Beda Memaid Transpo

54 2005 CENTRALIZED BAR OPERATIONS
TRANSPORTATION LAWS
CONTRACT OF TRANSPORTATION/ Industrial Corporation vs. CA)

CARRIAGE  One is a common carrier even if he
 A contract whereby a person, natural has no fixed and publicly known route,
or juridical, obligates to transport maintains no terminals, and issues no
persons, goods, or both, from one place tickets (Asia Lighterage Shipping, Inc. vs.
to another, by land, air or water, for a CA).
price or compensation.  Characteristics:
 Classifications: 1. Undertakes to carry for all people
1. Common or Private indifferently and thus is liable for
2. Goods or Passengers refusal without sufficient reason
3. For a fee (for hire) or Gratuitous (Lastimoso vs. Doliente, October
4. Land, Water/maritime, or Air 20, 1961);
5. Domestic/inter-island/coastwise 2. Cannot lawfully decline to accept a
or International/foreign particular class of goods for
 It is a relationship which is imbued carriage to the prejudice of the
with the public interest. traffic in these goods;
3. No monopoly is favored (Batangas
COMMON CARRIER Trans. vs. Orlanes, 52 PHIL 455);
 Persons, corporations, firms or 4. Provides public convenience.
associations engaged in the business of
carrying or transporting passengers or PRIVATE CARRIER
goods or both, by land, water, or air, for  One which, without being engaged in
compensation, offering their services to the business of carrying as a public
the public (Art. 1732, Civil Code). employment, undertakes to deliver
 Art. 1732 of the New Civil Code avoids goods or passengers for compensation.
any distinction between one whose (Home Insurance Co. vs. American
principal business activity is the carrying Steamship Agency, 23 SCRA 24)
of persons or goods or both and one who
does such carrying only as an ancillary  TESTS WHETHER CARRIER IS
activity (sideline). It also avoids a COMMON OR PRIVATE:
distinction between a person or  The SC in First Philippine Industrial
enterprise offering transportation Corporation vs. CA (1995) reiterated the
service on a regular or scheduled basis following tests:
and one offering such service on an 1. It must be engaged in the
occasional, episodic or unscheduled business of carrying goods for
basis. others as a public employment
Neither does the law distinguish and must hold itself out as ready
between a carrier offering its services to to engage in the transportation
the general public that is the general of goods generally as a business
community or population and one who and not as a casual occupation;
offers services or solicits business only 2. It must undertake to carry goods
from a narrow segment of the general of the kind to which its business
population. in confined;
A person or entity is a common 3. It must undertake to carry by the
carrier even if he did not secure a method by which his business is
Certificate of Public Convenience (De conducted and over its
Guzman vs. CA, 168 SCRA 612). established roads; and
 It makes no distinction as to the 4. The transportation must be for
means of transporting, as long as it is by hire.
land, water or air. It does not provide  In National Steel Corp. vs. CA (1997)
that the transportation should be by the SC held that the true test of a
motor vehicle. (First Philippine common carrier is the carriage of goods
2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND
SUBJECT CHAIRPERSONS
Maricel Abarentos (Over-all Chairperson), Ronald Jalmanzar (Over-all Vice Chair), Yolanda
Tolentino(VC-Acads), Jennifer Ang(VC- Secretariat), Joy Inductivo (VC-Finance), Elaine Masukat (VC-
EDP), Anna Margarita Eres (VC-Logistics) Jonathan
Mangundayao (Political Law), Francis Benedict Reotutar (Labor Law), Romuald Padilla (Civil Law),
Charmaine Torres (Taxation Law), Mark David Martinez (Criminal Law), Garny Luisa Alegre (Commercial
Law), Jinky Ann Uy (Remedial Law), Jackie Lou Bautista (Legal Ethics)
or passengers provided it has space for b. Air: Warsaw Convention

all who opt to avail themselves of its
transportation for a fee. I. NEW CIVIL CODE
(Arts. 1732-1766)
COMMON CARRIER PRIVATE REQUIREMENT OF EXTRAORDINARY

CARRIER DILIGENCE
1. As to availability  Rendition of service with the greatest
Holds himself out for Contracts with skill and utmost foresight. (Davao
all people particular individuals Stevedore Co. v. Fernandez)
indiscriminately or groups only  Rationale:
2. As to required diligence 1. From the nature of the business
Extraordinary Ordinary diligence is
and for reasons of public policy
diligence is required required
(Art. 1733)
3. As to regulation
Subject to State Not subject to State
2. Relationship of trust
regulation regulation 3. Business is impressed with a
4. Stipulation limiting liability special public duty
Parties may not agree Parties may limit the 4. Possession of the goods
on limiting the carrier’s liability, 5. Preciousness of human life
carrier’s liability provided it is not  A common carrier is not an absolute
except when contrary to law, insurer of all risks of travel.
provided by law morals or good
customs COVERAGE
5. Exempting circumstance 1. Vigilance over goods (Arts. 1734-
Prove extraordinary caso fortuito, Art. 1754); and
diligence and Art. 1174 NCC 2. Safety of passengers (Arts. 1755-
1733, NCC 1763).
6.Presumption of negligence
There is a No presumption of PASSENGER
presumption of fault or negligence  A person who has entered into a
fault or negligence contract of carriage, express or implied,
7.Governing law with the carrier. They are entitled to
Law on common Law on obligations extraordinary diligence from the
carriers and contracts common carrier.
 The following are not considered
GOVERNING LAWS passengers, and are entitled to ordinary
A. Domestic/inter-island/coastwise diligence only:
 Applicable to Land, Water, and Air a. One who has not yet boarded any
transportation part of a vehicle regardless of
1. Civil Code - primary whether or not he has purchased
2. Code of Commerce (Arts. 349, a ticket;
379, 573-734, 580, 806-845) - b. One who remains on a carrier for
suppletory an unreasonable length of time
after he has been afforded every
B. International/foreign/overseas safe opportunity to alight;
(Foreign country to Philippines) c. One who has boarded by fraud,
 Applicable to Water/maritime and Air stealth, or deceit;
transportation d. One who attempts to board a
 The law of the country of destination moving vehicle, although he has
generally applies. a ticket, unless the attempt be
1. Civil Code - primary with the knowledge and consent
2. Code of Commerce - suppletory of the carrier;
3. Others - suppletory e. One who has boarded a wrong
a. Water/maritime: Carriage of vehicle, has been properly
Goods by Sea Act (COGSA) informed of such fact, and on
San Beda College of Law
56
MEMORY AID IN COMMERCIAL LAW
alighting, is injured by the by the inherent defect/character of the

carrier; goods, the common carrier must exercise
f. Invited guests and due diligence to forestall or lessen the
accommodation passengers. loss. (Art. 1742)
(Lara vs. Valencia)  The carrier which, knowing the fact of
g. One who rides any part of the improper packing of the goods upon
vehicle which is unsuitable or ordinary observation, still accepts the
dangerous or which he knows is goods notwithstanding such condition, is
not designed or intended for not relieved of liability or loss or injury
passengers. resulting therefrom. (Southern Lines,
Inc. v. CA, 4 SCRA 258)
DEFENSES OF A COMMON CARRIER IN
THE CARRIAGE OF GOODS 5. ORDER OR ACT OF PUBLIC
1. CASO FORTUITO/FORCE MAJEURE AUTHORITY
 Requisites:  Said public authority must have the
a. Must be the proximate and only power to issue the order (Art. 1743).
cause of the loss Consequently, where the officer acts
b. Exercise of due diligence to without legal process, the common
prevent or minimize the loss before, carrier will be held liable. (Ganzon v. CA
during or after the occurrence of the 161 SCRA 646)
disaster (Art. 1739)  Diligence in the selection and
c. Carrier has not negligently supervision of employees under Article
incurred in delay in transporting the 2180 of the Civil Code cannot be
goods (Art. 1740) interposed as a defense by the common
 Fire is not considered a natural carrier because the liability of the
disaster or calamity as it arises almost carriers arises from the breach of the
invariably from some act of man. contract of carriage. The defense under
(Eastern Shipping Lines Inc. vs. IAC) said articles is applicable to negligence
 Mechanical defects are not force in quasi-delicts under Art. 2176. (Del
majeure if the same was discoverable by Prado v. Manila Electric Co., 52 Phil 900)
regular and adequate inspections. (Notes
and Cases on the Law on Transportation LIABILITY OF A COMMON CARRIER FOR
and Public Utilities, Aquino, T. & DEATH OR INJURIES TO PASSENGERS
Hernando, R.P. 2004 ed. p.120-122) DUE TO ACTS OF ITS EMPLOYEES AND
OTHER PASSENGERS OR STRANGERS
2. ACTS OF PUBLIC ENEMY
 Requisites: FOR ACTS OF
a. Must be the proximate and only FOR ACTS OF ITS OTHER
cause of the loss EMPLOYEES PASSENGERS OR
b. Exercise of due diligence to STRANGERS
prevent or minimize the loss before, Required diligence and defense
during or after the act causing the Extraordinary Ordinary diligence
loss, deterioration or destruction of diligence
the goods (Art. 1739) Nature of liability
Tort; however, Not absolute;
3. NEGLIGENCE OF THE SHIPPER OR The employee must limited by Art. 1763
OWNER be on duty at the
time of the act.
a. Sole and proximate cause:
(Maranan v. Perez)
absolute defense
b. Contributory: partial defense.
 The carrier is liable when its personnel
(Art. 1741)
allowed a passenger to drive the vehicle
causing it to collide with another vehicle
4. CHARACTER OF THE GOODS OR resulting to the injuries suffered by the other
DEFECTS IN THE PACKING OR IN THE passengers. (MRR vs. Ballesteros, 16 SCRA
CONTAINER 641)
 Even if the damage should be caused
COMMERCIAL LAW COMMITTEE

 CHAIRPERSON: Garny Luisa Alegre  ASST. CHAIRPERSON:Jayson O’S Ramos  EDP: Beatrix I. Ramos  SUBJECT HEADS:
Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario
(Transportation Laws);
Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John Lemuel
Gatdula (Banking Laws); Robespierre CU (Law on Intellectual Property)
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS
Parties
1. Common carrier 1. Common carrier
2. Shipper 2. Passenger
3. Consignee
Cause of liability
Delay in delivery, loss, destruction, or Death or injury to the passengers
deterioration of the goods
Duration of liability
From the time the goods are unconditionally The duty of a common carrier to provide safety
placed in the possession of, and received by the to its passengers so obligates it not only during
carrier for transportation until the same are the course of the trip, but for so long as the
delivered actually or constructively by the passengers are within its premises and where
carrier to the consignee or to the person who they ought to be in pursuance to the contract
has the right to receive them. (Art. 1736) of carriage. (LRTA v. Navidad, [2003])
 It remains in full force and effect even when  All persons who remain on the premises
they are temporarily unloaded or stored in within a reasonable time after leaving the
transit unless the shipper or owner has made conveyance are to be deemed passengers, and
use of the right of stoppage in transitu. (Art. what is a reasonable time or a reasonable
1737) delay within this rule is to be determined from
 It continues to be operative even during the all the circumstances, and includes a
time the goods are stored in a warehouse of the reasonable time to see after his baggage and
carrier at the place of destination until the prepare for his departure. (La Mallorca v. CA,
consignee has bee advised of the arrival of the 17 SCRA 739 ; Abiotiz Shipping Corporation v.
goods and has had reasonable opportunity CA, 179 SCRA 95)
thereafter to remove them or otherwise dispose  It is the duty of common carriers of
of them. (Art. 1738) passengers to stop their conveyances a
 Delivery of goods to the custom authorities is reasonable length of time in order to afford
not delivery to the consignee. (Lu Do v. passengers an opportunity to enter, and they
Binamira, 101 Phil 120) are liable for injuries suffered from the sudden
starting up or jerking of their conveyances
while doing so. The duty which the carrier of
passengers owes to its patrons extends to
persons boarding the cars as well as to those
alighting therefrom (Dangwa Trans Co., Inc. vs.
CA 202 SCRA 574).
Presumption of negligence
Art.1735 Civil Code Art.1755 Civil Code

