I.

Governing Laws
a. Constitution
Article III, Section 6 “(t)he liberty of abode and of changing the same within the
limits prescribed by law shall not be impaired except upon lawful order of the court.
Neither shall the right to travel be impaired except in the interest of national security,
public safety, or public health, as may be provided by law.”
b. Civil Code
Article 1732 persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public
c. Code of Commerce
Article 349 -374
d. COGSA
"Carriage of Goods by Sea Act";
e. Warsaw Convention
is an international convention which regulates liability for international
carriage of persons, luggage, or goods performed by aircraft for reward.
II. Constitutional Provisions
a. Article XII Sec. 11 (Franchise)
Section 11. No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at least
sixty per centum of whose capital is owned by such citizens; nor shall such
franchise, certificate, or authorization be exclusive in character or for a longer period
than fifty years. Neither shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal by the Congress
when the common good so requires. The State shall encourage equity participation in
public utilities by the general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their proportionate
share in its capital, and all the executive and managing officers of such corporation
or association must be citizens of the Philippines.
b. Article XII Sec. 17 (Temporary Take Over the Operation)
Section 17. In times of national emergency, when the public interest so
requires, the State may, during the emergency and under reasonable terms
prescribed by it, temporarily take over or direct the operation of any privately-owned
public utility or business affected with public interest.
c. Article XII Sec. 18 (Transfer to Public Ownership)
Section 18. The State may, in the interest of national welfare or defense,
establish and operate vital industries and, upon payment of just compensation,
transfer to public ownership utilities and other private enterprises to be operated by
the Government.
d. Article XII Sec. 19 (Prohibit Monopolies)
Section 19. The State shall regulate or prohibit monopolies when the public
interest so requires. No combinations in restraint of trade or unfair competition shall
be allowed.
III. Contract of Transportation (Definition, Elements, and Types)
A contract whereby a person, natural or juridical, obligates to transport
persons, goods, or both, from one place to another, by land, air or water, for a price
or compensation.
Elements:
 Natural/ Juridical Person
 Obligates transport persons, goods, or both
 from one place to another, by land, air or water
 for a price or compensation
 TYPE:
CARRIAGE OF PERSON - PASSENGER
CARRIAGE OF GOODS – SHIPPER/CARRIER

IV. Classifications of a Contract of Carriage (5)

1. Common or Private
2. Goods or Passengers
3. For a fee (for hire) or Gratuitous
4. Land, Water/maritime, or Air
5. Domestic/inter-island/coastwise or International/foreign

V. Parties to a Contract of Transportation

I. Carriage of Passengers (CC & P) Who are not considered a Passenger? Vda. De
Nueca v Manila Rail Road Co., CA No. 31731 – R, January 30, 1968
A passenger is one who travels in a public conveyance by virtue of a contract,
express or implied, with the carrier as to the payment of the fare, or that which is accepted
as an equivalent.
The relation of passenger and carrier commences when one puts himself in the care
of the carrier, or directly under its control, with the bona fide intention of becoming a
passenger, and is accepted as such by the carrier – as where he makes a contract for
trasportation and presents himself at the proper place and in a proper manner to be
transported.
II. Carriage of Goods
Shipper – the person who delivers the goods to the carrier for transportation;
pays the consideration or on whose behalf payment is made.
Consignee – person to whom the goods are to be delivered. May be the shipper
himself or a third person who is not actually a party to the contract
Carrier
VI. Perfection of Contract of Transportation
a. Contract to Carry
perfected by mere consent
b. Contract of Carriage or CC
; perfected by actual use.
contract of carriage - act of delivery of goods ( goods are unconditionally
placed in the possession and control of the carrier and upon their receipt by the carrier for
transportation)
VII. Continuous Offer Rule (Buses, Jeepneys, Street Cars) Dangwa Transportation Co.,
Inc. v. CA, GR No. 95582, October 7, 1991
Continuous offer RULE
VIII. Carriage of Passengers (CC & P)
IX. Tests for a Common Carrier (4) First Philippine Industrial Corp., v. CA, GR No.
125948, December 29, 1998
1. He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of goods
for person generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted
and over his established roads; and
4. The transportation must be for hire.
X. Characteristics of a Common Carrier
XI. Private Carrier
Home Insurance Co., v. American Steamship Agency, GR No. L – 25599, April 4, 1968
XII. Distinctions between Common Carrier and Private Carrier (7)
XIII. Conversion of Common Carrier into Private Carrier (Charter by Demise/
Bareboat) Caltex [Phils] Inc., v. Sulpicio Lines, GR No. 131166, September 30, 1999

