ship agent is
liable in case
of unlawful
arrival under
fear of
sei0ure,
privateers,
pirates, or
accidents of
the sea
disabling it
to navigate.
"Art. 21;#
usage and
customs<
2. 4is5 of
enemy not
well 5nown or
manifest
. )efect of
vessel due to
improper
repair< and
$. Dalice,
negligence,
lac5 of
foresight or
s5ill of
captain. "Art.
22:#
stress. =ut
they shall not
be liable for
the damages
caused by
reason of a
lawful arrival.
"Art. 221#
+t 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. ?owever, in case the
cause has been ris5 of enemies, there must ,rst
be an assembly before departure. "Art. 22(#
3teps@
1. Captain should determine during the
voyage if there is well founded fear of
sei0ure, privateers and other valid
grounds<
2. Captain shall assemble the o9cers and
summon the persons interested in the
cargo who may attend the meeting but
without a right to vote<
. >he o9cers shall determine and agree
if there is well*founded reason after
e7amining the circumstances. >he
captain shall have the deciding vote<
$. >he agreement shall be drafted and
the proper minutes shall be signed and
entered in the log boo5<
(. 6bjections and protests shall li5ewise
be entered in the minutes.
COLLISION
+mpact of two vessels both of which are
moving.
Allson
+mpact between a moving vessel and a
stationary one.
Na/#"al R/les #o De#e&+ne Neglgen"e
1. &hen two vessels are about to enter a port,
the farther one must allow the nearer to
enter ,rst< 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. &hen two vessels meet, the smaller should
give the right of way to the larger one.
. A vessel leaving port should leave the way
clear for another which may be entering
the same port.
%aws#<
)D
$. >he vessel which leaves later is presumed
to have collided against one which has left
earlier.
(. >here is a presumption against the vessel
which sets sail in the night.
1. >here 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 su9cient time to do so or there
was fear of a greater damage or other
legitimate reason.
.. >here is a presumption against an
improperly moored vessel.
2. >here 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.
;. Eessels must have Kproper loo5*outsL or
persons trained as such and who have no
other duty aside therefrom. "3mith =ell v.
CA#
Na/#"al R/les as #o Salng 'essel and
S#ea+s%1
1. &here 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. >he sailing vessel is reGuired to 5eep her
course unless the circumstances reGuire
otherwise.
Hones of T+e n #%e Collson of 'essels
1. 3irst >one P all time up to the moment when
ris5 of collision begins.
/o rule is as yet applicable for none is
necessary.
2. 'econd >one P time between moment when
ris5 of collision begins and moment it becomes
a practical certainty.
+t is in this period where conduct of the vessels
is primordial. +t is in this 0one that vessels must
strictly observe nautical rules, unless a
departure therefrom becomes necessary to
avoid imminent danger.
. Third >one P time when collision is certain
and time of impact.
An error in this 0one would no longer be
legally conseGuential.
6rror in 6?tre(is * sudden movement made
by a faultless vessel during the third 0one of
collision with another vessel which is at fault
during the 2nd 0one. Aven if such sudden
movement is wrong, no responsibility will fall on
said faultless vessel. "8rrutia and Co. v. =aco
4iver Plantation Co., 21 P?+% 12#
Cases Co-e&ed B0 Collson and Allson
$. 1ne /essel at )ault
Eessel at fault is liable for damage caused to
innocent vessel as well as damages su-ered by
the owners of cargo of both vessels. "Art. 221#
2. <oth /essels at )ault
Aach vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. "Art.
22.#
. +essel at )ault not @nown
Aach vessel must bear its own loss, but the
shippers of both vessels may go against the
shipowners who will be solidarily liable. "Art.
222#
;octrine o) 8nscrutable 3ault P +n case of
collision where it cannot be determined
which between the two vessels was at
fault, both vessels bear their respective
damage, but both should be solidarily liable
for damage to the cargo of both vessels.
