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TRANSPORTATION LAW REVIEWER GOVERNING LAWS 1. 2. Coastwise shipping: a. New Civil Code (NCC)- primary law b.

Code of Commerce (CoC)- suppletory law in the absence of NCC provisions Foreign Ports to Philippine Ports a. NCC- primary law b. CoC- all matters not regulated by the NCC c. Carriage of Goods by Sea Act (COGSA)- suppletorily to the NCC. Philippine Ports to Foreign Ports a. Laws of the country of destination Overland Transportation a. NCC- primary law b. CoC- suppletory law Air Transporation a. NCC b. CoC c. International carriage i. Warsaw Convention ii. When there is international transportation: 1. Place of departure and place of destination are within the territories of two contracting countries 2. Place of departure and place of destination are in the same country but there is an agreed stopping place that is a different country. COMMON CARRIERS IN GENERAL Common Carriers- are persons corporations, firms, associations engaged in the business of carrying or transporting passengers or goods, or both, by land, water, or air, for compensation, offering their services to the public. (1732) TEST for determining whether a party is a common carrier of goods is: 1. Engaged in the business of carrying goods for others as a public employment; 2. Must hold himself out as ready to engaged in the transportation of goods or persons generally as a business and NOT as a casual occupation; 3. Must undertake to carry goods of the kind to which his business is confined; 4. Must undertake to carry by the method by which his business is conducted and over his established roads; 5. The transportation must be for hire Note: The CC makes NO distinction between: 1. one whose principal business activity is the carrying of person or goods or both, and one who does such carrying only as ancillary activity (a sideline). 2. a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. 3. a carrier offering its services to the general public, i.e, the general community or population and one who offers services or solicits business only from a narrow segment of the general population. DILIGENCE REQUIRED OF COMMON CARRIERS IN GENERAL General Rule: Common Carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case (1733). CASES ON DILIGENCE OF A COMMON CARRIER IN GENERAL Republic vs. Lorenzo Shipping: the surrender of the original bill of lading is not a condition precedent for a common carrier to be discharged of its contractual obligation. If surrender of the original bill of lading is not possible, acknowledgment of the delivery receipt suffices. Central Shipping Company vs. Insurance Company of North America: The weather condition encountered by petitioners vessel was not a storm or a natural disaster comprehended by law. Given the known weather

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condition prevailing during the voyage, the manner of stowage employed by the carrier was insufficient to secure the cargo from the rolling action of the sea. The carrier took a calculated risk in improperly securing the cargo. Having lost that risk, it cannot now disclaim any liability for the loss. Sweet Lines, Inc. vs. CA: Mechanical defects in a common carrier are NOT considered fortuitous events. Even if mechanical trouble were to be considered as a caso fortuito, a boat is not justified in by-passing a port of call after the trouble had been fixed. Eastern Shipping Lines Inc, vs. CA: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. Since it is the duty of the arrastre to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the carrier. Both the arrastre and the carrier are therefore charged with the obligation to deliver the goods in good condition to the consignee. This is not to say however that the arrastre operator and is always solidarily liable with the carrier or vice versa. The liability of both will depend on the attendant facts. La Mallorca vs. CA: It cannot be said that the carriers agent had exercised utmost diligence of a very cautious person required by the CC to be observed by a common carrier in the discharge of its obligations to transport safely its passengers. The driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal to go and while the latter was still unloading part of the baggage of the passengers. The presence of said passengers near the bus was not unreasonable and they are therefore to be considered still passengers of the carrier, entitled to protection under their contract of carriage. Brinas vs. People: It was negligence on the conductors part to announce the next flag stop when said stop was till a full 3 minutes away. The proximate cause of the death of the victims was the premature and erroneous announcement of the petitioner. Action of petitioners of going near the trains exit door on announcement of a flagstop while train still moving is at most merely contributory. Fortune Express, Inc. vs. CA: The seizure of a passenger bus by armed men makes the common carrier liable because there was already a report from the police that a certain group will attack the buses and the carrier did not take steps to safeguard the lives and properties of its passengers. VIGILANCE OVER GOODS General Rule: Common Carriers are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed, or deteriorated. Exceptions (exclusive): 1. Proof that they observed extraordinary diligence 2. Flood, storm, earthquake, lightning, or other natural disaster or calamity 3. Act of the public enemy in war, whether international or civil 4. Act of omission of the shipper or owner of the goods 5. Character of the goods or defects in the packing or in the containers 6. Order or act of competent public authority (1734) NOTE: These exceptions apply ONLY TO GOODS. In the transport of passengers, different rules apply. Queries: 1. Does highjacking fall under the exceptions? No. the common carrier is presumed to be at fault or to have acted negligently unless there is a proof of extraordinary diligence on the part of the carrier. 2. What about robbery attended by grave irresistible threat, violence or force? Yes. The carrier is not liable. (De Guzman vs. CA) BUT to invoke the exceptions, it must be shown that: 1. The exception must have been the proximate and only cause of the loss. 2. The common carrier must have exercised due diligence to prevent or minimize loss before, during, and after the occurrence of the natural disaster or an act of the public enemy. (1739) 3. The common carrier has not negligently incurred in delay in transporting the goods. (1740) In short: PEN 1. Only proximate cause