Reason: As to when and how goods were Reason: The contract between the passenger
damaged in transit is a matter peculiarly within and the carrier imposes on the latter the duty
the knowledge of the carrier and its employees. to transport the passenger safely; hence the
(Mirasol v. Dollar, 53 PHIL 124) burden of explaining should fall on the carrier.
Mere proof of delivery of goods to a carrier
in good order and the subsequent arrival of the
same goods at the place of destination in bad
order makes for a prima facie case against the
carrier. (Coastwise Lighterage Corp. v. CA, 245
SCRA 796)

San Beda College of Law
58
MEMORY AID IN COMMERCIAL LAW
Defenses
1. Ordinary circumstance: Exercise of 1. Exercise of extraordinary diligence

extraordinary diligence (Art. 1735) (Art. 1756)
2. Special circumstances: 2. Caso fortuito
a. Flood, storm, earthquake,
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.The character of the goods or
defects in the packing or in the
containers
e.Order or act of competent public
authority (Art. 1734)
Valid stipulations
1. Reduction of degree of diligence to ordinary Stipulation limiting liability when a passenger

diligence, provided it be: is carried gratuitously, but not for willful acts
a) In writing, signed by the shipper or or gross negligence. (Art. 1758)
owner;
b) Supported by a valuable consideration
other than the service rendered by the
carriers; and
c) Reasonable, just and not contrary to
public policy. (Art. 1744)
2. Fixed amount of liability: A contract fixing
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. 1750)
3. Limited liability for delay: An agreement
limiting the common carrier’s liability for delay
on account of strikes or riots (Art. 1748)
4. Stipulation limiting liability to the value of
the goods appearing in the bill of lading, unless
the shipper or owner declares a greater value.
(Art. 1749)
 The diligence required in the carriage of the

goods may be reduced by only one degree, from
extraordinary to ordinary diligence or diligence
of a good father of a family. (Art. 1744, Art.
1745, no. 4)
Void stipulations
1. That the goods are transported at the risk Dispensing with or lessening the extraordinary
of the owner or shipper; responsibility of a common carrier for the
2. That carrier will not be liable for any loss, safety of passengers imposed by law by
destruction or deterioration of the goods; stipulation, by posting of notices, by
3. That the carrier need not observe any statements on tickets or otherwise. (Art. 1757)
diligence in the custody of the goods;
4. That the carrier shall exercise a degree of
diligence less than that of a good father of a
family over the movable transported;
5. That the carrier shall not be responsible
for the acts or omissions of his or its
employees;
6. That the carrier’s liability for acts
COMMERCIAL LAW COMMITTEE

 CHAIRPERSON: Garny Luisa Alegre  ASST. CHAIRPERSON:Jayson O’S Ramos  EDP: Beatrix I. Ramos  SUBJECT HEADS:
Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario
(Transportation Laws);
Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John Lemuel
Gatdula (Banking Laws); Robespierre CU (Law on Intellectual Property)
committed by thieves or robbers who do not

act with grave or irresistible threat, violence
or force is dispensed with or diminished;
7. That 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 equipment used in
the contract of carriage. (Art. 1745)

RULES ON PASSENGERS’ BAGGAGE
IN THE CUSTODY IN THE CUSTODY LIMITATIONS AS TO CARRIER’S
OF THE OF THE COMMON LIABILITY
PASSENGERS CARRIER INVALID AS BEING VALID &
(HAND-CARRIED) (CHECKED-IN) CONTRARY TO ENFORCEABLE
Legal nature of the baggage PUBLIC POLICY
Necessary deposit Considered as 1. One exempting the 1. One limiting the
“goods” carrier from any and liability of the
Required diligence by the common carrier all liability for loss or carrier to an agreed
Diligence of a Extraordinary damage occasioned by valuation, unless
depositary (ordinary diligence its own negligence. the shipper declares
diligence) 2. An unqualified a higher value and
Applicable rules limitation of liability pays a higher rate of
Arts. 1998 and 2000- Arts. 1733-1753 to an agreed freight
2003 valuation. (H.E. Heacock
Company vs.
CONCURRING CAUSES OF ACTION Macondray &
Company Inc.)
ARISING FROM THE NEGLIGENT ACT OF
THE COMMON CARRIER
1. Culpa contractual (breach of contract)  However, the carrier cannot limit its
 Only the carrier is primarily liable and liability for injury to, or loss of, goods
not the driver, because there is no shipped where such injury or loss was
privity between the driver and the caused by its own negligence.
passenger. (Shewaram vs. PAL, 17 SCRA 606)
 Basis: Art.1759, NCC.
SPECIAL RULES ON LIABILITES OF
 No defense of due diligence in the
AIRLINE CARRIERS
selection and supervision of employees.
1. In case of flight diversion due to bad
weather or other circumstances beyond
2. Culpa aquiliana (quasi-delict)
the pilot’s control, the relation between
 The carrier and driver are solidarily the carrier and the passenger continues
liable as joint tortfeasors. until the latter has been landed at the
 Basis: Art. 2180, NCC. port of destination and has left the
 Defense of due diligence in the carrier’s premises. The carrier should
selection and supervision of employees is necessarily exercise extraordinary
available. Exception: maritime tort diligence in safeguarding the comfort,
resulting in collision. (See notes on convenience and safety of its stranded
Collision) passengers until they have reached their
final destination. (Philippine Airlines vs.
3. Culpa criminal (criminal negligence) CA, 226 SCRA 423)
 The driver is primarily liable. The 2. Even where overbooking of passengers
carrier is subsidiarily liable only if the is allowed as a commercial practice, the
driver is convicted and declared airline company would still be guilty of
insolvent. bad faith and still be liable for damages
 Basis: Art. 100, RPC. if it did not properly inform passenger
that it could breach the contract of
 In case of injury to a passenger due to carriage even if they were confirmed
the negligence of the driver of the bus passengers. (Zalamea vs. CA, 228 SCRA
on which he is riding and of the driver of 23)
another vehicle, the drivers as well as 3. An open-dated ticket constitutes a
the owners of the two vehicles are complete contract between the carrier
jointly and severally liable for damages. and passenger. Hence, the airline
It makes no difference that the liability company is liable if it refused to confirm
of the bus driver and owner springs from a passenger’s flight reservation. (Singson
contract while that of the owner and vs. CA, 282 SCRA 149)
driver of the other vehicle arises from 4. An airline company which issued a
quasi-delict. (Fabre vs. CA) confirmed ticket to a passenger covering
successive trips on different airlines can basis of said bill of lading. (Sea-Land
be held liable for damages occasioned by Services Inc. vs. IAC)
“bumping off” by one of the successive
airlines. (Lufthansa German Airlines vs. 4. The right of a party to recover for loss
CA, 238 SCRA 290) of shipment consigned to him under a
5. An airline ticket providing that bill of lading drawn up only by and
carriage by successive air carriers is to between the shipper and the carrier,
be regarded as a “single operation” is to springs from either a relation of agency
make the issuing carrier liable for the between him and the shipper, or his
tortuous conduct of the other carrier. A status as stranger in whose favor some
printed provision in the ticket limiting stipulation is made in said contract, and
liability only to its own conduct is not who becomes a party thereto when he
enough to rebut that liability. (KLM demands fulfillment of that stipulation.
Royal Dutch Airlines vs. CA, 65 SCRA 237) (Art. 1311 (2), (Mendoza vs. PAL Inc.)
II. CODE OF COMMERCE 5. Acceptance of the bill of lading