#. Third /essel at )ault
>he third vessel will be liable for losses and
damages. "Art. 21#
:. 3ortuitous e/entA)orce (aBeure
/o liability. Aach bears its own loss. "Art. 2:#
>he doctrine of res ipsa loGuitur applies in
case a moving vessel stri5es a stationary
object, such as a bridge post, doc5, or
navigational aid. "!ar Aastern 3hipping v. CA,
%u0on 3tevedoring vs. CA#
Aven if the cause of action against the
common carrier is based on Guasi*delict, the
defense of due diligence in the selection and
supervision of employees is unavailing in case
of a maritime tort resulting in collision. +t is not
a civil tort governed by the Civil Code but a
maritime one governed by Arts. 221*2; of the
Code of Commerce. "Danila 3teamship vs. +nsa
Abdulhaman#
)octrine of %ast Clear Chance and 4ule on
Contributory /egligence cannot be applied in
collision cases because of Art.22. of the Code
of Commerce. (Notes and Cases on the Law on
ernando, R.P. !""# ed.&
MARITIME PROTEST
Condition precedent or prereGuisite to
recovery of damages arising from collisions and
other maritime accidents.
+t 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.
A7cuses for not ,ling protest@ 1# where the
interested person is not on board the vessel<
%aws#<
)1
and 2# on collision time, need not be protested.
"Art. 21#
Cases applicable@
1. Collision "Art. 2(#<
2. Arrival under stress "Art. 112"2##<
. 3hipwrec5s "Arts. 112"1(#, 2$#<
$. &here the vessel has gone through a
hurricane or when the captain believes
that the cargo has su-ered damages
or averages "Art. 12$#.
&ho ma5es@ Captain
&hen made@ within 2$ hours from the time the
collision too5 place.
=efore whom made@ competent authority at
the point of collision or at the ,rst port of
arrival, if in the Philippines and to the Philippine
consul, if the collision too5 place abroad. "Art.
2(#
S(IPWREC?
+t is the loss of the vessel at sea as a
conseGuence of its grounding, or running
against an object in sea or on the coast. +t
occurs when the vessel sustains injuries due to
a marine peril rendering her incapable of
navigation.
+f the wrec5 was due to malice, negligence or
lac5 of s5ill of the captain, the owner of the
vessel may demand indemnity from said
captain. "Art. 2$1#
>he rules on collision or allision, as may be
pertinent, can eGually apply to shipwrec5s.
SPECIAL CONCEPTS
ARRASTRE SER'ICE
A contract for the unloading of goods from a
vessel.
A11l"a<l#0$ 1/erseas trade only.
(Co((ercial Law Re/iew, C. +illanue/a, !""#
ed.&
Sgn!"an"e$ &hen a person brings in cargo
from abroad, he cannot unload and deliver the
cargo by himself. >he unloading must be done
by the arrastre operator, which will then deliver
the cargo to the importer. (Co((ercial Law
Re/iew, C. +illanue/a, !""# ed.&
Na#/&e of </sness$ +t is a public utility,
discharging functions which are heavily
invested with public interest.
La<l#0$
1. 3imilar to a warehouseman "%ua Fian v.
Danila 4ailroad#
2. 3imilar to a common carrier "/orthern
Dotors v. Prince %ine#
. 3olidary liability with the common carrier
No#e$ +n order that the arrastre operator may
be held liable, the consignee must prove that
the damage was due to the negligence and
while the goods are in the custody of the
arrastre operator. "?artford !ire +nsurance v. A.
4a0on, +nc.#
STE'EDORING SER'ICE
>he carriage of goods from the warehouse or
pier to the holds of the vessel. "Chief of 3ta- vs.
C+4#
As understood in the port business, the term
consists of the handling of cargo from the hold
of the ship to the doc5, in case of pier*side
unloading< or to a barge, in case of unloading at
sea. "Anglo*!il >rading Corp. vs. %a0aro#
>he loading on the ship of outgoing cargo is
also part of stevedoring wor5. "+bid.#
CONTAINERIHATION/ ISAID,TO,CONTAINJ/
IS(IPPER>S LOAD AND CO7NTJ SYSTEM
3ystem whereby the shipper loads his cargoes
in a specially designed container, seals the
container and delivers it to the carrier for
transportation. >he carrier does not participate
in the counting of the merchandise for loading
into the container, the actual loading, and the
sealing of the container. "83 %ines v. Comm. 6f
Customs, +C>3+ v. Prudential Guarantee#
>he matter of Guantity, description and
conditions of the cargo inside the container is
the sole responsibility of the shipper, unless
there is stipulation to the contrary. "83 %ines vs.