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Exercise of due diligence before, during, and after No delay

In the above enumerated exceptions, other natural disasters and calamities are otherwise known as fortuitous events. The requisites are: 1. The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. 2. It must be impossible to foresee the event which constitutes caso fortuito, or if it can be foreseen, it must be impossible to avoid. 3. The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner 4. The obligor must be free from any participation in or the aggravation of the injury resulting to the creditor. In short: 1. Independent of human will 2. Impossible to foresee, or if foreseen impossible to avoid 3. Renders impossible the fulfillment of the obligation 4. No participation or aggravation on the part of the obligor When does the extraordinary responsibility of the carrier start and end? 1. starts from: time unconditionally placed in the possession and received by the carrier. 2. ends on: actual or constructive delivery by the carrier to the consignee or the person bound to receive it. (1736) Effect if goods are stored at carriers warehouse upon arrival: the extraordinary liability of the common carrier continues until: 1. consignee is advised of the arrival of the goods; and 2. had a reasonable opportunity thereafter to remove or dispose them (1738) Thus: the common carrier must still observe extraordinary diligence even when the goods are temporarily unloaded or stored in transit unless the shipper or owner has made use of the right of stoppage in transits. (1737) Is the carrier bound to exercise due diligence even if the loss, destruction, or deterioration is caused by the character of the goods, faulty nature of the packing or of the containers? Yes, in order to forestall or lessen the loss. (1742) RULES ON REDUCTION OF DILIGENCE & LIMITING LIABILITY (GOODS) Generally, in the carriage of goods, stipulations limiting the liability of the common carrier to a degree less than extraordinary diligence are valid, provided: 1. it is in writing 2. supported by a valuable consideration other than the service rendered by the common carrier 3. reasonable, just, not contrary to public policy Can such a stipulation be availed of any time? No. The valid stipulation limiting the liability of a carrier cannot be availed of when without just cause 1. there was delay or 2. a change in the stipulated or usual route (1747). Discussion: 1. the rules on reduction of diligence is different in the carriage of goods and the carriage of passengers. In the former, a reduction is allowed, in the latter, it is absolutely prohibited. 2. However, the reduction allowed in the carriage of goods is limited: a. It cannot be stipulated that the carrier will exercise no diligence at all; or b. It cannot be stipulated that the carrier will exercise diligence less than the diligence of a good father. 3. But even if there is a stipulation limiting the carriers liability (carriage of goods), in case of loss, the carrier is still presumed to have been negligent. (1752) 4. An agreement limiting the carriers liability may be annulled by the shipper/owner if the carrier refuses to carry the goods unless the shipper/owner agrees to such a stipulation. (1746) Examples of valid stipulations:

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limiting the carriers liability for delay on account of strikes or riots. (1748) limiting the carriers liability to the value of the goods on the bill of lading UNLESS the shipper/owner declares a greater value. (1749) contract fixing the sum that may be recovered as long as it is reasonable, just, and freely agreed upon. (1750)