without dissent raises the presumption
A. OVERLAND TRANSPORTATION that all the terms therein where brought
(Arts. 349-379) to the knowledge of the shipper and
agreed to by him and, in the absence of
Applicability fraud or mistake; he is estopped from
1. Domestic land and water/maritime thereafter denying that he assented to
transportation. (Pandect of Commercial such terms. (Notes and Cases on the Law
Law and Jurisprudence, Justice Jose on Transportation and Public Utilities,
Vitug, 1997 ed.) Aquino, T. & Hernando, R.P. 2004 ed.
2. Domestic Air Transportation. p.261)
(Commercial Law Review, Cesar
Villanueva, 2004 ed.)  Kinds:
1. On board - issued when the goods
IMPORTANT CONCEPTS: have been actually placed aboard
1. Bill of lading the ship with very reasonable
2. Obligations of the carrier expectation that the shipment is as
3. Right of abandonment good as on its way.
4. Notice of damage 2. Received - one in which it is stated
5. Combined carrier agreement that the goods have been received
for shipment with or without
BILL OF LADING specifying the vessel by which the
 The written acknowledgment of receipt goods are to be shipped.
of goods and agreement to transport 3. Negotiable - one in which it is
them to a specific place to a person stated that the goods referred to
named or to his order. therein will be delivered to the
 Rules: bearer or to the order of any
1. It is not indispensable for the person named therein.
creation of a contract of carriage. 4. Non-negotiable - One in which it is
(Compania Maritima vs. Insurance stated that the goods referred to
Company of North America, 12 SCRA 213) therein will be delivered to a
specified person.
2. Ambiguity is construed against the 5. Clean – One which does not
carrier, the contract being one of indicate any defect in the goods.
adhesion. 6. Foul – One which contains a
notation thereon indicating that
3. The consignee, although the the goods covered by it are in bad
instrument is oftentimes drawn up only condition.
by the consignor and carrier, becomes
bound by all the stipulations contained 7. Spent – One which covers goods
therein by making a claim for loss on the that already have been delivered
by the carrier without a surrender and the like
of a signed copy of the bill. 7.) Goods like livestock will be exposed
8. Through – One issued by the to disease
carrier who is obliged to use the 8.) Strike
facilities of other carriers as well 9.) Failure to tender goods on time.
as his own facilities for the (Notes and Cases on the Law on
purpose of transporting the goods Transportation and Public Utilities,
from the city of the seller to the Aquino, T. & Hernando, R.P. 2004 ed.
city of the buyer, which bill of p.68)
lading is honored by the second  In case of carriage by railway, the
and other interested carriers who carrier is exempted from liability if
do not issue their own bills. carriage is insisted upon by the shipper,
9. Custody – One wherein the goods provided its objections are stated in the
are already received by the carrier bill of lading.
but the vessel indicated therein  However, when a common carrier
has not yet arrived in the port. accepts cargo for shipment for valuable
10. Port – One which is issued by the consideration, it takes the risk of
carrier to whom the goods have delivering it in good condition as when it
been delivered, and the vessel was loaded. (PAL vs. CA)
indicated in the bill of lading by
which the goods are to be shipped B. Duty to deliver the goods
is already in the port where the  Not only to transport the goods safely
goods are held for shipment. but to the person indicated in the bill of
 Functions: lading. The goods should be delivered to
1. Best evidence of the existence of the consignee or any other person to
the contract of carriage of cargo whom the bill of lading was validly
(Art. 353) transferred or negotiated.
2. Document of title
3. Receipt of cargo Time of delivery
4. Contract to transport and deliver Stipulated in No stipulation
goods as stipulated Contract/Bill of
5. Symbol of the goods Lading
1. Carrier is bound to 1. Within a
OBLIGATIONS OF THE CARRIER fulfill the contract reasonable time.
A. Duty to accept the goods and is liable for any 2. Carrier is bound to
GENERAL RULE: A common carrier delay; no matter forward them in the
cannot ordinarily refuse to carry a from what cause it 1st shipment of the
particular class of goods. may have arisen. same or similar goods
which he may make
EXCEPTION: For some sufficient reason to the point of
the discrimination against the traffic in delivery. (ART. 358
such goods is reasonable and necessary. Code of Commerce)
(Fisher vs. Yangco Steamship Co. 31 Phil
1). Effects of delay
 Instances when the carrier may validly a. Merely suspends and generally does
refuse to accept the goods include the not terminate the contract of carriage
ff: b. Carrier remains duty bound to
1.) Goods sought to be transported are exercise extraordinary diligence
dangerous objects, or substances c. Natural disaster shall not free the
including dynamite and other explosives carrier from responsibility (Art.1740)
2.) Goods are unfit for transportation d. If delay is without just cause, the
3.) Acceptance would result in contract limiting the common carrier’s
overloading liability cannot be availed of in case of
4.) Contrabands or illegal goods loss or deterioration of the goods
5.) Goods are injurious to health (Art.1747)
6.) Goods will be exposed to untoward
danger like flood, capture by enemies
RIGHT OF CONSIGNEE TO ABANDON ARTICLE 366 COGSA Sec.3 (6)
GOODS Applicability
 Instances: 1. Domestic/inter- 1. International/
1. Partial non-delivery, where the island/coastwise overseas/foreign
goods are useless without the others transportation (from foreign
(Art. 363); 2. Land, water, air country to Phils.)
transportation Note: subject to the
2. Goods are rendered useless for sale
3. Carriage of goods rule on Paramount
or consumption for the purposes for Clause
which they are properly destined (Art. 2. Water/maritime
365); and transportation
3. In case of delay through the fault of 3. Carriage of goods
the carrier (Art. 371). Notice of damage
1. Condition 1. Not a condition
NOTICE OF DAMAGE (ART. 366) precedent precedent
 Requisites for applicability: 2. 24-hour period for 2. 3-day period for
claiming latent claiming latent
1. Domestic/inter-island/coastwise
damage damage
transportation Prescriptive period
2. Land/water/air transportation None provided; Civil One year from the
3. Carriage of goods Code applies. date of delivery
4. Goods shipped are damaged (delivered but
 Rules: damaged goods), or
a. Patent damage: shipper must file a date when the
claim against the carrier immediately vessel left port or
upon delivery (it may be oral or from the date of
delivery to the
written)
arrastre (non-
b. Latent damage: shipper should file a delivery or loss).
claim against the carrier within 24
hours from delivery.
COMBINED CARRIER AGREEMENT (ART.
Note: These rules does not apply to
373)
misdelivery of goods. (Roldan vs. Lim
Ponzo) GENERAL RULE: In case of a contract
of transportation of several legs, each
Purpose of notice: To inform the carrier
carrier is responsible for its particular
that the shipment has been damaged,
leg in the contract.
and it is charged with liability therefore,
and to give it an opportunity to make an EXCEPTION: A combined carrier
investigation and fix responsibility while agreement where a carrier makes itself
the matter is fresh. liable assuming the obligations and
acquiring as well the rights and causes of
 The filing of notice of claim is a
action of those which preceded it.
condition precedent for recovery.
 Shorter period may be stipulated by
the parties because it merely affects A. MARITIME COMMERCE
the shipper’s remedy and does not affect (Arts. 573-869)
the liability of the carrier. (PHILAMGEN
vs. Sweetlines, Inc.) IMPORTANT CONCEPTS:
Prescriptive Period 1. Merchant vessel
2. Maritime lien and Preference of
 Not provided by Article 366. Thus, in
Credit
such absence, Civil Code rules on
3. Doctrine of limited liability
prescription apply.
4. Causes of revocation of voyage
 If despite the notice of claim, the
5. Participants in maritime
carrier refuses to pay, action must be
commerce
filed in court.
6. Charter party
1. No bill of lading was
7. Loans on bottomry and
issued: within 6 years
respondentia
2. Bill of lading was issued:
8. Accidents in maritime commerce
within 10 years.
MARITIME/ADMIRALTY LAW  Constitutes property which may be
 It is the system of laws which acquired and transferred by any of the
particularly relates to the affairs and means recognized by law. They shall
business of the sea, to ships, their crews continue to be considered as personal
and navigation, and to maritime property. (Arts. 573, 585)
conveyance of persons and property.  They are susceptible to maritime liens
(Notes and Cases on the Law on such as for the repair, equipping and
Transportation and Public Utilities, provisioning of the vessel in the
Aquino & Hernando, citing Francisco, preparation of a voyage, as well as
p.254) mortgage liabilities, in satisfaction of
which a vessel may be validly arrested
 Maritime laws apply only to maritime and sold. (Ship Mortgage Decree of 1978)
trade and sea voyages. (Pandect of
Commercial Law and Jurisprudence, MARITIME LIEN
Justice Jose Vitug, 1997 ed.)  It constitutes a present right of
property in the ship, a jus in re, to be
 Arrastre service is not maritime in afterward enforced in admiralty by
character. It refers to a contract for the process in rem. (PNB vs. CA, 337 SCRA
unloading of goods from a vessel. (ICTSI 381)
vs. Prudential Guarantee, 320 SCRA 244)  If the maritime lien arose prior to the
recording of a preferred mortgage, it
CHARACTERISTICS OF MARITIME shall have priority over the said
TRANSACTION mortgage lien. (PNB vs. CA, 337 SCRA
1. Real - similar to transactions over real 381)
property with respect to effectivity
against third persons which is done
through registration. (Rubiso vs. Rivera, ORDER OF PREFERENCE IN CASE OF
37 Phil. 72). The evidence of real nature SALE OF VESSEL
is shown by: 1) the limitation of the
liability of the agents to the actual value R.A. 6106 P.D. 1521
of the vessel and the freight money; and Effectivity date
1969 1978
2) the right to retain the cargo and
Applicability
embargo and detention of the vessel
Overseas shipping Both domestic and
(Luzon Stevedoring Corp v. CA, 156 SCRA only overseas shipping
169); Kind of sale
2. Hypothecary - the liability of the Judicial Judicial and
owner of the value of the vessel is extrajudicial
limited to the vessel itself (Doctrine of Order of Preference
Limited Liability). A preferred The preferred
mortgage shall have mortgage lien shall
 The real and hypothecary nature of priority over all have priority over all
maritime law simply means that the claims against the claims against the
vessel, except the vessel, except the
liability of the carrier in connection with
following following
losses related to maritime contracts is preferences in the preferences in the
confined to the vessel, which stands as order stated: order stated:
the guaranty for their settlement. 1. Judicial costs of 1. Expenses and fees
(Aboitiz Shipping Corp. vs. General the proceedings; allowed and costs
Accident Fire and Life Assurance Corp. 2. Taxes due the taxed by the court
217 SCRA 359). Philippine and taxes due to the