XIV. Rules on the ff:

 a. Tour Package – the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between the parties in this case
was an ordinary one for services and not one of carriage. a common carrier in a contract of
carriage is bound by law to carry passengers as far as human care and foresight can
provide using the utmost diligence of very cautious persons and with due regard for all the
circumstances. Tour Package is contract between the parties is an ordinary one for
services, the standard of care required of respondent is that of a good father of a family
under Article 1173 of the Civil Code.12 This connotes reasonable care consistent with that
which an ordinarily prudent person would have observed when confronted with a similar
situation. (Crisostomo vs CA GR 138334 August 25, 2003)
b. Junk Dealer - The true test for a common carrier is not the quantity or extent of
the business actually transacted, or the number and character of the conveyances used in
the activity, but whether the undertaking is a part of the activity engaged in by the carrier
that he has held out to the general public as his business or occupation. If the undertaking
is a single transaction, not a part of the general business or occupation engaged in, as
advertised and held out to the general public, the individual or the entity rendering such
service is a private, not a common, carrier. The question must be determined by the
character of the business actually carried on by the carrier, not by any secret intention or
mental reservation it may entertain or assert when charged with the duties and obligations
that the law imposes.”
–Spouses Teodoro v. Spouses Zarate, 2012
extraordinary diligence
c. Pipeline
“It is engaged in the business of transporting or carrying goods, i.e. petroleum
products, for hire as a public employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to employ its services, and transports the
goods by land and for compensation. The fact that petitioner has a limited clientele does
not exclude it from the definition of a common carrier.”
–First Philippine Industrial Corp. v. CA, 1998
d. School Bus
- usually regarded as a private carrier, primarily because he only caters to
some specific or privileged individuals, and his operation is neither open to the indefinite
public nor for public use
However, if such school bus held themselves out as a ready transportation
indiscriminately to the students of a particular school living within or near where they
operated the service and for a fee, it can now be regarded as common carrier
e. Lighterage and Dryage – A common carrier need not have fixed and publicly
known routes. Neither does it have to maintain terminals or issue tickets. To be sure,
petitioner fits the test of a common carrier as laid down in Bascos vs. Court of Appeals. The
test to determine a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." In the case at
bar, the petitioner admitted that it is engaged in the business of shipping and lighterage,
offering its barges to the public, despite its limited clientele for carrying or transporting
goods by water for compensation.
f. Travel Agency
g. Towage
h. Arrastre Service (Nature of Business)
i. Stevedoring Service
XV. Registered Owner Rule
a. General Rule
b. Reason
c. Exception to the GR Duavit v. CA, GR No. 82318, May 18, 1989
d. Lease of Vehicle (Registered vs Not Registered)
e. Remedy of the Registered Owner against the Transferee Villanueva v.
Domingo, GR No. 144274, September 20, 2004
 f. Kabit System
g. Liability against Third Person Zamboanga Transportation Co. v. CA, GR No.
L – 25292, November 29, 1969 h. Boundary System
i. Relationship between Operator and Driver
XVI. Obligations of a Common Carrier in the Carriage of Goods (PASTE) Saludo
Jr v. CA, GR No. 95536, March 23, 1992
XVII. Defenses of a Common Carrier in the Carriage of Goods
1. Ordinary Circumstances : exercised extraordinary diligence
2. Special Circumstances:
a. ARTICLE 1734. Common carriers are responsible for the loss, destruction,
or deterioration of the goods, unless the same is due to any of the following
causes only:
i. Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
1. Force majeure, - refer to any event beyond the reasonable
control of the Owner or the Contractor, as the case may be, and
which is unavoidable notwithstanding the reasonable care of
the party affected.
Requisites:
a. Must be the proximate and only cause of the loss
b. Exercise of due diligence to prevent or minimize the loss before,
during or after the occurrence of the disaster (Art. 1739)
c. Carrier has not negligently incurred in delay in transporting the
goods (Art. 1740)
ii. Act of the public enemy in war, whether international or civil;
Requisites:
a. Must be the proximate and only cause of the loss
b. Exercise of due diligence to prevent or minimize the loss before,
during or after the act causing the loss, deterioration or destruction of
the goods (Art. 1739)
iii. Act or omission of the shipper or owner of the goods;
Can be:
a. Sole and proximate cause: absolute defense
b. Contributory: partial defense. (Art. 1741)
iv. The character of the goods or defects in the packing or in the
containers;
v. Order or act of competent public authority.
b. ARTICLE 1742. Even if the loss, destruction, or deterioration of the goods
should be caused by the character of the goods, or the faulty nature of the
packing or of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
c. ARTICLE 1743. If through the order of public authority the goods are
seized or destroyed, the common carrier is not responsible, provided said
public authority had power to issue the order.
XVIII. Defenses of common carrier of passenger
- Extraordinary diligence
o extreme care and caution which very prudent and thoughtful persons use in
securing and preserving their own property.
XIX. Obligations/duties of common Carrier in Passenger
Article 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious persons,
with a due regard for all the circumstances.
Cases:
ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G. SALUDO and
SATURNINO G. SALUDO, petitioners, vs. HON. COURT OF APPEALS, TRANS WORLD
AIRLINES, INC., and PHILIPPINE AIRLINES, INC., respondents.