The following are VOID for being unreasonable, unjust and contrary to public policy: 1. Goods are transported at the risk of the owner/shipper 2. Carrier incurs NO liability whatsoever for any loss, destruction, deterioration 3. Carrier need not observe ANY diligence in the custody of goods 4. Carrier shall exercise a degree of diligence less than that of a good father of a family 5. Carrier shall not be responsible for the acts or omissions of his employees 6. Carriers liability for acts committed by thieves, or of robbers who do no tact with grave or irresistible threat, violence or force, is dispensed with or diminished 7. Carrier is not responsible for the loss on account of the defective condition of the equipment/ transportation used in the contract of carriage. COGSA: 1. This only applies when the goods are shipped from a foreign port to the Philippines 2. When the goods are shipped from the Philippines to a foreign port, the liability of the carrier in case of loss shall be governed by the laws of the country where the goods are to be transported. (1753) 3. The carriers liability is limited to US$ 500 per package in the absence of a shippers declaration of a higher value in the bill of lading. a. If the goods are shipped in cartons, each carton is considered a package even if they are stored in container vans. b. Belgian Overseas Chartering vs. Philippine First Insurance Co.: 242 coils of steel sheets were shipped in several containers. The SC ruled that each coil sheet is considered a package. 4. The conditions is part of the bill of lading even if not expressly stated RULES ON PASSENGERS BAGGAGES The law makes no distinction between a baggage in possession of the passenger and one that is with the carrier. 1. Baggage in the custody of the passengers or their employee a. The common carrier shall be responsible for the baggage as depositaries, provided: i. Notice was given to the CC ii. Passenger took necessary precaution advised by the CC b. In case of loss due to the passengers fault: the CC has no liability (Note: the act of a thief or robber, who has entered the common carriers vehicle is not deemed force majeure, unless it is done with the use of arms or through an irresistible force) 2. Baggage in the custody of the carrier a. CC is required to observe extraordinary diligence. If lost, the CC is presumed negligent. Applicability to passengers baggage: the common carrier provisions in the civil code will apply ONLY to those which are not in the personal custody of the passenger. (1754) CASES ON VIGILANCE OVER GOODS Gacal vs. PAL: The requisites of caso fortuito are the following: 1. cause of the breach must be independent of the human will 2. event must be either unforeseeable or unavoidable 3. event must be as such to render impossible the fulfillment of the obligation in a normal manner 4. debtor must be free from any participation in, or aggravation of the injury. In this case, PAL could have foreseen the skyjacking incident and could have avoided it but the incident occurred where there was a military takeover of airport security handling the security. A Clear case of no. 3 above. Compania Maritima vs. CA: Respondents act of furnishing petitioner with an inaccurate weight of the payloader upon being asked by petitioners collectr, canno be used by said petitioner as an excuse to avoid liability for the damage caused, as the same could have been avoided had petitioner utilized the jumbo lifting apparatus which has a capacity to lift 20-25 tons. The fact is that petitioner used a 5-ton capacity lifting apparatus to life and unload a visibly heavy cargo like a payloader.

Servando vs. Philippine Steam Navigation Co.: The burning of the customs warehouse owned by the government was an extraordinary even which happened independently of the will of respondent. The latter could not have foreseen the event. Hence, this is a case of caso fortuito. DSR Lines vs. Federal Phoenix: Fire is not one of those enumerated under 1734 which exempts a carrier from liability for loss or destruction of the cargo. Edgar Cokaliong Shipping Lines, Inc. vs. UCPB: Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been caused by force majeure. Broadly speaking, force majeure applies to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a public enemy. Hence, fire is not considered a natural disaster or calamity. Southern Lines, Inc.vs. CA: the carrier, knowing the fact of improper packing of the goods upon ordinary observation, still accepts the goods notwithstanding such condition, is not relieved of liability or loss or injury resulting therefrom. SAFETY OF PASSENGERS General Rule: a common carrier is bound to carry the passenger safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. (1755) Therefore: in case of death or injury to the passenger, the common carrier is presumed to be at fault or have acted negligently. The only exception: unless they prove that they observed extraordinary diligence as prescribed by the code. (1756) The general rule is that the death of or injury caused to a passenger makes the common carrier liable unless they prove that they exercised extraordinary diligence. Note however, the diligence required in the transport of passengers is of utmost diligence of very cautious persons. It may be inferred, that in the transportation of passengers, a higher degree of diligence (that is, higher than extraordinary diligence) is required. When does utmost diligence required in the carriage of passengers start and end? 1. Start: the moment the person who purchases the ticket from the carrier presents himself at the proper place and in a proper manner to be transported with a bona fide intention to use the facilities of the carrier. (Jesusa Vda. De Nueca, et al. vs. The Manila Railroad Company) 2. End: until the passenger has, after reaching his destination, safely alighted from the carriers conveyance or has had a reasonable opportunity to leave the carriers premises. 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 is determined from taking all the circumstances into consideration. (Aboitiz Shipping vs. CA) RULES ON REDUCTION OF DILIGENCE (PASSENGERS) Absolute Rule: NOT ALLOWED. The responsibility of the carrier cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise. (1757) In other words: in the carriage of passengers, the common carrier is absolutely prohibited to reduce the diligence it is required by law to exercise. RULES ON LIMITING THE LIABILITY Note: In carriage of passengers, reducing the diligence required is not the same as limiting the liability of the carrier. Liability is what is imputable to the carrier for any damage caused to the passenger. When may it be limited in the carriage of passengers? When a passenger is carried gratuitously. A stipulation limiting the liability of the carrier is valid. However, if the carrier acted willfully or with gross negligence, the carriers liability will not be limited. Does the reduction of fare justify any limitation of the common carriers liability? No. (1758)