Government; Government;
MERCHANT VESSEL 3. Salaries and 2. Crew’s wages;
wages of the 3. General average;
 Vessel engaged in maritime commerce,
Captain and Crew of 4. Salvage, including
whether foreign or otherwise. (Bar the vessel during its contract salvage;
Review Materials in Commercial Law, last voyage; 5. Maritime liens
Jorge Miravite, 2002 ed.) 4. General average arising prior in time
or salvage including to the recording of 2. Injury or damage due to shipowner
contract salvage, the preferred or to the concurring negligence of
bottomry loans, and mortgage; the shipowner and the captain;
indemnity due 6. Damages arising 3. The vessel is insured (Vasquez vs. CA
shippers for the out of tort; and
138 SCRA 553).
value of goods 7. Preferred
transported but mortgage registered 4. Expenses for repair on vessel
which were not prior in time. completed before loss;
delivered to the 5. In case there is no total loss and the
consignee; vessel is not abandoned;
5. Costs of repair 6. Collision between two negligent
and equipment of vessels;
the vessel, and
provisioning of food,
 Abandonment of the vessel is
supplies and fuel
during its last
necessary to limit the liability of the
voyage; and shipowner. The only instance were
6. Preferred abandonment is dispensed with is when
mortgages the vessel is entirely lost (Luzon
registered prior in Stevedoring vs. CA 156 SCRA 169).
time.
RIGHT OF SHIPOWNER OR SHIP AGENT
TO ABANDON VESSEL
 Effect of sale: All pre-existing claims
 Instances:
in the vessel are terminated. They will
1.In case of civil liability from
then be satisfied from the proceeds of
indemnities to third persons (Art. 587);
the sale subject to the order of
2. In case of leakage of at least ¾ of the
preference.
contents of a cargo containing liquids
(Art. 687); and
DOCTRINE OF LIMITED LIABILITY
3. In case of constructive loss of the
(HYPOTHECARY RULE)
vessel (Sec. 138, Insurance Code).
 Cases where applicable:
1. Art. 587 – civil liability for
RIGHT OF ABANDONMENT
indemnities to third persons
2. Art. 590 – indemnities from
negligent acts of the captain SHIPOWNER OR CONSIGNEE
(not the shipowner or ship agent) SHIP AGENT
What may be abandoned
3. Art. 837 – collision
Vessel Goods shipped
4. Art. 643 – liability for wages of
Instances
the captain and the crew and for 1. In case of civil 1. Partial non-
advances made by the ship agent liability from delivery, where the
if the vessel is lost by shipwreck indemnities to third goods are useless
or capture persons (Art. 587); without the others
2. Sec. 138, (Art. 363);
GENERAL RULE: The liability of Insurance Code; 2. Goods are
shipowner and ship agent is limited to 3. In case of leakage rendered useless for
the amount of interest in said vessel of at least ¾ of the sale or consumption
contents of a cargo for the purposes for
such that where vessel is entirely lost,
containing liquids which they are
the obligation is extinguished. (Luzon (Art. 687) properly destined
Stevedoring v. Escano, 156 SCRA 169) (Art. 365); and
The interest extends to: 1) the vessel 3. In case of delay
itself; 2) equipments; 3) freightage; and through the fault of
4) insurance proceeds. (Chua v. IAC, 166 the carrier (Art.
SCRA 183) 371).
EXCEPTIONS: Effects
1. Claims under Workmen’s 1. Transfer of 1. Transfer of
ownership of the ownership on the
Compensation (Abueg vs. San Diego
vessel from the goods from the
77 Phil 730); shipowner to the shipper to the
shippers or insurer. carrier.  Powers and functions:
2. In case of (2), the 2. Carrier should 1. Capacity to trade;
insurer must pay the pay the shipper the 2. Discharge duties of the captain,
insured as if there market value of the
subject to Art.609;
was actual total loss goods at the point of
of the vessel. destination. 3. Contract in the name of the owners
with respect to repairs, details of
CAUSES OF REVOCATION OF VOYAGE equipment, armament, provisions of
1. War or interdiction of commerce; food and fuel, and freight of the
2. Blockade; vessel, and all that relate to the
3. Prohibition to receive cargo at requirements of navigation;
destination; 4. Order a new voyage, make a new
4. Embargo; charter or insure the vessel after
5. Inability of the vessel to navigate. obtaining authorization from the
(Art. 640) shipowner or if granted in certificate
of appointment.
Terms:
1. Interdiction of commerce – A Civil Liabilities of the Shipowner And
governmental prohibition of Ship Agent
commercial intercourse intended to 1. All contracts of the captain, whether
bring about an entire cessation for authorized or not, to repair, equip
the time being of all trade whatever. and provision the vessel; (Art. 586)
2. Blockade – A sort of circumvallation 2. Loss and damage to the goods loaded
of a place by which all foreign on the vessel without prejudice to
connection and correspondence is, their right to free themselves from
as far as human power can effect it, liability by abandoning the vessel to
to be cut off. the creditors. (Art. 587)
3. Embargo – A proclamation or order of
a state, usually issued in time of war Duty of Ship Agent to Discharge the
or threatened hostilities, prohibiting Captain and Members of the Crew
the departure of ships or goods from  If the seamen contract is not for a
some or all the ports of such state definite period or voyage, he may
until further order. discharge them at his discretion. (Art.
603)
PARTICIPANTS IN MARITIME COMMERCE  If for a definite period, he may not
A. Shipowners and ship agents discharge them until after the
B. Captains and masters of the vessel fulfillment of their contracts, except on
C. Officers and crew of the vessel the following grounds:
D. Supercargoes a. Insubordination in serious
E. Pilot matters;
b. Robbery;
A. SHIPOWNERS AND SHIP AGENTS c. Theft;
Shipowner (proprietario) d. Habitual drunkenness;
 Person who has possession, control and e. Damage caused to the vessel or
management of the vessel and the to its cargo through malice or
consequent right to direct her navigation manifest or proven negligence. (Art.
and receive freight earned and paid, 605)
while his possession continues.
B. CAPTAINS AND MASTERS
Ship agent (naviero)  They are the chiefs or commanders of
 Person entrusted with provisioning and ships.
representing the vessel in the port in  The terms have the same meaning, but
which it may be found; also includes the are particularly used in accordance with
shipowner. the size of the vessel governed and the
 Not a mere agent under civil law; he is scope of transportation, i.e., large and
solidarily liable with the ship owner. overseas, and small and coastwise,
respectively.
 Nature of position (3-fold character): 7. Follow instructions of and render
1. General agent of the shipowner; an accounting to the ship agent;
2. Technical director of the vessel; 8. Leave the vessel last in case of
3. Representative of the wreck;
government of the country under 9. Hold in custody properties left
whose flag he navigates. by deceased passengers and
 Qualifications: crew members;
1. Filipino citizen; 10. Comply with the requirements of
2. Legal capacity to contract; customs, health, etc. at the port
3. Must have passed the required of arrival;
physical and mental 11. Observe rules to avoid collision;
examinations required for 12. Demand a pilot while entering or
licensing him as such. (Art. 609) leaving a port. (Art. 612)
 Inherent powers:
1. Appoint crew in the absence of  A ship’s captain must be accorded a
ship agent; reasonable measure of discretionary
2. Command the crew and direct authority to decide what the safety of
the vessel to its port of the ship and of its crew and cargo
destination; specifically requires on a stipulated
3. Impose correctional punishment ocean voyage (Inter-Orient Maritime
on those who, while on board Enterprises Inc. vs. CA).
vessel, fail to comply with his
orders or are wanting in  No liability for the following:
discipline; 1. Damages caused to the vessel or
4. Make contracts for the charter of to the cargo by force majeure;
vessel in the absence of ship 2. Obligations contracted for the
agent. repair, equipment, and
5. Supply, equip, and provision the provisioning of the vessel unless
vessel; and he has expressly bound himself
6. Order repair of vessel to enable personally or has signed a bill of
it to continue its voyage. (Art. exchange or promissory note in
610) his name. (Art. 620)
 Sources of funds to comply with the
inherent powers of the captain (in Solidary Liabilities of the Ship
successive order): Agent/Shipowner for Acts Done by the
1. From the consignee of the Captain towards Passengers and
vessel; Cargoes
2. From the consignee of the cargo; 1. Damages to vessel and to cargo
3. By drawing on the ship agent; due to lack of skill and
4. By a loan on bottomry; negligence;
5. By sale of part of the cargo. 2. Thefts and robberies of the
(Art. 611) crew;
 Duties: 3. Losses and fines for violation of
1. Bring on board the proper laws;
certificate and documents and a 4. Damages due to mutinies;
copy of the Code of Commerce; 5. Damages due to misuse of
2. Keep a Log Book, Accounting power;
Book and Freight Book; 6. For deviations;
3. Examine the ship before the 7. For arrivals under stress;
voyage; 8. Damages due to non-observance
4. Stay on board during the loading of marine regulations. (Art. 618)
and unloading of the cargo;
5. Be on deck while leaving or C. OFFICERS AND CREW
entering the port; 1. Sailing Mate/First Mate
6. Protest arrivals under stress and 2. Second Mate
in case of shipwreck; 3. Engineers
4. Crew the motor apparatus. When two or more
 No liability under the following are hired, one of them shall be the chief
circumstances: engineer.
1. If, before beginning voyage, captain  Duties:
attempts to change it, or a naval war 1. In charge of the motor
with the power to which the vessel apparatus, spare parts, and
was destined occurs; other instruments pertaining to
2. If a disease breaks out and be the engines;
officially declared an epidemic in 2. Keep the engines and boilers in
the port of destination; good condition;
3. If the vessel should change owner or 3. Not to change or repair the
captain. (Art. 647) engine without authority of the
captain;
Sailing Mate/First Mate 4. Inform the captain of any
 Second chief of the vessel who takes damage to the motor apparatus;
the place of the captain in case of 5. Keep an Engine Book;
absence, sickness, or death and shall 6. Supervise all personnel
assume all of his duties, powers and maintaining the engine. (Art.
responsibilities. (Art. 627) 632)
 Duties:
1. Provide himself with maps and Crew
charts with astronomical tables  The aggregate of seamen who man a
necessary for the discharge of ship, or the ship’s company.
his duties;  Hired by the ship agent, where he is
2. Keep the Binnacle Book; present and in his absence, the captain
3. Change the course of the voyage hires them, preferring Filipinos, and in
on consultation with the captain their absence, he may take in foreigners,
and the officers of the boat, but not exceeding 1/5 of the crew. (Art.
following the decision of the 634)
captain in case of disagreement;
4. Responsible for all the damages Classes of Seaman’s Contracts
caused to the vessel and the 1. By the voyage;
cargo by reason of his 2. By the month; and
negligence. (Arts. 628 - 631) 3. By share of profits or freightage.
Second Mate Just Causes for the Discharge of