Comm. 6f Customs, 4eyma =ro5erage v. Phil.
?ome Assurance#
No#e$ +n order to attribute to the carrier any
damage to the shipment that may be found,
inspection o) the ,oods should be done at pier%
side. "=an5ers vs. CA#

III* CARRIAGE OF GOODS BY SEA
ACT/COGSA .C*A* No* 5=2
APPLICABILITY
>he transportation must be@
1. &ater'maritime transportation<
2. for the carriage of goods< and
. overseas'international'foreign "from
foreign port to Philippine port#.
+t can be applied in domestic sea
transportation if agreed upon by the parties.
"Clause para(ount or para(ount clause#
IMPORTANT FEAT7RES$
1. Amount of carrierCs liability
2. /otice of damage
. Prescriptive period
AMO7NT OF CARRIER>S LIABILITY
8nder the 3ec. $"(#, the liability limit is set at
U(:: per pac5age or customary freight unit
unless the nature and value of such goods is
declared by the shipper. >his is deemed
incorporated in the bill of lading even if not
mentioned in it. "Aastern 3hipping vs. +AC, 1(:
3C4A $1#
/ote that Art. 1.$;, /CC applies to
domestic'inter*island'coastwise trade.
%aws#<
))
NOTICE OF DAMAGE .SEC* 4.522
R/les$
a. Patent damage@ shipper should ,le a claim
with the carrier immediately upon delivery
b. %atent damage@ shipper should ,le a claim
with the carrier within three days from
delivery.
No#e@ >he ,ling of a notice of claim is not a
condition precedent.
PRESCRIPTI'E PERIOD
Action for loss or damage to the cargo should
be brought within one year after@
a. )elivery of the goods "delivered but
damaged goods#< or
b. >he date when the goods should have
been delivered "non*delivery#. "3ec.
I1J#
K%oss or )amageL as applied to the C6G3A
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 e7istence is un5nown or they cannot be
recovered. >hus, it is inapplicable in case of
misdelivery or conversion. "Ang vs. American
3teamship Agencies +nc.# and damage arising
from delay or late delivery "Ditsui 6.3.F. %ines
%td. vs. CA#. +n such instance the, Civil Code
rules on prescription shall apply.
>he one*year prescriptive period is
suspended by@
1. >he e7press agreement of the parties
"8niversal 3hipping %ines, +nc. vs. +AC,
122 3C4A 1.:#
2. >he ,ling of an action in court until it is
dismissed. "3tevens M Co. vs.
/ordeutscher %loyd, 1 3C4A 12:#
>he one*year period shall run from delivery of
the last pac5age and is not suspended by
e7trajudicial demand. ")ole Phils.,+nc. vs.
Daritime Co.,1$2 3C4A 112#
>he one*year period shall run from delivery to
the arrastre operator and not to the consignee.
"8nion Carbide Phils, +nc. vs. Danila 4ailroad
Co.,3C4A (;#
>he insurer e7ercising its right of subrogation
is bound by the one*year prescriptive period.
?owever, it does not apply to the claim against
the insurer for the insurance proceeds. "!il.
Derchants +ns. Co. vs. Alejandro< Dayer 3teel
Pipe Corp. vs. CA#
I'* WARSAW CON'ENTION OF 1A)A .WC2
P7RPOSE$ >o protect the emerging air
transportation industry and to secure the
uniformity of recovery by the passengers.
APPLICABILITY
>he transportation must be@
1. +nternational transportation<
2. Air transportation< and
. Carriage of passengers, baggage or
goods.
>he &C shall also apply to fortuitous
transportation by aircraft performed by an air
transportation enterprise.