RULES ON EMPLOYEES OF A CARRIER General Rule: Carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the carriers employees, even if: 1. they acted beyond the scope of their authority; or 2. violated the orders of the common carrier; or 3. carrier shows proof that they exercised all the diligence of a good father in the selection and supervision of their employees. (1759) But: the passenger must exercise the diligence of a good father to avoid injury to himself (1761). Therefore, if the passenger did not exercise such diligence, that is, there was contributory negligence on his part, the amount recoverable shall be reduced (1762). Note: this liability CANNOT be limited or eliminated, even if it is stipulated, posted etc. (1760) Off duty employees: the carrier shall not be liable for their acts. However, the rule on strangers shall apply to them. RULE ON CO-PASSENGERS & STRANGERS General Rule: If the injuries suffered by a passenger are due to the willful acts or negligence of a co-passenger or a stranger, the common carrier is liable. Except: If the common carriers employees exercised the diligence of a good father in preventing or stopping such act or omission. (1763) CASES ON THE SAFETY OF PASSENGERS Dangwa Transportation Co. vs. CA: It is the duty of carriers of passengers to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances. Pilapil vs. CA: A tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for which a common carrier is held responsible is the negligent omission by the carriers employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. La Mallorca: A passenger alighted from the bus, upon realizing that he left his baggage inside, he ran to the bus, steps on the running board. Meanwhile, the bus moved although the conductor had not yet signaled the driver to start off. The bus hit the passengers child, who unbeknownst to him followed him to the bus. The SC ruled that there was breach of extraordinary diligence because the presence of passengers near the bus was not unreasonable and they were, therefore, to be considered still as passengers of the carrier, entitled to the protection of their contract. Aboitiz Shipping Corporation vs. CA: Carrier-passenger relationship continues until the passenger has been landed at the port of destination and has left the vessel-owners premises. Reasonableness of time should be made to depend on the attending circumstances, such as the kind of common carrier. The victims presence in the petitioners premises after the lapse of one hour from the time he disembarked from the vessel is justified, hence he is deemed still a passenger when the accident occurred. Batangas Laguna Tayabas vs. IAC: In an action based on a contract of carriage, the court need not make an express finding of fault or negligence on the part of the carrier in order to hold in responsible for the payment of the damages sought by the passenger. For the defense of force majeure to prosper, the accident must be due to natural causes and absolutely without human intervention. Sarreal, Sr. vs. JAL: It is standard procedure for any passenger with a two day stop over in a foreign city to confirm the validity of his ticket and the availability of a seat on his next flight out of that city. Vasquez vs. CA: There is no caso fortuito where a ship captain proceeded en route despite a typhoon advice close to the area where vessel will pass.