 Takes command of the vessel in case of Seaman While Contract Subsists
the inability or disqualification of the 1. Perpetration of a crime;
captain and the sailing mate, assuming 2. Repeated insubordination, want of
in such case their powers and discipline;
responsibilities. 3. Repeated incapacity and negligence;
 Third in command 4. Habitual drunkenness;
 Duties: 5. Physical incapacity;
1. Preserve the hull and rigging of 6. Desertion. (Art. 637)
the vessel;
2. Arrange well the cargo; Rules in case of Death of a Seaman
3. Discipline the crew;  The seaman’s heirs are entitled to
4. Assign work to crew members; payment as follows:
5. Inventory the rigging and 1. If death is natural:
equipment of the vessel, if laid a. compensation up to time of
up. (Art. 632) death if engaged on wage
b. if by voyage - half of amount if
Engineers death occurs on voyage out; and
 Officers of the vessel but have no full, if on voyage in
authority except in matters referring to
c. if by shares - none, if before promulgated rules requiring vessels
departure; full, if after approaching their ports to take on board
departure pilots licensed under the local laws.
2. if death is due to defense of vessel - (Notes and Cases on the Law on
full payment; Transportation and Public Utilities,
3. if captured in defense of vessel - full Aquino, T. & Hernando, R.P. 2004 ed. p.
payment; 518)
4. if captured due to carelessness -
wages up to the date of the capture. Liablity of Pilot
(Art. 645) GENERAL RULE: On compulsory
pilotage grounds, the Harbor Pilot is
Complement of the Vessel responsible for damage to a vessel or to
 All persons on board, from the captain life or property due to his negligence.
to the cabin boy, necessary for the EXCEPT:
management, maneuvers, and service, 1. Accident caused by force majeure or
thus including the crew, the sailing natural calamity provided the pilot
mates, engineers, stokers and other exercised prudence and extra diligence
employees on board not having specific to prevent or minimize damages.
designations. 2. Countermand or overrule by the
 Does not include the passengers or the master of the vessel in which case the
persons whom the vessel is transporting. registered owner of the vessel is liable.
(Sec.11, Art.III PPA Admin Order 03-85)
D. SUPERCARGOES
 Persons who discharges administrative SPECIAL CONTRACTS OF MARITIME
duties assigned to him by ship agent or COMMERCE
shippers, keeping an account and record 1. Charter party
of transaction as required in the 2. Bill of lading
accounting book of the captain. (Art. 3. Contract of transportation of
649) passengers on sea voyages
4. Loan on bottomry
E. PILOT 5. Loan on respondentia
 A person duly qualified, and licensed, 6. Marine insurance
to conduct a vessel into or out of ports,
or in certain waters. CHARTER PARTY
 The term generally connotes a person  A contract by virtue of which the owner
taken on board at a particular place for or agent binds himself to transport
the purpose of conducting a ship through merchandise or persons for a fixed price.
a river, road or channel, or from a port.  A contract by which an entire ship, or
 Master pro hac vice for the time being some principal part thereof is let/leased
in the command and navigation of the by the owner to another person for a
ship. specified time or use. (Planters
 While in exercising his functions a pilot Products, Inc. vs. CA, 226 SCRA 476)
is in sole command of the ship and  Parties:
supersedes the master for the time being 1. Ship owner or ship agent
in the command and navigation of the 2. Charterer
ship, the master does not surrender his  Classes:
vessel to the pilot and the pilot is not 1. Bareboat or demise – The charterer
the master. There are occasions when provides crew, food and fuel. The
the master may and should interfere and charterer is liable as if he were the
even displace the pilot, as when the owner, except when the cause arises
pilot is obviously incompetent or from the unworthiness of the vessel. The
intoxicated (Far Eastern Shipping shipowner leases to the charterer the
Company vs. CA). whole vessel, transferring to the latter
 Compulsory Pilotage – States the entire command, possession and
possessing harbors have enacted laws or consequent control over the vessel’s
navigation, including the master and the accredit goods
crew, who thereby become the charter’s received from
servants. It transforms a common carrier persons
into a private carrier. Consensual contract Real contract
 The charterer becomes the owner
of the vessel pro hac vice, just for BAREBOAT OR CONTRACT OF
that one particular purpose only. DEMISE CHARTER AFFREIGHTMENT
Because the charterer is treated as (TIME OR VOYAGE
owner pro hac vice, the charterer CHARTER)
assumes the customary rights and Charterer becomes Owner remains liable
liable to others as carrier and must
liabilities of the shipowner to third
caused by its answer for any
persons and is held liable for the negligence breach of duty
expense of the voyage and the wages Charterer regarded Charterer is not
of the seamen. as owner pro hac regarded as owner.
2. Contract of Affreightment – A contract vice for the voyage
whereby the owner of the vessel leases Owner of vessel The vessel owner
part or all of its space to haul goods for relinquishes retains possession,
others. possession, command command and
 The shipowner retains the and navigation to navigation of the ship
possession, command and navigation charterer
of the ship, the charterer merely Common carrier is Common carrier is
converted to private not converted to a
having use of the space in the vessel
carrier. private carrier.
in return for his payment of the
charter hired.
 Kinds:
a. Time charter – vessel is PERSONS WHO MAY MAKE A CHARTER
chartered for a fixed period of 1. Owner or owners of the vessel,
time or duration of voyage. either in whole or in majority
b. Voyage or trip charter – the part, who have legal control and
vessel is leased for one or series possession of the vessel
of voyages usually for purposes 2. Charterer may subcharter entire
of transporting goods for vessel to 3rd person only if not
charterer. prohibited in original charter.
(Art.679)
LEASE CHARTER PARTY 3. Ship agent if authorized by the
If for a definite Charterer may owner/s or given such power in
period, lessee cannot rescind charter party the certificate of appointment.
give up the lease by by paying half of the (Art.598)
paying a portion of freightage agreed 4. Captain in the absence of the
the amount agreed upon.
ship agent or consignee and only
upon.
If the leased The new owner is not
if he acts in accordance with the
property is sold to compelled to respect instructions of the agent or
one who knows of the charter party so owner and protects the latter’s
the existence of the long as he can load interests. (Art.609)
lease, the new owner the vessel with his
must respect the own cargo. (Art. 689) REQUISITES OF A VALID CHARTER
lease. PARTY
Civil law concept Commercial law 1. Consent of the contracting
concept parties
2. Existing vessel which should be
placed at the disposition of the
shipper
CHARTER PARTY BILL OF LADING 3. Freight
An entire or More like a private 4. Compliance with Art. 652 of the
complete contract. receipt which the Code of Commerce
captain gives to
Clauses Which May Be Included In a
Charter Party
Rescission of a Charter Party
At At Fortuitous
Jason clause Clause paramount
charterer’s shipowner’s causes
or paramount request
request (Art. 690)
clause (Art. 689)
(Art 688)
A stipulation in a A clause in a charter
charter party that in party providing that
case of a maritime the COGSA shall 1. By 1. If the 1. War or
accident for which apply, even though abandoning extra lay interdiction
the shipowner is not the transportation is the charter days of
responsible by law, domestic, subject to and paying terminate commerce;
contract or the extent that any half of the without the 2. Blockade;
otherwise, the cargo term of the bill of freightage; cargo being 3. Prohibition
shippers, consignees lading is repugnant to 2. Error in placed to receive
or owners shall the COGSA or tonnage or alongside the cargo;
contribute with the applicable law, then flag; vessel; 4. Embargo;
shipowner in general to the extent thereof 3. Failure to 2. Sale by and
average. (Pandect of the provision of the place the the owner of 5. Inability of
Commercial Law and bill of lading is void. vessel at the the vessel the vessel to
Jurisprudence, (Pandect of charterer’s before navigate.
Justice Jose Vitug, Commercial Law and disposal; loading by
1997 ed.) Jurisprudence, 4. Return of the
Justice Jose Vitug, the vessel charterer;
1997 ed.) due to
pirates,
enemies or
Rights and Obligations of Parties bad weather;
5. Arrival at
SHIPOWNER OR CHARTERER a port for
repairs.
SHIP AGENT
1. If the vessel is 1. To pay the
chartered wholly, agreed charter Terms:
not to accept cargo price; 1. Primage - bonus to be paid to the
from others; 2. To pay captain after the successful voyage.
2. To observe freightage on 2. Demurrage – the sum fixed in the
represented unboarded cargo; charter party as a remuneration to
capacity; 3. To pay losses to the owner of the ship for the
3. To unload cargo others for loading detention of his vessel beyond the
clandestinely placed uncontracted cargo
number of days allowed by the
4. To substitute and illicit cargo;
another vessel if load 4. To wait if the charter party for loading or
is less than 3/5 of vessel needs repair; unloading or for sailing.
capacity; 5. To pay expenses 3. Deadfreight – the amount paid by or
5. To leave the for deviation. (Arts. recoverable from a charterer of a
port if the charterer 679-687) ship for the portion of the ship’s
does not bring the capacity the latter contracted for
cargo within the lay but failed to occupy.
days and extra lay 4. Lay Days - days allowed to charter
days allowed;
parties for loading and unloading the
6. To place in a
vessel in a condition cargo.
to navigate; 5. Extra Lay Days – days which follow
7. to bring cargo to after the lay days have elapsed.
nearest neutral port
in case of war or USUAL FORMS OF CONSUMMATING
blockade. (Arts. 669- CONTRACTS
678) 1. C.I.F. – cost, insurance and freight;
2. F.O.B. - free on board; Common elements:
3. F.A.S. - free alongside ship; and 1. Exposure of security to marine peril;
4. C. & F. - cost and freight. 2. Obligation of the debtor conditioned
only upon safe arrival of the security at
the point of destination.
TRANSSHIPMENT OF GOODS
Forms:
 The act of taking cargo out of one ship 1. Public instrument
and loading it in another, or the transfer 2. Policy signed by the contracting parties
of goods from the vessel stipulated in and the broker taking part therein
the contract of affreightment to another 3. Private instrument (Art. 720)
vessel before the place of destination Contents:
named in the contract has been reached, 1. Kind, name and registry of the vessel;
or the transfer for further transportation 2. Name, surname and domicile of the
from one ship or conveyance to another. captain;
3. Names, surnames and domiciles of the
 It is not dependent on the ownership borrower and the lender;
of the transporting ships or in the change 4. Amount of the loan and the premium
of carriers, but rather on the fact of stipulated;
actual physical transfer of cargo from 5. Time for repayment;
one vessel to another. 6. Goods pledged to secure repayment;
 If done without legal excuse, however 7. Voyage during which the risk is run
competent and safe the vessel into (Art.721)
which the transfer is made, is a violation
of contract and infringement of right of
shipper and subjects carrier to liability if BOTTOMRY/ ORDINARY LOAN
freight is lost event by cause otherwise RESPONDENTIA (MUTUUM)
excepted. (Magellan Manufacturing vs.
CA, 201 SCRA 102) Not subject to Usury Subject to Usury
Law Law
LOAN ON BOTTOMRY AND Liability of the Not subject to any
RESPONDENTIA borrower is contingency
 A real, unilateral, aleatory contract, by contingent on the (absolute liability)
virtue of which one person lends to safe arrival of the
vessel or cargo at
another a certain amount of money or
destination
goods on things exposed to maritime
risks, which amount, with its earnings, is The last lender is a The first lender is a
to be returned if the things are safely preferred creditor preferred creditor
transported, and which is lost if the
latter are lost. WHEN LOAN ON BOTTOMRY OR
RESPONDENTIA REGARDED AS SIMPLE
LOAN
LOAN ON LOAN ON 1. Lender loaned an amount larger
BOTTOMRY RESPONDENTIA than the value of the object due
Definition to fraudulent means employed
Loan made by Loan taken on by the borrower. (ART.726)
shipowner or ship security of the cargo 2. Full amount of the loan is not
agent guaranteed by laden on a vessel,
used for the cargo or given on
vessel itself and and repayable upon
repayable upon safe arrival of cargo the goods if all of them could
arrival of vessel at at destination. (Art. not have been loaded, the
destination. (Art. 719) balance will be considered a
719) simple loan. (ART.727)
Who may contract 3. If the effects on which the
Shipowner or ship Only the owner of money is taken is not subjected
agent. Outside of the cargo. to any risk. (ART.729)
the residence of the
owners - the Note: Under existing laws, the parties to
captain.
a loan, whether ordinary or maritime,
may agree on any rate of interest. (CB to the extent of the loan
Circular 905) accommodation. The same rule would
apply to the hypothecation of the cargo
by respondentia. (Pandect of
MARINE INSURANCE LOAN ON Commercial Law and Jurisprudence,
BOTTOMRY OR Justice Jose Vitug, 1997 ed.)
RESPONDENTIA
Indemnity is paid after Indemnity is paid ACCIDENTS IN MARITIME COMMERCE
the loss has occurred in advance by 1. Averages
way of a loan 2. Arrival Under Stress
In case of loss of the In case of loss of 3. Collision
vessel due to a risk the vessel due to 4. Shipwreck
insured against, the a marine peril,
obligation of the insurer the obligation of
becomes absolute the borrower to
AVERAGE
pay is  An extraordinary or accidental expense
extinguished incurred during the voyage in order to
Consensual contract Real contract preserve the cargo, vessel or both, and
all damages or deterioration suffered by
Hypothecary Nature of Bottomry/ the vessel from departure to the port of
Respondentia destination, and to the cargo from the
GENERAL RULE: The obligation of the port of loading to the port of
borrower to pay the loan is extinguished consignment. (Art. 806)
if the goods given as security are  The person whose property has been
absolutely lost by reason of an accident saved must contribute to reimburse the
of the sea, during the voyage damage caused or expense incurred if
designated, and if it is proven that the the situation constitutes general
goods were on board. average.
EXCEPTIONS:  Classes:
1. Loss due to inherent defect; 1. Particular or Simple Average
2. Loss due to the barratry on the part 2. Gross or General Average
of the captain;  Where both vessel and cargo are
3. Loss due to the fault or malice of the saved, it is general average; where only
borrower; the vessel or only the cargo is saved, it is
4. The vessel was engaged in particular average.
contraband; and  Expenses incurred to refloat a vessel,
5. The cargo loaded on the vessel be which accidentally ran aground, in order
different in from that agreed upon. to continue its voyage, do not constitute
general average. Not only is there
Concurrence of Marine Insurance and absence of a marine peril, common
Loan on Bottomry/Respondentia safety factor, and deliberateness. It is
1. The insurable interest of the the safety of the property, and not the
owner of a ship hypothecated by voyage, which constitutes the true
bottomry is only the excess of foundation of general average. (A.
the value over the amount Magsaysay, Inc. vs. Agan, G.R.No. L-
secured by bottomry. (Sec. 101, 6393, Jan. 31, 1955)
Insurance Code)
2. The value of what may be saved
in case of shipwreck shall be PARTICULAR OR GROSS OR
divided between the lender and SIMPLE GENERAL
the insurer in proportion to the Definition
interest of each one. (Art. 735) Damages or expenses Damages or
caused to the vessel expenses
Note: If a vessel is hypothecated by or cargo that did not deliberately caused
bottomry only the excess is insurable, inure to the common in order to save the
since a loan on bottomry partakes of the benefit, and borne by vessel, its cargo or
respective owners. both from real and
nature likewise of an insurance coverage
(Art. 809) known risk. (Art. AVERAGE EVEN IF SACRIFICED
811) 1. Goods carried on deck.
Requisites (ART.855)
1. common 2. Goods not recorded in the books
danger; or records of the vessel.
2. deliberate
(ART.855 (2))
sacrifice;
3. success; 3. Fuel for the vessel if there is
4. proper more than sufficient fuel for the
formalities and voyage. (Rule IX, York-Antwerp
legal steps. Rule)
Liability
The owner of the All the persons Jettison
goods which gave rise having an interest in  Act of throwing cargo overboard in
to the expense or the vessel and the order to lighten the vessel.
suffered the damage cargo therein at the
shall bear this time of the
 Order of goods to be cast overboard:
average. (Art. 810) occurrence of the 1. Those which are on the deck,
average shall preferring the heaviest one with
contribute to satisfy the least utility and value;
this average. (Art. 2. Those which are below the upper
812) deck, beginning with the one
 The insurers with greatest weight and
(Art.859) and smallest value. (Art. 815)
lenders on bottomry
and respondentia
shall likewise
 Jettisoned goods are not res nullius
contribute. nor deemed “abandoned” within the
(Art.732). meaning of civil law so as to be the
Number of interests involved object of occupation by salvage.
Only one interest Several interests (Pandect of Commercial Law and
involved involved Jurisprudence, Justice Jose Vitug, 1997
Share in the damage or expense ed.)
100% share In proportion to the  In order that the jettisoned goods may
value of the owner’s be included in the gross or general
property saved
average, the existence of the cargo on
Right to recover
board should be proven by means of the
No reimbursement There may be
reimbursement bill of lading. (Art. 816)
Kinds (not exclusive)
Art. 809 Art. 811 York-Antwerp (Y-A) Rules on
Procedure for recovery Determining Liability for Averages With
1. Assembly and Regard To Deck Cargo
deliberation 1. Deck cargo is allowed only in
2. Resolution of the domestic/coastwise/inter-island
captain shipping, and is prohibited in
3. Entry of the international/overseas/foreign shipping.
resolution in the 2. If deck cargo is loaded with the
logbook
consent of the shipper on overseas
4. Detailed minutes
5. Delivery of the trade, it must always contribute to
minutes to the general average, but should the same be
maritime judicial jettisoned, it would not be entitled to
authority of the first reimbursement because there is
port, within 24 hours violation of the Y-A Rules.
from arrival, 3. If deck cargo is loaded with the
6. Ratification by consent of the shipper on coastwise
captain under oath. shipping, it must always contribute to
(Arts. 813-814)
general average and if jettisoned would
be entitled to reimbursement.
GOODS NOT COVERED BY GENERAL  Reason: In domestic shipping, voyages
are usually short and the seas are privateers and other valid
generally not rough. In overseas grounds;
shipping, the vessel is exposed for many 2. Captain shall assemble the
days to perils of the sea. officers and summon the persons
interested in the cargo who may
DOMESTIC INTERNATIONAL attend the meeting but without
Deck cargo is allowed Deck cargo is not a right to vote;
allowed 3. The officers shall determine and
With shipper’s consent agree if there is well-founded
General average Particular average reason after examining the
Without shipper’s consent circumstances. The captain shall
Captain is liable Captain is liable have the deciding vote;
4. The agreement shall be drafted
ARRIVAL UNDER STRESS (ARRIBADA) and the proper minutes shall be
 The arrival of a vessel at the nearest signed and entered in the log
and most convenient port instead of the book;
port of destination, if during the voyage 5. Objections and protests shall
the vessel cannot continue the trip to likewise be entered in the
the port of destination. minutes.
When When Who bears COLLISION