8nternational transportation * any
transportation in which the place of departure
and the place of destination are situated either@
1. &ithin the territories of two ?igh
Contracting Parties regardless of whether
or not there be a brea5 in the
transportation or transshipment, or
2. &ithin the territory of a single ?igh
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. "Kround
tripL, Am. Bur.#
>ransportation to be performed by several
successive air carriers shall be deemed to be
one undivided transportation, if it has been
regarded by the parties as a single operation,
whether it has been agreed upon under the
form of a single contract or of a series of
contracts, and it shall not lose its international
character merely because one contract or a
series of contracts is to be performed entirely
within a territory subject to the sovereignty,
su0erainty, mandate, or authority of the same
?igh Contracting Party. "Art. 1 3ec.#
W(EN INAPPLICABLE
1. &hen public policy is contradicted<
2. +f the reGuirements under the
Convention are not complied with.
IMPORTANT CONCEPTS$
1. >ransportation documents
a. Passenger tic5et
b. =aggage chec5
c. Air way bill
2. %iability of the carrier for damages
a. )eath or injury to passengers
b. %oss or damage to baggage or goods
c. )elay
. 3uccessive carrier agreement
$. Burisdiction
(. Combined transportation agreement
PASSENGER
TIC?ET
BAGGAGE
C(EC?
AIR
WAYBILL
Passenger Chec5ed*in
baggage
Goods to be
shipped
%aws#<
)4
LIABILITY OF CARRIER FOR DAMAGES
1. )eath or injury of a passenger if the accident
causing it too5 place on board the aircraft or in
the course of its operations of embar5ing or
disembar5ing< "Art. 1.#
2. )estruction, loss or damage to any baggage
or goods, if it too5 place during the
Ktransportation by airL< "Art. 12# and
Transportation b4 air P >he period during
which the baggage or goods are in the charge
of the carrier, whether in an airport or on board
an aircraft, or, in case of a landing outside an
airport, in any place whatsoever.
+t includes any transportation by land or
water outside an airport if such ta5es place in
the performance of a contract for transportation
by air, for the purpose of loading, delivery, or
transshipment.
. )elay in the transportation of passengers,
baggage or goods. "Art. 1;#
No#e@ >he ?ague Protocol amended the &C by
removing the provision that if the airline too5 all
necessary steps to avoid the damage, it could
e7culpate itself completely "Art. 2:"1##. "Alitalia
vs. +AC, 1;2 3C4A ;#
LIMIT OF LIABILITY .A&#* ))K as a+ended
<0 G/a#e+ala P&o#o"olK 1A31L Al#ala -s*
IAC2
1* Passenge&s
56N6RAL RUL6: U1::,::: per passenger
67C6PT81N: Agreement to a higher limit
)* C%e"Ged,n <aggage
56N6RAL RUL6: U2: per 5ilogram
67C6PT81N: +n 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.
4* (and,"a&&ed <aggage
U1:::'passenger
;* Goods #o <e s%11ed
56N6RAL RUL6: U2: per 5ilogram
67C6PT81N: +n 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.
An agreement relieving the carrier from
liability or ,7ing a lower limit is null and void.
"Art. 2#
Carrier is not entitled to the foregoing limit if
the damage is caused by willful misconduct or
default on its part. "Art. 2(#
>hus, the &C does not operate as an
e7clusive enumeration of the instances of an
absolute limit of the e7tent of liability. +t does
not preclude the application of the Civil Code
and other pertinent local laws. +t does not
regulate or e7clude liability for other breaches
of contract by the carrier, or misconduct of its
employees, or for some particular or
e7ceptional type of damage. "Alitalia vs. CA#
+n PanAm v. +AC, the &C was applied as
regards the limitation on the carrierCs liability,
there being a simple loss of baggage without
any improper conduct on the part of the o9cials
or employees of the airline or other special
injury sustained by the passenger.
+n F%D 4oyal v. >uller, the &C has invariably
been held inapplicable, or as not restrictive of
the carrierCs liability, where there was
satisfactory evidence of malice or bad faith
attributable to its o9cers and employees.