Gatchalian vs. Delim: The driver did not stop to check if anything had gone wrong with the bus. Moreover, the drivers reply necessarily indicated that the same snapping sound had been heard in the bus on previous occasions. This could only mean that the bus had not been checked to determine what was causing the sound. The continued failure of respondent to look after the roadworthiness and safety of the bus, coupled with the drivers refusal or neglect to stop it to check the sound constitutes wanton disregard of the physical safety of the passengers (gross negligence). Juntilla vs. Fontanar: While it may be true that the tire that blew up was still good because the grooves of the tire were still visible, this fact alone does not make the explosion of the tire a fortuitous event. No evidence was presented to show that the accident was due to adverse road conditions or that precautions were taken by the jeepney driver to compensate for any conditions liable to cause accidents. The sudden blowing-up, therefore, could have been caused by too much air pressure injected into the tire coupled by the fact that the jeepney was overloaded and speeding at the time of the accident. Necesito vs. Paras: The steering knuckle failure is not a fortuitous event. Periodical visual inspection of the steering knuckle as practiced by carriers agents did not measure up to the required standard of utmost diligence of very cautious persons-as far as human care and foresight can provide. COMMON PROVISIONS In all matters not regulated by the CC, the rights and obligations of common carriers shall be governed by the Code of Commerce and special laws. (1766) COMMENTS AND CASES ON THE LIABILITY OF COMMON CARRIERS A. Liability of Successive Carriers CoC 373: The second carrier shall assume the obligations of the first carrier but the second carrier has a right of action against the first carrier, if the latter is directly responsible for the fault giving rise to the claim of the shipper or consignee. KLM vs. CA: KLM was chargeable with the duty and responsibility of specifically informing the respondents of conditions prescribed in their tickets or, in the very least, to ascertain that the respondents read them before they accepted their passage thickets. The passage tickets of the respondents provide that the carriage to be performed thereunder by several successive carriers is to be regarded as a single operation. The respondents dealt exclusively with KLM which issued them tickets for their entire trip and which in effect guaranteed to them that they would have sure space on the Aer Lingus flight. The respondents, under the assurance of the internationally prestigious KLM, naturally had the right to expect that their tickets would be honored by Aer Lingus to which, in the legal sense, the KLM had indorsed and in effect guaranteed the performance of its principal engagement to carry out the respondents scheduled itinerary previously and mutually agreed upon between the parties. KLM vs. CA: An airline ticket providing that carriage of successive air carriers is to be regarded as a single operation is to make the insurer-carrier liable for the tortuous conduct of the other carrier. A printed provision in the ticket limiting liability only to its own conduct is not enough to rebut that liability. Ortigas vs. Lufthansa: It has been proven that under the so-called pool arrangement among different airline companies pursuant to the IATA agreement of which Alitalia and Lufthansa are signatories, both companies are constituted thereby as agents of each other in the issuing of tickets and other matters pertaining to their relations with those who would need their services, and since there can be no question that on its face, the annotations made by Alitalia on the ticket here in dispute cannot have any other meaning that the reservation of Ortigas for the Rome-HK flight was validated and confirmed, Lufthansas disclaimer is unavailing. China Airlines vs. Chiok: A common carrier has a peculiar relationship with an exacting responsibility to its passengers. For reasons of public interest and policy, the ticket-issuing airline acts as principal in a contract of carriage and is thus liable for the acts and the omissions of any errant carrier to which it may have endorsed any sector of the entire, continuous, trip. B. Liability of Arrastre and Carrier Firemans Fund Insurance vs. Metro Port Service: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. Since it is the duty of the arrastre to