lawful unlawful expenses:  Impact of two vessels both of which are
moving.
The inability 1. Lack of The
to continue provisions shipowner or Allision
voyage is due to ship agent is
 Impact between a moving vessel and a
due to lack negligence to liable in case
of carry of unlawful
stationary one.
provisions, according to arrival under
well-founded usage and stress. But Nautical Rules to Determine Negligence
fear of customs; they shall not 1. When two vessels are about to enter
seizure, 2. Risk of be liable for a port, the farther one must allow
privateers, enemy not the damages the nearer to enter first; if they
pirates, or well known or caused by collide, the fault is presumed to be
accidents of manifest reason of a imputable to the one who arrived
the sea 3. Defect of lawful
later, unless it can be proved that
disabling it vessel due to arrival. (Art.
to navigate. improper 821)
there was no fault on its part.
(Art. 819) repair; and 2. When two vessels meet, the smaller
4. Malice, should give the right of way to the
negligence, larger one.
lack of 3. A vessel leaving port should leave
foresight or the way clear for another which may
skill of be entering the same port.
captain. 4. The vessel which leaves later is
(Art. 820) presumed to have collided against
one which has left earlier.
 It is the duty of the captain to 5. There is a presumption against the
continue the voyage without delay after vessel which sets sail in the night.
the cause of the arrival under stress has 6. There is a presumption against the
ceased failing in such duty renders him vessel with spread sails which
liable. However, in case the cause has collides with another which is at
been risk of enemies, there must first be anchor and cannot move, even when
an assembly before departure. (Art. 825) the crew of the latter has received
 Steps: word to lift anchor, when there was
1. Captain should determine during not sufficient time to do so or there
the voyage if there is well was fear of a greater damage or
founded fear of seizure, other legitimate reason.
7. There is a presumption against an
improperly moored vessel. Cases Covered By Collision and Allision
8. There is a presumption against a 1. One vessel at fault
vessel which has no buoys to indicate  Vessel at fault is liable for damage
the location of its anchors to prevent caused to innocent vessel as well as
damage to vessels which may damages suffered by the owners of cargo
approach it. of both vessels. (Art. 826)
9. Vessels must have “proper look-outs” 2. Both vessels at fault
or persons trained as such and who  Each vessel must bear its own loss, but
have no other duty aside therefrom. the shippers of both vessels may go
(Smith Bell v. CA) against the shipowners who will be
solidarily liable. (Art. 827)
Nautical Rules as to Sailing Vessel and 3. Vessel at fault not known
Steamship  Each vessel must bear its own loss, but
1. Where a steamship and a sailing the shippers of both vessels may go
vessel are approaching each other against the shipowners who will be
from opposite directions, or on solidarily liable. (Art. 828)
intersecting lines, the steamship  Doctrine of Inscrutable Fault – In
from the moment the sailing vessel is case of collision where it cannot be
seen, shall watch with the highest determined which between the two
diligence her course and movements vessels was at fault, both vessels
so as to be able to adopt such timely bear their respective damage, but
means of precaution as will both should be solidarily liable for
necessarily prevent the two boats damage to the cargo of both vessels.
from coming in contact. 4. Third vessel at fault
2. The sailing vessel is required to keep  The third vessel will be liable for losses
her course unless the circumstances and damages. (Art. 831)
require otherwise. 5. Fortuitous event/force majeure
 No liability. Each bears its own loss.
Zones of Time in the Collision of
(Art. 830)
Vessels
1. First zone – all time up to the moment
 The doctrine of res ipsa loquitur
when risk of collision begins.
applies in case a moving vessel strikes a
 No rule is as yet applicable for none is
stationary object, such as a bridge post,
necessary.
dock, or navigational aid. (Far Eastern
2. Second zone – time between moment
Shipping v. CA, Luzon Stevedoring vs.
when risk of collision begins and moment
CA)
it becomes a practical certainty.
 It is in this period where conduct of the
 Even if the cause of action against the
vessels is primordial. It is in this zone
common carrier is based on quasi-delict,
that vessels must strictly observe
the defense of due diligence in the
nautical rules, unless a departure
selection and supervision of employees is
therefrom becomes necessary to avoid
unavailing in case of a maritime tort
imminent danger.
resulting in collision. It is not a civil tort
3. Third zone – time when collision is
governed by the Civil Code but a
certain and time of impact.
maritime one governed by Arts. 826-839
 An error in this zone would no longer of the Code of Commerce. (Manila
be legally consequential. Steamship vs. Insa Abdulhaman)
 Error in Extremis - sudden movement
made by a faultless vessel during the  Doctrine of Last Clear Chance and
third zone of collision with another Rule on Contributory Negligence cannot
vessel which is at fault during the 2nd be applied in collision cases because of
zone. Even if such sudden movement is Art.827 of the Code of Commerce.
wrong, no responsibility will fall on said (Notes and Cases on the Law on
faultless vessel. (Urrutia and Co. v. Baco
River Plantation Co., 26 PHIL 632)
Transportation and Public Utilities,  A contract for the unloading of goods
Aquino, T. & Hernando, R.P. 2004 ed.) from a vessel.
 Applicability: Overseas trade only.
MARITIME PROTEST (Commercial Law Review, C. Villanueva,
 Condition precedent or prerequisite to 2004 ed.)
recovery of damages arising from  Significance: When a person brings in
collisions and other maritime accidents. cargo from abroad, he cannot unload and
 It is a written statement made under deliver the cargo by himself. The
oath by the captain of a vessel after the unloading must be done by the arrastre
occurrence of an accident or disaster in operator, which will then deliver the
which the vessel or cargo is lost or cargo to the importer. (Commercial Law
damaged, with respect to the Review, C. Villanueva, 2004 ed.)
circumstances attending such  Nature of business: It is a public
occurrence, for the purpose of utility, discharging functions which are
recovering losses and damages. heavily invested with public interest.
 Excuses for not filing protest: 1)  Liability:
where the interested person is not on 1. Similar to a warehouseman (Lua Kian
board the vessel; and 2) on collision v. Manila Railroad)
time, need not be protested. (Art. 836) 2. Similar to a common carrier
 Cases applicable: (Northern Motors v. Prince Line)
1. Collision (Art. 835); 3. Solidary liability with the common
2. Arrival under stress (Art. 612(8)); carrier
3. Shipwrecks (Arts. 612(15), 843);
4. Where the vessel has gone Note: In order that the arrastre operator
through a hurricane or when the may be held liable, the consignee must
captain believes that the cargo prove that the damage was due to the
has suffered damages or negligence and while the goods are in
averages (Art. 624). the custody of the arrastre operator.
 Who makes: Captain (Hartford Fire Insurance v. E. Razon,
 When made: within 24 hours from the Inc.)
time the collision took place.
 Before whom made: competent STEVEDORING SERVICE
authority at the point of collision or at  The carriage of goods from the
the first port of arrival, if in the warehouse or pier to the holds of the
Philippines and to the Philippine consul, vessel. (Chief of Staff vs. CIR)
if the collision took place abroad. (Art.  As understood in the port business, the
835) term consists of the handling of cargo
from the hold of the ship to the dock, in
SHIPWRECK case of pier-side unloading; or to a
 It is the loss of the vessel at sea as a barge, in case of unloading at sea.
consequence of its grounding, or running (Anglo-Fil Trading Corp. vs. Lazaro)
against an object in sea or on the coast.  The loading on the ship of outgoing
It occurs when the vessel sustains cargo is also part of stevedoring work.
injuries due to a marine peril rendering (Ibid.)
her incapable of navigation.
 If the wreck was due to malice, CONTAINERIZATION/ “SAID-TO-
negligence or lack of skill of the captain, CONTAIN”/ “SHIPPER’S LOAD AND
the owner of the vessel may demand COUNT” SYSTEM
indemnity from said captain. (Art. 841)  System whereby the shipper loads his
 The rules on collision or allision, as cargoes in a specially designed
may be pertinent, can equally apply to container, seals the container and
shipwrecks. delivers it to the carrier for
transportation. The carrier does not
SPECIAL CONCEPTS participate in the counting of the
ARRASTRE SERVICE merchandise for loading into the
container, the actual loading, and the days from delivery.
sealing of the container. (US Lines v.
Comm. Of Customs, ICTSI v. Prudential Note: The filing of a notice of claim is
Guarantee) not a condition precedent.
 The matter of quantity, description
and conditions of the cargo inside the PRESCRIPTIVE PERIOD
container is the sole responsibility of the  Action for loss or damage to the cargo
shipper, unless there is stipulation to the should be brought within one year after:
contrary. (US Lines vs. Comm. Of a. Delivery of the goods (delivered
Customs, Reyma Brokerage v. Phil. Home but damaged goods); or
Assurance) b. The date when the goods should
have been delivered (non-
Note: In order to attribute to the carrier delivery). (Sec. 3[6])
any damage to the shipment that may be
found, inspection of the goods should be  “Loss or Damage” as applied to the
done at pier-side. (Bankers vs. CA) COGSA contemplates a situation where
no delivery at all was made by the
III. CARRIAGE OF GOODS BY SEA shipper of the goods because the same
ACT/COGSA (C.A. No. 65) had perished, gone out of commerce, or
disappeared in such a way that their
APPLICABILITY existence is unknown or they cannot be
 The transportation must be: recovered. Thus, it is inapplicable in
1. Water/maritime transportation; case of misdelivery or conversion. (Ang
2. for the carriage of goods; and vs. American Steamship Agencies Inc.)
3. overseas/international/foreign and damage arising from delay or late
(from foreign port to Philippine delivery (Mitsui O.S.K. Lines Ltd. vs. CA).
port). In such instance the, Civil Code rules on
 It can be applied in domestic sea prescription shall apply.
transportation if agreed upon by the
parties. (Clause paramount or  The one-year prescriptive period is
paramount clause) suspended by:
1. The express agreement of the
IMPORTANT FEATURES: parties (Universal Shipping Lines,
1. Amount of carrier’s liability Inc. vs. IAC, 188 SCRA 170)
2. Notice of damage 2. The filing of an action in court
3. Prescriptive period until it is dismissed. (Stevens &
Co. vs. Nordeutscher Lloyd, 6
AMOUNT OF CARRIER’S LIABILITY SCRA 180)
 Under the Sec. 4(5), the liability limit
is set at $500 per package or customary  The one-year period shall run from
freight unit unless the nature and value delivery of the last package and is not
of such goods is declared by the shipper. suspended by extrajudicial demand.
This is deemed incorporated in the bill of (Dole Phils.,Inc. vs. Maritime Co.,148
lading even if not mentioned in it. SCRA 118)
(Eastern Shipping vs. IAC, 150 SCRA 463)
 Note that Art. 1749, NCC applies to  The one-year period shall run from
domestic/inter-island/coastwise trade. delivery to the arrastre operator and not
to the consignee. (Union Carbide Phils,
NOTICE OF DAMAGE (SEC. 3(6)) Inc. vs. Manila Railroad Co.,SCRA 359)
 Rules:
a. Patent damage: shipper should file a  The insurer exercising its right of
claim with the carrier immediately subrogation is bound by the one-year
upon delivery prescriptive period. However, it does
b. Latent damage: shipper should file a not apply to the claim against the
claim with the carrier within three insurer for the insurance proceeds. (Fil.
Merchants Ins. Co. vs. Alejandro; Mayer contradicted;
Steel Pipe Corp. vs. CA) 2. If the requirements under the
Convention are not complied
IV. WARSAW CONVENTION OF 1929 with.
(WC)
IMPORTANT CONCEPTS:
PURPOSE: To protect the emerging air 1. Transportation documents
transportation industry and to secure the a. Passenger ticket
uniformity of recovery by the b. Baggage check
passengers. c. Air way bill
APPLICABILITY 2. Liability of the carrier for damages
 The transportation must be: a. Death or injury to passengers
1. International transportation; b. Loss or damage to baggage or
2. Air transportation; and goods
3. Carriage of passengers, baggage c. Delay
or goods. 3. Successive carrier agreement
 The WC shall also apply to fortuitous 4. Jurisdiction
transportation by aircraft performed by 5. Combined transportation agreement
an air transportation enterprise.
PASSENGER BAGGAGE AIR
 International transportation - any TICKET CHECK WAYBILL
transportation in which the place of Passenger Checked-in Goods to be
departure and the place of destination baggage shipped
are situated either:
1. Within the territories of two High LIABILITY OF CARRIER FOR DAMAGES
Contracting Parties regardless of 1. Death or injury of a passenger if the
whether or not there be a break in accident causing it took place on board
the transportation or transshipment, the aircraft or in the course of its
or operations of embarking or
2. Within the territory of a single disembarking; (Art. 17)
High Contracting Party, if there is an 2. Destruction, loss or damage to any
agreed stopping place within a baggage or goods, if it took place during
territory subject to the sovereignty, the “transportation by air”; (Art. 18) and
mandate or authority of another  Transportation by air – The period
power, even though that power is during which the baggage or goods are in
not a party to the Convention. the charge of the carrier, whether in an
(“round trip”, Am. Jur.) airport or on board an aircraft, or, in
case of a landing outside an airport, in
 Transportation to be performed by any place whatsoever.
several successive air carriers shall be It includes any transportation by land
deemed to be one undivided or water outside an airport if such takes
transportation, if it has been regarded place in the performance of a contract
by the parties as a single operation, for transportation by air, for the purpose
whether it has been agreed upon under of loading, delivery, or transshipment.
the form of a single contract or of a 3. Delay in the transportation of
series of contracts, and it shall not lose passengers, baggage or goods. (Art. 19)
its international character merely
because one contract or a series of Note: The Hague Protocol amended the
contracts is to be performed entirely WC by removing the provision that if the
within a territory subject to the airline took all necessary steps to avoid
sovereignty, suzerainty, mandate, or the damage, it could exculpate itself
authority of the same High Contracting completely (Art. 20(1)). (Alitalia vs. IAC,
Party. (Art. 1 Sec.3) 192 SCRA 9)
WHEN INAPPLICABLE
1. When public policy is
on the part of the officials or employees
LIMIT OF LIABILITY (Art. 22, as of the airline or other special injury
amended by Guatemala Protocol, 1971; sustained by the passenger.
Alitalia vs. IAC)
1. Passengers  In KLM Royal v. Tuller, the WC has
GENERAL RULE: $100,000 per invariably been held inapplicable, or as
passenger not restrictive of the carrier’s liability,
EXCEPTION: Agreement to a higher where there was satisfactory evidence of
limit malice or bad faith attributable to its
officers and employees. (Alitalia vs. IAC)
2. Checked-in baggage
GENERAL RULE: $20 per kilogram ACTION FOR DAMAGES
EXCEPTION: In case of special 1. Notice of claim
declaration of value and payment of a  A written complaint must me made
supplementary sum by consignor, carrier within:
is liable to not more than the declared a. 3 days from receipt of baggage
sum unless it proves the sum is greater b. 7 days from receipt of goods
than actual value. c. In case of delay, 14 days from
3. Hand-carried baggage receipt of baggage/goods
 $1000/passenger  The complaint is a condition
4. Goods to be shipped precedent. Without the complaint, the
GENERAL RULE: $20 per kilogram action is barred except in case of fraud
EXCEPTION: In case of special on the part of the carrier. (Art. 26)
declaration of value and payment of a
supplementary sum by consignor, carrier 2. Prescriptive period
is liable to not more than the declared  Action must be filed within 2 years
sum unless it proves the sum is greater from:
than actual value. a. date of arrival at the destination
b. date of expected arrival
 An agreement relieving the carrier c. date on which the transportation
from liability or fixing a lower limit is stopped. (Art. 29)
null and void. (Art. 23)
 Carrier is not entitled to the foregoing  In United Airlines vs. Uy the two-year
limit if the damage is caused by willful prescriptive period was not applied
misconduct or default on its part. (Art. where the airline employed delaying
25) tactics.
 Thus, the WC does not operate as an RULE IN CASE OF VARIOUS SUCCESSIVE