G.R. No. 95536, March 23, 1992, Second Division, REGALADO, J.

The carrier has the right to accept shipper's marks as to the contents of the package
offered for transportation and is not bound to inquire particularly about them in order to take
advantage of a false classification and where a shipper expressly represents the contents of
a package to be of a designated character, it is not the duty of the carrier to ask for a
repetition of the statement nor disbelieve it and open the box and see for itself.

Facts:

Petitioners herein together with Pomierski and Son Funeral Home of Chicago brought
the remains of petitioners’ mother to Continental Mortuary Air Services (CMAS) which
booked the shipment of the remains from Chicago to San Francisco by Trans World Airways
(TWA) and from San Francisco to Manila with Philippine Airlines (PAL).

The remains were taken to the Chicago Airport, but it turned out that there were two
(2) bodies in the said airport. Somehow the two (2) bodies were switched, and the remains
of petitioners’ mother was shipped to Mexico instead.

The shipment was immediately loaded on another PAL flight and it arrived the day
after the expected arrival. Petitioners filed a claim for damages in court. Petitioners
consider TWA's statement that "it had to rely on the information furnished by the shipper"
a lame excuse and that its failure to prove that its personnel verified and identified the
contents of the casket before loading the same constituted negligence on the part of TWA.

The lower court absolved both airlines and upon appeal it was affirmed by the court.
Issue:
Whether or not private respondents is liable for damages for the switching of the two
caskets.

Ruling:

No. The Supreme Court concluded that the switching occurred or, more accurately,
was discovered on October 27, 1976; and based on the above findings of the Court of
appeals, it happened while the cargo was still with CMAS, well before the same was place in
the custody of private respondents. Verily, no amount of inspection by respondent airline
companies could have guarded against the switching that had already taken place. Or,
granting that they could have opened the casket to inspect its contents, private
respondents had no means of ascertaining whether the body therein contained was indeed
that of Crispina Saludo except, possibly, if the body was that of a male person and such
fact was visually apparent upon opening the casket. However, to repeat, private
respondents had no authority to unseal and open the same nor did they have any reason or
justification to resort thereto.

It is the right of the carrier to require good faith on the part of those persons who
deliver goods to be carried, or enter into contracts with it, and inasmuch as the freight may
depend on the value of the article to be carried, the carrier ordinarily has the right to
inquire as to its value. Ordinarily, too, it is the duty of the carrier to make inquiry as to the
general nature of the articles shipped and of their value before it consents to carry them;
and its failure to do so cannot defeat the shipper's right to recovery of the full value of the
package if lost, in the absence of showing of fraud or deceit on the part of the shipper. In
the absence of more definite information, the carrier has a the right to accept shipper's
marks as to the contents of the package offered for transportation and is not bound to
inquire particularly about them in order to take advantage of a false classification and
where a shipper expressly represents the contents of a package to be of a designated
character, it is not the duty of the carrier to ask for a repetition of the statement nor
disbelieve it and open the box and see for itself. However, where a common carrier has
reasonable ground to suspect that the offered goods are of a dangerous or illegal character,
the carrier has the right to know the character of such goods and to insist on an
inspection, if reasonable and practical under the circumstances, as a condition of receiving
and transporting such goods.

It can safely be said then that a common carrier is entitled to fair representation of
the nature and value of the goods to be carried, with the concomitant right to rely thereon,
and further noting at this juncture that a carrier has no obligation to inquire into the
correctness or sufficiency of such information. The consequent duty to conduct an
inspection thereof arises in the event that there should be reason to doubt the veracity of
such representations. Therefore, to be subjected to unusual search, other than the
routinary inspection procedure customarily undertaken, there must exist proof that would
justify cause for apprehension that the baggage is dangerous as to warrant exhaustive
inspection, or even refusal to accept carriage of the same; and it is the failure of the carrier
to act accordingly in the face of such proof that constitutes the basis of the common
carrier's liability.

In the case at bar, private respondents had no reason whatsoever to doubt the truth
of the shipper's representations. The airway bill expressly providing that "carrier certifies
goods received below were received for carriage," and that the cargo contained "casketed
human remains of Crispina Saludo," was issued on the basis of such representations. The
reliance thereon by private respondents was reasonable and, for so doing, they cannot be
said to have acted negligently. Likewise, no evidence was adduced to suggest even an iota of
suspicion that the cargo presented for transportation was anything other than what it was
declared to be, as would require more than routine inspection or call for the carrier to insist
that the same be opened for scrutiny of its contents per declaration.