take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the carrier. Both the arrastre and the carrier are therefore charged with the obligation to deliver the goods in good condition to the consignee. Summa Insurance Corporation vs. CA: The relationship between the consignee and the arrastre operator must be examined. This relationship is much akin to that existing between a depositor and a warehouseman. In the performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman. Being the custodian of the goods discharged from a vessel, an arrastres duty is to take good care of the goods and to turn them over to the party entitled to their possession. Consignee = depositor Arrastre = warehouseman Consignee = depositor Common carrier = warehouseman Arrastre and the common carrier are solidarily liable C. Registered Owner Rule and Kabit System Equitable Leasing Corporation vs. Sayon: The rule in this jurisdiction is that the person who is the registered owner of a vehicle is liable for any damages caused by the negligent operation of the vehicle although the same was already sold or conveyed to another person at the time of the accident. The registered owner is liable to the injured party subject to his right or recourse against the transferee or the buyer. BA Finance vs. CA: The registered owner is also liable even if the vehicle was leased to another person. Duavit vs. CA: the reistered owner is not liable if the vehicle was taken from his garage without his knowledge and consent. Abelardo Lim et al. vs. CA: The registered owner rule is applicable whenever the persons involved are engaged in what is knows as the kabit system. The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to perate them under his license, sometimes for a fee or percentage of the earnings. Although the parties to such a agreement are not outrightly penalized by law, the kabit system is invariably recognized as being contrary to public policy and therefore void and inexistent under the law. Jereos vs. CA: Actual owner of passenger jeep solidarily liable with registered owner in a civil action based on quasi-delict. The registered owner or operator has the right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused. D. Limited Liability Rule Monarch Insurance vs. CA: The exclusive real and hypothecary nature of maritime law operates to limit the liability of the shipowner to the value of the vessel, earned freightage and proceeds of the insurance, if any. NO VESSEL, NO LIABILITY expresses in a nutshell the limited liability rule. The total destruction of the vessel extinguishes the martime lien as there is no longer any res to which it can attach. When is the limited liability rule applicable: 1. Civil liability for indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried. 2. Civil liability arising from collisions 3. Unpaid wages of the captain and the crew if the vessel and its cargo are totally lost by reason of capture or shipwreck When is the limited liability rule NOT applicable: WIFF 1. When the injury to or death of a passenger is due either to the fault of the shipowner, or to the concurring negligence of the shipowner and the captain; 2. When the vessel is insured (to the extent of the insurance proceeds); and 3. Workmens compensation claims 4. When the carrier failed to overcome the presumption of negligence (Monarch Insurance vs. CA) Aboitiz Shipping vs. General Accident Fire and Life Insurance: All claims should be collated before they can be satisfied from what remains of the insurance proceeds and freightage at the time of the loss. No claimant should

be given preference over the others by the simple expedience of having filed or completed its action earlier than the rest. Abandonment: shipowner or ship agent may exempt themselves from liability by abandoning the vessel with all her equipment and the freight it may have earned during the voyage. If there is insurance over the vessel, abandonment covers the insurance proceeds while the vessel itself shall be abandoned in favor of the insurer. REMEDIES CONCURRENT CAUSES OF ACTION The basis of a cause of action of a passenger or shipper against the common carrier is culpa contractual, while the basis of liability on the part of the driver is either culpa delictual or culpa aquiliana. The driver of the carrier, not being an agent but an employee, has no contractual relations with the passenger. However, the same act or omission may give rise to both causes of action. Tort may be a mode of breach. If the negligence of third persons concurs with the breach (as in the case where the passenger was injured because the carrier collided with another vehicle), the liability of the third person who was driving the vehicle and/ or his employer may be based on quasi-delict. The driver (third person) alone may be held criminally liable and civil liability may be imposed on him based on delict. In the latter case, the employer is subsidiarily liable. (To the reader: please double check the table below) Person Common carrier/employer of driver/ owner of occupied vehicle Driver of the occupied vehicle Third party driver Contract Delict or quasi-delict Delict or quasi-delict However, he alone may be held criminally liable and civil liability liability may be imposed on him based on delict. Subsidiarily liable if his driver is held criminally liable. Liability Comment

Third party drivers employer

Delict (limited) or quasi-delict

In case the negligence of the carriers driver and a third person concurs, the liability of the parties (carrier, his driver, and the third person) is joint and several. CODE OF COMMERCE PROVISIONS MARITIME COMMERCE 1. Collision a. Liabilities i. Doctrine of Inscrutable Fault: where fault is established but it cannot be determined which of the two vessels were at fault, both shall be deemed to have been at fault. ii. One vessel at fault: damages sustained or losses incurred iii. Both vessels were at fault: each shall suffer its own damages and both shall be solidarily liable to others. iv. Collision was due to force majeure of fortuitous event: each shall bear his own damage v. Both vessels collide without their fault but due to the fault of a third vessel: third vessel will be liable for losses and damages vi. Vessel properly anchored and moored collides into those nearby by reason of storm or other force majeure: the vessel run into shall suffer its own damage or expense b. Doctrine of Error in Extremis i. If a vessel having a right of way suddenly changes its course during the third zone to avoid an imminent collision due to the fault of another vessel, such act may be said to be done in extremis, and even if wrong cannot create responsibility on the part of said vessel with the right of way ii. Zones of collision 1. First zone- time up to the moment when risk of collision begins