exclusive enumeration of the instances CARRIERS
of an absolute limit of the extent of 1. Carriage of passengers
liability. It does not preclude the GENERAL RULE: Action is filed only
application of the Civil Code and other against the carrier in which the accident
pertinent local laws. It does not or delay occurred.
regulate or exclude liability for other EXCEPTION: Agreement or contract
breaches of contract by the carrier, or whereby the first carrier assumed
misconduct of its employees, or for some liability for the whole journey.
particular or exceptional type of 2. Carriage of baggage or goods
damage. (Alitalia vs. CA) a. Passenger or consignor can file
an action against the first carrier
 In PanAm v. IAC, the WC was applied and the carrier in which the
as regards the limitation on the carrier’s damage occurred
liability, there being a simple loss of b. Passenger or consignee can file
baggage without any improper conduct an action against the last carrier
and the carrier in which the SALVAGE
damage occurred.  Two concepts:
 These carriers are jointly and 1. Services one person renders to the
severally liable. (Art. 30) owner of a ship or goods, by his own
labor, preserving the goods or the ship
 A contract of international carriage by which the owner or those entrusted with
air, although performed by different the care of them have either abandoned
carriers under a series of airline tickets in distress at sea, or are unable to
constitutes a single operation. Members protect or secure.
of the International Air Transportation 2. Compensation allowed to persons by
Association (IATA) are under a general whose voluntary assistance a ship at sea
pool partnership agreement wherein or her cargo or both have been saved in
they act as agent of each other in the whole or in part from impending sea
issuance of tickets to contracted peril, or such property recovered from
passengers to boost ticket sales actual peril or loss, as in cases of
worldwide and at the same time provide shipwreck, derelict or recapture.
passengers easy access to airlines which  Requisites:
are otherwise inaccessible in some parts 1. Valid object of salvage;
of the world. (American Airlines vs. CA) 2. Object must have been exposed
to marine peril (not perils of the
 Under a general pool partnership ship);
agreement, the ticket-issuing airline is 3. Services rendered voluntarily
the principal in a contract of carriage (neither an existing duty nor out
while the endorsee-airline is the agent. of a pre-existing contract);
The obligation of the former remained 4. Services are successful, total or
and did not cease even when the breach partial.
occurred not on its own flight but on  Subjects of Salvage:
that of another airline which had 1. Ship itself;
undertaken to carry the passengers to 2. Jetsam – goods which are cast into the
one of their destinations. (China Airlines sea, and there sink and remain under
vs. Chiok) water;
3. Floatsam or Flotsam – goods which
JURISDICTION float upon the sea when cast overboard;
 At the option of the plaintiff, the 4. Ligan or Lagan – goods cast into the
action for damages may be filed in the: sea tied to a buoy, so that they may be
a. Court of domicile of the carrier; found again by the owners (p.173, Judge
b. Court of its principal place of Diaz).
business;  Persons who have no right to a
c. Court where it has a place of reward for salvage:
business through which the 1. Crew of the vessel saved;
contract has been made; or 2. Person who commenced Salvage in
d. Court of the place of destination. spite of opposition of the Captain or his
(Art. 28(1)) representative;
NOTE: It is the passenger’s “ultimate 3. In accordance with Sec. 3 of the
destination” not “an agreed stopping Salvage Law, a person who fails to
place” that determines the country deliver a salvaged vessel or cargo to the
where suit is to be filed. Collector of Customs.
 The forum of action provided in Art.
28(1) is a matter of jurisdiction rather  Derelict – a ship or her cargo which is
than of venue. (Santos III vs. Northwest; abandoned and deserted at sea by those
2A C.J.S.) who are in charge of it, without any
hope of recovering it, or without any
V. SALVAGE LAW (Act No. 2616) intention of returning to it.
 The intention of those in charge must the future.
be ascertained. If those in charge left 3. If sold (no claim being made within 3
with the intention of returning, or of months from publication), the
procuring assistance, the property is not proceeds, after deducting expenses
derelict, but if they quitted the property and the salvage claim, shall go to
with the intention of finally leaving it, it the owner; if the latter does not
is derelict and a change of their claim it within 3 years, 50% of the
intention and an attempt to return will said proceeds shall go to the salvors,
not change its nature (Erlanger & who shall divide it equitably, and the
Galinger vs. Swedish East Asiatic Co. other half to the government. (Secs.
Ltd.). 11-12)
4. If a vessel is the salvor, the reward
 If it is clear that the intention to shall be distributed as follows:
return is slight, the salvage which was a. 50% to the shipowner;
done thereafter is considered valid. b. 25% to the captain; and
(Notes and Cases on the Law on
Transportation and Public Utilities,
Aquino, T. & Hernando, R.P. 2004 ed. p. c. 25% to the officers and crew in
616) proportion to their salaries. (Sec.
13)
CONTRACT OF TOWAGE
 A contract whereby one vessel, usually  Taking passengers from a sinking ship,
motorized, pulls another, whether without rendering any service in rescuing
loaded or not with merchandise, from the vessel, is not a salvage service, being
one place to another, for a a duty of humanity and not for reward.
compensation. It is a contract for
services rather than a contract of VI. PUBLIC SERVICE ACT
carriage. (C.A. No. 146)
PURPOSES:
SALVAGE TOWAGE 1. To secure adequate, sustained
Governed by special Governed by Civil service for the public at the
law (Act No. 2616) Code on contract of least possible cost;
lease 2. To protect the public against
Requires success, Success is not unreasonable charges and poor,
otherwise no required inefficient service;
payment 3. To protect and secure
Must be done with Only the consent of investments in public services;
the consent of the the tugboat owner 4. To prevent ruinous competition.
captain/crewmen is needed
Vessel must be Vessel need not be
involved in an involved in an
AUTHORITY TO OPERATE PUBLIC
accident accident SERVICES
Fees distributed Fees belong to the GENERAL RULE: No public service shall
among crewmen tugboat owner operate without having been issued a
certificate of public convenience or a
RULES ON SALVAGE REWARD certificate of public convenience and
1. The reward is fixed by the RTC judge necessity.
in the absence of agreement or EXCEPTIONS:
where the latter is excessive. (Sec. 1. Warehouses;
9) 2. Animal drawn vehicles and
2. The reward should constitute a bancas moved by oar or sail;
sufficient compensation for the 3. Airships, except for the fixing of
outlay and effort of the salvors and maximum rates for fare and
should be liberal enough to offer an freight;
inducement to others to render 4. Radio companies, except for
services in similar emergencies in rates fixing;
5. Public services owned or privilege. The holder of said certificate
operated by the government, does not acquire a property right in the
except as to rates fixing; route covered thereby. Nor does it
6. Ice plants; and confer upon the holder any proprietary
7. Public markets. right or interest or franchise in the
public highways. Revocation of this
PUBLIC SERVICE certificate deprives him of no vested
 A person who owns, operates, manages right. New and additional burdens,
or controls in the Philippines for hire or alteration of the certificate, or even
compensation, with general or limited revocation or annulment thereof is
clientele, whether permanent, reserved to the State. (Luque vs.
occasional or accidental, and done for Villegas, 30 SCRA 408)
general business purposes, any common
carrier or public utility, ice plants,  It is a “property” and has a
power and water supplies, considerable value and can be the
communication and similar public subject of sale or attachment. (Cogeo-
services. (Sec. 13b, CA 146) Cubao Operators and Drivers Assn. vs.
 A casual or incidental service devoid CA, 207 SCRA 343, Raymundo vs. Luneta
of public character and interest is not Motor Co.)
brought within the category. The
question depends on such factors as the REQUREMENTS FOR GRANTING CPC OR
extent of services, whether such person CPCN
or company has held himself or itself out 1. Applicant must be a citizen of the
as ready to serve the public or a portion Philippines or a corporation or entity
of the public generally. (Luzon 60% of the capital of which is owned
Stevedoring vs. PSC) by such citizens;
2. Applicant must prove public
NOTE: The Public Service Commission necessity;
created under the Public Service Law has 3. Applicant must prove that the
already been abolished under P.D. No. 1 operation of the public service
and other issuances. It has been proposed and the authorization to do
replaced by the following government business will promote the public
agencies: LTO; LTFRB; ATO; BOE; NTC; interest on a proper and suitable
NEA; ERB; NWRC; CAB; and MIA. manner;
4. Applicant must have sufficient
financial capability to undertake the
CERTIFICATE OF CERTIFICATE OF proposed services and meeting the
PUBLIC PUBLIC responsibilities incident to its
CONVENIENCE CONVENIENCE operation.
(CPC) AND NECESSITY
(CPCN)
An authorization An authorization POWERS POWERS
issued by the issued by the REQUIRING EXERCISABLE
appropriate appropriate PRIOR NOTICE WITHOUT PRIOR
government agency government agency AND HEARING NOTICE AND
for the operation of for the operation of
HEARING
public services for public service for
which no franchise, which a prior
either municipal or franchise is required 1. Issuance of 1. Investigation
legislative, is by law; e.g. CPC or CPCN; any matter
required by law, telephone and other 2. Fixing of rates, concerning public
e.g., common services. tolls, and charges; service;
carriers. 3. Setting up of 2. Requiring
standards and operators to furnish
classifications; safe, adequate, and
 A CPC or a CPCN constitutes neither a 4. Establishment proper service;
franchise nor a contract, confers no of rules to secure 3. Requiring public
property right, and is a mere license or a accuracy of all services to pay
meters and all expenses of
measuring investigation;  Under Sec. 20(g) of C.A. No. 146, the
appliances; 4. Valuation of sale, etc. may be negotiated and
5. Issuance of properties of public completed before the approval by the
orders requiring utilities;
proper authority. Its approval is not a
establishment or 5. Examination and
maintenance of test of measuring condition precedent to the validity of
extension of appliances; the contract. The approval is necessary
facilities; 6. Grant of special only to protect public interest.
6. Revocation, or permits to make
modification of extra or special trips PRIOR OPERATOR/OLD OPERATOR RULE
CPC or CPCN; in territories  The rule allowing an existing franchised
7. Suspension of specified in the operator to invoke a preferential right
CPC or CPCN, certificate;
within the authorized territory as long as
except when it is 7. Uniform
necessary to avoid accounting system
he renders satisfactory and economical
serious and and furnishing of service.
irreparable damage annual reports;  The policy is not to issue a certificate
or inconvenience 8. Compelling to a second operator to cover the same
to the public or compliance with the field and in competition with a first
private interest, in laws and operator who is rendering sufficient,
which case, a regulations. adequate and satisfactory service. The
suspension not prior operator must first be given an
more than 30 days
opportunity to improve its service, if
may be ordered,
prior to the inadequate or deficient.
hearing. (Soriano  Purpose: To prevent ruinous and
v. Medina, 164 wasteful competition in order that the
SCRA 36) interests of the public would be
conserved and preserved.
UNLAWFUL ACTS OF PUBLIC UTILITY
COMPANIES  It subordinates the prior applicant
1. Engagement in public service rule which gives the first applicant
business without first securing the priority only if things and circumstances
proper certificate; are equal.
2. Providing or maintaining unsafe,
improper or inadequate service as  Where the operator either fails or
determined by the proper authority; neglects to make the improvement or
3. Committing any act of unreasonable effect the increase in services,
and unjust preferential treatment to especially when given the opportunity,
any particular person, corporation or new operators should be given the
entity as determined by the proper chance to give the services needed by
authority; the public.
4. Refusing or neglecting to carry
public mail upon request. (Secs. 18 PRIOR APPLICANT RULE
and 19)  Presupposes a situation when two
interested persons apply for a certificate
ACTS REQUIRING PRIOR APPROVAL to operate a public utility in the same
1. Establish and maintain individual or community over which no person has as
joint rates; yet granted any certificate. If it turns
2. Establish and operate new units; out, after the hearing, that the
3. Issue free tickets; circumstances between the two
4. Issue any stock or stock certificates applicants are more or less equal, then
representing an increase of capital; the applicant who applied ahead of the
5. Capitalize any franchise in excess of other, will be granted the certificate.
the amount actually paid to the
Government; RATE-FIXING POWER
6. Sell, alienate, mortgage or lease  The rate to be fixed must be just,
property, certificates or franchise.
founded upon conditions which are fair
and reasonable to both the owner and
the public.
 A rate is just and reasonable if it
conforms to the following requirements:
1. One which yields to the carrier a
fair return upon the value of the
property employed in performing
the service; and
2. One which is fair to the public
for the service rendered.
REGISTERED OWNER RULE