"Alitalia vs. +AC#
ACTION FOR DAMAGES
1. /otice of claim
A written complaint must me made within@
a. days from receipt of baggage
b. . days from receipt of goods
c. +n case of delay, 1$ days from receipt
of baggage'goods
>he complaint is a condition precedent.
&ithout the complaint, the action is barred
e7cept in case of fraud on the part of the
carrier. "Art. 21#
2. Prescriptive period
Action must be ,led within 2 years from@
a. date of arrival at the destination
b. date of e7pected arrival
c. date on which the transportation
stopped. "Art. 2;#
+n 8nited Airlines vs. 8y the two*year
prescriptive period was not applied where the
airline employed delaying tactics.
R7LE IN CASE OF 'ARIO7S S7CCESSI'E
CARRIERS
1. Carriage of passengers
56N6RAL RUL6: Action is ,led only against
the carrier in which the accident or delay
occurred.
67C6PT81N: Agreement or contract whereby
the ,rst carrier assumed liability for the whole
journey.
2. Carriage of baggage or goods
a. Passenger or consignor can ,le an
action against the Crst carrier and the
carrier in which the damage occurred
b. Passenger or consignee can ,le an
action against the last carrier and the
carrier in which the damage occurred.
>hese carriers are jointly and severally
liable. "Art. :#
A contract of international carriage by air,
although performed by di-erent carriers under
%aws#<
);
a series of airline tic5ets constitutes a single
operation. Dembers of the +nternational Air
>ransportation Association "+A>A# are under a
general pool partnership agreement wherein
they act as agent of each other in the issuance
of tic5ets to contracted passengers to boost
tic5et sales worldwide and at the same time
provide passengers easy access to airlines
which are otherwise inaccessible in some parts
of the world. "American Airlines vs. CA#
8nder a general pool partnership agreement,
the tic5et*issuing airline is the principal in a
contract of carriage while the endorsee*airline
is the agent. >he obligation of the former
remained and did not cease even when the
breach occurred not on its own Night but on
that of another airline which had underta5en to
carry the passengers to one of their
destinations. "China Airlines vs. Chio5#
:7RISDICTION
At the option of the plainti-, the action for
damages may be ,led in the@
a. Court of domicile of the carrier<
b. Court of its principal place of business<
c. Court where it has a place of business
through which the contract has been
made< or
d. Court of the place of destination. "Art.
22"1##
NOTE$ +t is the passengerCs Kultimate
destinationL not Kan agreed stopping placeL
that determines the country where suit is to be
,led.
>he forum of action provided in Art. 22"1# is a
matter of jurisdiction rather than of venue.
"3antos +++ vs. /orthwest< 2A C.B.3.#
'* SAL'AGE LAW .A"# No* )5152
SAL'AGE
Two "on"e1#s$
1. 3ervices one person renders to the owner
of a ship or goods, by his own labor, preserving
the goods or the ship which the owner or those
entrusted with the care of them have either
abandoned in distress at sea, or are unable to
protect or secure.
2. Compensation allowed to persons by whose
voluntary assistance a ship at sea or her cargo
or both have been saved in whole or in part
from impending sea peril, or such property
recovered from actual peril or loss, as in cases
of shipwrec5, derelict or recapture.
Re9/s#es$
1. Ealid object of salvage<
2. 6bject must have been e7posed to
marine peril "not perils of the ship#<
. 3ervices rendered voluntarily "neither
an e7isting duty nor out of a pre*
e7isting contract#<
$. 3ervices are successful, total or partial.
S/<Me"#s of Sal-age$
1. 3hip itself<
2. Betsam P goods which are cast into the sea,
and there sin5 and remain under water<
. !loatsam or !lotsam P goods which Noat upon
the sea when cast overboard<
$. %igan or %agan P goods cast into the sea tied
to a buoy, so that they may be found again by
the owners (p.$.D, *ud,e ;ia>&.