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3. Arrival under stress a. The arrival of a vessel at the nearest and most convenient poort, if during the voyage the vessel cannot continue the trip to the port of destination due to: i. Lack of provisions ii. Well founded fear of seizure, privateers or pirates; and iii. By reason of any accident of the sea disabling it to navigate Persons involved in maritime commerce a. Shipowners and ship agents i. ship agent 1. entrusted with the provisioning and representing the vessel in the port in which it may be found. 2. Solidarily liable with the owner for such loss or damage subject to his right to claim reimbursement from the ship owner b. Captains and masters of the vessel i. roles 1. General agent of the shipowner 2. Commander and technical director of the vessel 3. Government representative of the country under whose flag he navigates ii. Grounds for discharge 1. Insubordination in serious matters 2. Robbery/theft 3. Habitual drunkenness 4. Damage caused to the vessel or cargo through manifest negligence or malice c. Officers and crew of the vessel d. Supercargoes i. Person who discharges administrative duties assigned to him by ship agent or shippers, keeping an account and record of transaction as required in the accounting book of the captain. e. Desertion: act by which a seaman deserts and abandons a ship or vessel before the expiration of his term of duty and without leave and without intention to return Averages a. General Average i. includes damages and expenses which are deliberately caused by the master of the vessel or upon his authority, in order to save the vessel, her cargo, or both at the same time from a real or known risk. It must be borne equally by all of the interests concerned in the venture. 1. Requisites: CN-BASS a. Common danger to vessel or cargo b. Part of the vessel or cargo was sacrificed deliberately c. Sacrifice must be for the common safety or benefit of all d. Made by the master or upon his authority e. Must have resulted in the successful saving of the vessel or cargo f. Must be necessary. ii. Formalities: they must be complied with for the distribution to prosper 1. Deliberation by the captain with other officers of the vessel 2. Hearing of all persons interested in the cargoes 3. Resolution of the captain 4. Resolution must contain the dissents and must be entered into the logbook 5. Must be signed as applicable 6. Minutes must also contain a detail of all the goods jettisoned and those injuries caused to those on board b. Particular Average i. includes all damages and expenses caused to the vessel or to her cargo which have not inured to the common benefit and profit of all person interested in the vessel and her cargo. It refers to those losses, which occur under such circumstances as do not entitle the unfortunate owners to receive contribution from other owners concerned in the venture as where a vessel accidentally runs aground and goes to pieces after the cargo is saved. Charter Party

Second zone- time between moment when risk of collision begins up to the moment it becomes practical certainty Third zone- time when collision is certain up to the time of impact





Is a contract by which the entire ship or some principal part thereof is let by the owner to another person for a specified period of time of use b. Types i. Contract of affreightment 1. Involves the use of shipping space leased by the owner in part or as a whole, to carry goods for others ii. Demise or bareboat 1. By the terms of which the whole vessel is let to the charterer which transfers to him its entire command and possession and consequent control over its navigation, including the master and crew who are his servants. 2. The charterer is treated as owner pro hac vice of the vessel. In such a case, a common carrier becomes a private carrier. Bill of Lading a. Written acknowledgment of receipt of goods and agreement to transport them to a specific place to a person named or to his order. i. Consignee and the shipper who accepts a bill of lading even without signing are bound by the terms and conditions thereof. ii. Acceptance of the consignee is implied if he claims reimbursement for missing goods and files a case based on the bill of lading b. Functions: i. Evidence of existence of K of carriage ii. Commercial document iii. Receipt of cargo c. Types i. on board- goods have been received on board the carrier vessel ii. received shipment- received for shipment; carrying vessel has not been specified Procedure and prescriptive period for claims a. Coastwise or within the Philippines i. When to file a claim with carrier (condition precedent to file a case in court) 1. Damage apparent- immediately 2. Damage not apparent- within 24 hours from delivery ii. When to file a case in court 1. No bill of lading issued- within 6 years 2. Bill of lading issued- within 10 years b. International carriage from foreign port to Philippines i. When to file claim with carrier (NOT a condition precedent to file a case in court) 1. Damage apparent- immediately 2. Damage not apparent- within 3 days from delivery ii. When to file a case in court 1. within 1 year from discharge c. Queries: i. Under the COGSA, a prescriptive period of one year is expressed. When does it start? It starts from the delivery of the goods or the date the goods should have been delivered. The period does not apply to conversions or misdeliveries. It starts from delivery to the arrastre operator NOT the consignee. A stipulation reducing the one year period is void, but a written agreement is valid and will suspend it. ii. Does the rule apply in collision cases? Yes. It doesnt however starts during the date of collision, but when the goods should be delivered. iii. Is it suspended by an extra-judicial demand? No. iv. Is the prescriptive period applicable to an insurer who is enforcing his right of subrogation? The insurere is also bound by the 1 year period. v. Is the period applicable in case of damage caused by delay or late delivery of goods? Damages arising from delay or late delivery is not the damage or loss contemplated under the COGSA. The goods are not actually lost or damaged. The applicable period is 10 years. Loans on bottomry and respondentia a. Bottomry: loan secured by the shipowner/ship agent, guaranteed by the vessel itself, and payable only upon arrival of vessel at destination. b. Respondentia: loan secured by the owner of the cargo payable upon safe arrival of cargo at destination. PUBLIC SERVICE ACT