 The registered owner of a certificate of
public convenience is liable to the public
for the injuries or damages suffered by
third persons caused by the operation of 2. The registered owner is primarily
said vehicle, even though the same had liable for all the consequences
been transferred to a third person. flowing from the operations of the
 The registered owner is not allowed carrier.
to escape responsibility by proving that a  The public has the right to assume
third person is the actual and real owner that the registered owner is the
Reason: It would be easy for him, by actual or lawful owner thereof. It
collusion with others or otherwise, to would be very difficult and often
transfer the responsibility to an impossible, as a practical matter, for
indefinite person, or to one who the public to enforce their rights of
possesses no property with which to action that they may have for
respond financially for the damage or injuries inflicted by the vehicle if
injury done. (Erezo, et al. vs. Jepte 102 they should be required to prove
Phil 103). who the actual owner is. (Benedicto
vs. IAC, 187 SCRA 547)
KABIT SYSTEM 3. The thrust of the law in enjoining
 A system whereby a person who has the kabit system is to identify the
been granted a certificate of public person upon whom responsibility
convenience allows other persons who may be fixed with the end in view of
own motor vehicles to operate under protecting the riding public (Lim vs.
such license, for a fee or percentage of CA 373 SCRA 394).
such earnings. It is void and inexistent 4. The registered owner cannot recover
under Art. 1409, Civil Code. from the actual owner and the latter
 Effects: cannot obtain transfer of the vehicle
1. The transfer, sale, lease or to himself, both being in pari
assignment of the privilege granted delicto. (Teja Marketing vs. IAC)
is valid between the contracting 5. For the better protection of the
parties but not upon the public or public, both the registered owner
third persons. (Gelisan vs. Alday, 154 and the actual owner are jointly and
SCRA 388) severally liable with the driver.
(Zamboanga Transportation Co. vs.
CA)

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54 2005 CENTRALIZED BAR OPERATIONS

CONTRACT OF TRANSPORTATION/ Industrial Corporation vs. CA)

or passengers provided it has space for b. Air: Warsaw Convention

COMMON CARRIER PRIVATE REQUIREMENT OF EXTRAORDINARY

alighting, is injured by the by the inherent defect/character of the

COMMERCIAL LAW COMMITTEE

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Art.1735 Civil Code Art.1755 Civil Code

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND

1. Ordinary circumstance: Exercise of 1. Exercise of extraordinary diligence

1. Reduction of degree of diligence to ordinary Stipulation limiting liability when a passenger

 The diligence required in the carriage of the

COMMERCIAL LAW COMMITTEE

committed by thieves or robbers who do not

2005 CENTRALIZED BAR OPERATIONS EXECUTIVE COMMITTEE AND

II. CODE OF COMMERCE 5. Acceptance of the bill of lading

Second Mate Just Causes for the Discharge of

When When Who bears COLLISION

 Thus, the WC does not operate as an RULE IN CASE OF VARIOUS SUCCESSIVE

REGISTERED OWNER RULE

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