Pe&sons w%o %a-e no &g%# #o a &ewa&d
fo& sal-age@
1. Crew of the vessel saved<
2. Person who commenced 3alvage in spite of
opposition of the Captain or his representative<
. +n accordance with 3ec. of the 3alvage
%aw, a person who fails to deliver a salvaged
vessel or cargo to the Collector of Customs.
Derelict P a ship or her cargo which is
abandoned and deserted at sea by those who
are in charge of it, without any hope of
recovering it, or without any intention of
returning to it.
>he intention of those in charge must be
ascertained. +f those in charge left with the
intention of returning, or of procuring
assistance, the property is not derelict, but if
they Guitted the property with the intention of
,nally leaving it, it is derelict and a change of
their intention and an attempt to return will not
change its nature "Arlanger M Galinger vs.
3wedish Aast Asiatic Co. %td.#.
+f it is clear that the intention to return is
slight, the salvage which was done thereafter is
considered valid. (Notes and Cases on the Law
on Transportation and Public Utilities, Aquino, T.
& ernando, R.P. !""# ed. p. 0$0&
CONTRACT OF TOWAGE
A contract whereby one vessel, usually
motori0ed, pulls another, whether loaded or not
with merchandise, from one place to another,
for a compensation. +t is a contract for services
rather than a contract of carriage.
SAL'AGE TOWAGE
Governed by special
law "Act /o. 2111#
Governed by Civil
Code on contract of
lease
4eGuires success,
otherwise no
payment
3uccess is not
reGuired
Dust be done with
the consent of the
captain'crewmen
6nly the consent of
the tugboat owner
is needed
Eessel must be
involved in an
accident
Eessel need not be
involved in an
accident
!ees distributed
among crewmen
!ees belong to the
tugboat owner
%aws#<
)=
R7LES ON SAL'AGE REWARD
1. >he reward is ,7ed by the 4>C judge in the
absence of agreement or where the latter
is e7cessive. "3ec. ;#
2. >he reward should constitute a su9cient
compensation for the outlay and e-ort of
the salvors and should be liberal enough to
o-er an inducement to others to render
services in similar emergencies in the
future.
. +f sold "no claim being made within
months from publication#, the proceeds,
after deducting e7penses and the salvage
claim, shall go to the owner< if the latter
does not claim it within years, (:S of the
said proceeds shall go to the salvors, who
shall divide it eGuitably, and the other half
to the government. "3ecs. 11*12#
$. +f a vessel is the salvor, the reward shall be
distributed as follows@
a. (:S to the shipowner<
b. 2(S to the captain< and
c. 2(S to the o9cers and crew in
proportion to their salaries. "3ec. 1#
>a5ing passengers from a sin5ing ship,
without rendering any service in rescuing the
vessel, is not a salvage service, being a duty of
humanity and not for reward.
'I* P7BLIC SER'ICE ACT
.C*A* No* 1;52
P7RPOSES$
1. >o secure adeGuate, sustained service
for the public at the least possible
cost<
2. >o protect the public against
unreasonable charges and poor,
ine9cient service<
. >o protect and secure investments in
public services<
$. >o prevent ruinous competition.
A7T(ORITY TO OPERATE P7BLIC SER'ICES
56N6RAL RUL6: /o public service shall
operate without having been issued a
certi,cate of public convenience or a certi,cate
of public convenience and necessity.
67C6PT81N':
1. &arehouses<
2. Animal drawn vehicles and bancas
moved by oar or sail<
. Airships, e7cept for the ,7ing of
ma7imum rates for fare and freight<
$. 4adio companies, e7cept for rates
,7ing<
(. Public services owned or operated by
the government, e7cept as to rates
,7ing<
1. +ce plants< and
.. Public mar5ets.

P7BLIC SER'ICE
A person who owns, operates, manages or
controls 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 or public utility, ice plants,
power and water supplies, communication and
similar public services. "3ec. 1b, CA 1$1#
A casual or incidental service devoid of public
character and interest is not brought within the
category. >he Guestion depends on such factors
as the e7tent of services, whether such person
or company has held himself or itself out as
ready to serve the public or a portion of the
public generally. "%u0on 3tevedoring vs. P3C#
NOTE@ >he Public 3ervice Commission created
under the Public 3ervice %aw has already been
abolished under P.). /o. 1 and other issuances.