The Public Service Commission (PSC) has been replaced by the following: a. Land Transportation Franchising Regulatory Board (LTFRB)- land transportation b. Martime Industry Authority (MARINA)- water transportation c. National Telecommunications Commission (NTC)- communication utilities d. Energy Regulatory Board- electric and power companies e. National Water Resources Council- water resources f. Civil Aeronautics Board- air transportation. 2. Requisites for a grant of a certificate of public convenience (and necessity): a. Grantee must be a citizen of the phliippines or a corporation or entity 60% of which is owned by such citizens b. Sufficient financial capability to undertake the service c. Service will promote public interest and convenience in a proper and suitable manner 3. Nature of CPC a. Is a mere license or a privilege. It is not a franchise nor a contract. It confers no vested or property right or interest in the holder. b. However, in its purely private aspect, it has value and may be considered property that can be levied upon 4. CPC vs. CPCN vs. legislative franchise a. CPC: is any authorization to operate public service issued by the PSC for whoic no franchise, either municipal or legislative, is required by law. b. CPCN: requires a franchise to be issued by the legislative department c. Legislative franchise: a grant or privilege from a sovereign power d. Query: is a legislative franchise necessary before a public utility can be allowed to secure a certificate of public convenience? IT DEPENDS. No, if there is no statute requiring the same, but yes if the pertinent law requires such legislative franchise. 5. Prior or old operator rule a. The first licensee will be protected in his investment and will not be subjected to ruinous competition. b. It is not a policy of the PSC to issue a CPC to a second operator when a prior operator is rendering sufficient, adequate and satisfactory service. 6. Grounds for revocation of certificate a. Violates or contumaciously refuses to comply to any order, rule, regulation of the commission b. Holder is a mere dummy c. Holder ceases operations or abandons service 7. Notice and hearing a. When required i. Issuance of CPC or CPCN ii. Fixing of standards and qualifications iii. Establishment of rules to secure accuracy of all meters and all measuring appliances iv. Order to compel operators to furnish proper service v. Allowing extension of facilities b. When not required i. Investigation of public utility companies (PUC) ii. Valuation of property of PUCs iii. Examination of measuring appliances iv. Grant of special permits to make extra or special trips in territories specified in the certificate v. Investigation of accidents vi. Comple compliance with rules and regulations 8. Regulation of rates a. The rates prescribed by the state must be one that yields a fair return on the public utility upon the value of the property performing the service and one that is reasonable to the public for the service rendered. b. Standard to be used: law requires that it be reasonable and just. This is the only standard. i. Factors to be considered 1. Rate of return 2. Rate base 3. Return itself or the computed revenue to be earned by the public utility based on the rate of return or rate base.



Query: can an administrative body that regulates a public utility grant a provisional rate increase without prior evidentiary hearing? Yes. They are merely temporary and subject to adjustment. Foreign Equity in Public Utilities a. Article XII, Section 11 of the Constitution: No franchise, certificate or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the law of the Philippines at least 60% of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character for a longer period than 50 years. b. Tatad vs. Garcia: the limit imposed by the constitution on foreign equity applies only to the OPERATION of a public utility and not to ownership of the facilities. The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. c. Ownership of the assets do not require 60% Filipino equity. --------ooo--------