+t has been replaced by the following
government agencies@ %>6< %>!4=< A>6< =6A<
/>C< /AA< A4=< /&4C< CA=< and D+A.
CERTIFICATE OF
P7BLIC
CON'ENIENCE
.CPC2
CERTIFICATE OF
P7BLIC
CON'ENIENCE
AND NECESSITY
.CPCN2
An authori0ation
issued by the
appropriate
government agency
for the operation of
public services for
which no franchise,
either municipal or
legislative, is
reGuired by law,
e.g., common
carriers.
An authori0ation
issued by the
appropriate
government agency
for the operation of
public service for
which a prior
franchise is reGuired
by law< e.g.
telephone and other
services.
A CPC or a CPC/ constitutes neither a
franchise nor a contract, confers no property
right, and is a mere license or a privilege. >he
holder of said certi,cate does not acGuire a
property right in the route covered thereby. /or
does it confer upon the holder any proprietary
right or interest or franchise in the public
highways. 4evocation of this certi,cate
deprives him of no vested right. /ew and
additional burdens, alteration of the certi,cate,
or even revocation or annulment thereof is
reserved to the 3tate. "%uGue vs. Eillegas, :
3C4A $:2#
+t is a KpropertyL and has a considerable
value and can be the subject of sale or
%aws#<
)5
attachment. "Cogeo*Cubao 6perators and
)rivers Assn. vs. CA, 2:. 3C4A $, 4aymundo
vs. %uneta Dotor Co.#
RE67REMENTS FOR GRANTING CPC OR
CPCN
1. Applicant must be a citi0en of the
Philippines or a corporation or entity 1:S
of the capital of which is owned by such
citi0ens<
2. Applicant must prove public necessity<
. Applicant must prove that the operation of
the public service proposed and the
authori0ation to do business will promote
the public interest on a proper and suitable
manner<
$. Applicant must have su9cient ,nancial
capability to underta5e the proposed
services and meeting the responsibilities
incident to its operation.
POWERS
RE67IRING
PRIOR NOTICE
AND (EARING
POWERS
E8ERCISABLE
WIT(O7T PRIOR
NOTICE AND
(EARING
1. +ssuance of
CPC or CPC/<
2. !i7ing of rates,
tolls, and charges<
. 3etting up of
standards and
classi,cations<
$. Astablishment
of rules to secure
accuracy of all
meters and all
measuring
appliances<
(. +ssuance of
orders reGuiring
establishment or
maintenance of
e7tension of
facilities<
1. 4evocation, or
modi,cation of CPC
or CPC/<
.. 3uspension of
CPC or CPC/,
e7cept when it is
necessary to avoid
serious and
irreparable damage
or inconvenience
to the public or
private interest, in
which case, a
suspension not
more than : days
may be ordered,
prior to the
1. +nvestigation
any matter
concerning public
service<
2. 4eGuiring
operators to furnish
safe, adeGuate, and
proper service<
. 4eGuiring public
services to pay
e7penses of
investigation<
$. Ealuation of
properties of public
utilities<
(. A7amination
and test of
measuring
appliances<
1. Grant of special
permits to ma5e
e7tra or special trips
in territories
speci,ed in the
certi,cate<
.. 8niform
accounting system
and furnishing of
annual reports<
2. Compelling
compliance with the
laws and
regulations.
hearing. "3oriano v.
Dedina, 11$ 3C4A
1#
7NLAWF7L ACTS OF P7BLIC 7TILITY
COMPANIES
1. Angagement in public service business
without ,rst securing the proper certi,cate<
2. Providing or maintaining unsafe, improper
or inadeGuate service as determined by the
proper authority<
. Committing any act of unreasonable and
unjust preferential treatment to any
particular person, corporation or entity as
determined by the proper authority<
$. 4efusing or neglecting to carry public mail
upon reGuest. "3ecs. 12 and 1;#
ACTS RE67IRING PRIOR APPRO'AL
1. Astablish and maintain individual or joint
rates<
2. Astablish and operate new units<
. +ssue free tic5ets<
$. +ssue any stoc5 or stoc5 certi,cates
representing an increase of capital<
(. Capitali0e any franchise in e7cess of the
amount actually paid to the Government<
1. 3ell, alienate, mortgage or lease property,
certi,cates or franchise.
8nder 3ec. 2:"g# of C.A. /o. 1$1, the sale,
etc. may be negotiated and completed before
the approval by the proper authority. +ts
approval is not a condition precedent to the
validity of the contract. >he approval is
necessary only to protect public interest.
PRIOR OPERATOR/OLD OPERATOR R7LE
>he rule allowing an e7isting franchised
operator to invo5e a preferential right within the
authori0ed territory as long as he renders
satisfactory and economical service.
>he policy is not to issue a certi,cate to a
second operator to cover the same ,eld and in
competition with a ,rst operator who is
rendering su9cient, adeGuate and satisfactory
service. >he prior operator must ,rst be given
an opportunity to improve its service, if
inadeGuate or de,cient.
Purpose@ >o prevent ruinous and wasteful
competition in order that the interests of the
public would be conserved and preserved.
+t subordinates the prior applicant rule which
gives the ,rst applicant priority only if things
and circumstances are eGual.
&here the operator either fails or neglects to
ma5e the improvement or e-ect the increase in
services, especially when given the opportunity,
new operators should be given the chance to
give the services needed by the public.
%aws#<
)3
PRIOR APPLICANT R7LE
Presupposes a situation when two interested
persons apply for a certi,cate to operate a
public utility in the same community over which
no person has as yet granted any certi,cate. +f
it turns out, after the hearing, that the
circumstances between the two applicants are
more or less eGual, then the applicant who
applied ahead of the other, will be granted the
certi,cate.
RATE,FI8ING POWER
>he rate to be ,7ed 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 reGuirements@
1. 6ne which yields to the carrier a fair
return upon the value of the property
employed in performing the service<
and
2. 6ne which is fair to the public for the
service rendered.
REGISTERED OWNER R7LE
>he registered owner of a certi,cate of public
convenience is liable to the public for the
injuries or damages su-ered by third persons
caused by the operation of said vehicle, even
though the same had been transferred to a
third person.
>he registered owner is not allowed to
escape responsibility by proving that a third
person is the actual and real owner Reason@ +t
would be easy for him, by collusion with others
or otherwise, to transfer the responsibility to an
inde,nite person, or to one who possesses no
property with which to respond ,nancially for
the damage or injury done. "Are0o, et al. vs.
Bepte 1:2 Phil 1:#.
?ABIT SYSTEM
A system whereby a person who has been
granted a certi,cate of public convenience
allows other persons who own motor vehicles to
operate under such license, for a fee or
percentage of such earnings. +t is void and
ine7istent under Art. 1$:;, Civil Code.
ECe"#s$
1. >he 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, 1($
3C4A 22#
2. >he registered owner is primarily liable for
all the conseGuences Nowing from the
operations of the carrier.
>he public has the right to assume that
the registered owner is the actual or lawful
owner thereof. +t would be very di9cult and
often impossible, as a practical matter, for
the public to enforce their rights of action
that they may have for injuries inNicted by
the vehicle i) the4 should be required to
pro/e who the actual owner is. "=enedicto
vs. +AC, 12. 3C4A ($.#
. >he thrust of the law in enjoining the 5abit
system is to identify the person upon whom
responsibility may be ,7ed with the end in
view of protecting the riding public "%im vs.
CA . 3C4A ;$#.
$. >he registered owner cannot recover from
the actual owner and the latter cannot
obtain transfer of the vehicle to himself,
both being in pari delicto. ">eja Dar5eting
vs. +AC#
(. !or the better protection of the public, both
the registered owner and the actual owner
are jointly and severally liable with the
driver. "Oamboanga >ransportation Co. vs.
CA#
%aws#<

San Beda College of Law: 1 M A C L

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