Dangwa Transportation Co., Inc. v CA GR No. 95582 Oct. 7, 1991

Facts: On May 13, 1985, private respondents filed a complaint for damages against
petitioners for the death of Pedrito Cudiamat as a result of a vehicular accident which
occurred on March 25, 1985 at Marivic, Sapid, Mankayan, Benguet. Among others, it was
alleged that on said date, while petitioner Theodore M. Lardizabal was driving a passenger
bus belonging to petitioner corporation in a reckless and imprudent manner and without
due regard to traffic rules and regulations and safety to persons and property, it ran over
its passenger, Pedrito Cudiamat. However, instead of bringing Pedrito immediately to the
nearest hospital, the said driver, in utter bad faith and without regard to the welfare of the
victim, first brought his other passengers and cargo to their respective destinations before
bringing said victim to the Lepanto Hospital where he expired.

Issue: W/N respondent court erred in reversing the decision of the trial court and in finding
petitioners negligent and liable for the damages claimed.

Held: No.After a careful review of the evidence on record, we find no reason to disturb the
above holding of the Court of Appeals.

The contention of petitioners that the driver and the conductor had no knowledge that the
victim would ride on the bus, since the latter had supposedly not manifested his intention
to board the same, does not merit consideration. When the bus is not in motion there is no
necessity for a person who wants to ride the same to signal his intention to board. A public
utility bus, once it stops, is in effect making a continuous offer to bus riders.

It is the duty of common carriers of passengers, including common carriers by railroad

train, streetcar, or motorbus, to stop their conveyances a reasonable length of time in order
to afford passengers an opportunity to board and enter, and they are liable for injuries
suffered by boarding passengers resulting from the sudden starting up or jerking of their
conveyances while they are doing so.

It has also been repeatedly held that in an action based on a contract of carriage, the court
need not make an express finding of fault or negligence on the part of the carrier in order to
hold it responsible to pay the damages sought by the passenger. By the contract of
carriage, the carrier assumes the express obligation to transport the passenger to
destination safely and to observe extraordinary diligence with a due regard for all the
circumstances, and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier. This is an exception to the general rule
that negligence must be proved, and it is therefore incumbent upon the carrier to prove
that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the
Civil Code.
Light Rail Transit Authority & Rodolfo Roman v. Marjorie Navidad & Prudent Security
Agency
G.R. No. 145804, February 6, 2003
Vitug, J.
FACTS:
On 14 October 1993, about 7:30 in the evening, Nicanor Navidad, then drunk, entered
the EDSA LRT station after purchasing a token. While Navidad was standing on the
platform near the LRT tracks, the assigned security guard Junelito Escartin approached
Navidad. A misunderstanding between them was apparently ensued that led to a fist
fight. No evidencewas adduced to indicate how the fight started or who, between the two,
delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment
that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming
in. Navidad was struck by the moving train, and he was killed instantaneously.
The widow of Nicanor, Marjorie Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent Security Agency for the death of her
husband.Prudent Security Agency denied liability and averred that it had exercised due
diligence in the selection and supervision of its security guards.The LRTA and Roman
presented their evidence while Prudent and Escartinfiled a demurrer contending that
Navidad had failed to prove that Escartin was negligent in his assigned task. 
The RTC Pasig ruled against Prudent Security Agency and Junelito Escartin ordering
them to pay for actual and moral damages, the attorney’s fees and cost of suit, and
dismissed the complaint against LRTA and Roman for lack of merit
Prudent appealed to the Court of Appeals and the court modified the lower court’s
decision by exonerating Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable.
ISSUE:
Is the LRTA liable for the death of Nicanor Navidad?
RULING:
Yes, LRTA is liable.
The law requires common carriers to carry passengers safely using the utmost diligence of
very cautious persons with due regard for all circumstances. Such duty of a common
carrier to provide safety to its passengers so obligates it not only during the course of the
trip but for so long as the passengers are within its premises and where they ought to be in
pursuance to the contract of carriage. The statutory provisions render a common carrier
liable for death of or injury to passengers (a) through the negligence or willful acts of its
employees or b) on account of willful acts or negligence of other passengers or of
strangers if the common carriers employees through the exercise of due diligence could
have prevented or stopped the act or omission. In case of such death or injury, a carrier is
presumed to have been at fault or been negligent, and by simple proof of injury, the
passenger is relieved of the duty to still establish the fault or negligence of the carrier or of
its employees and the burden shifts upon the carrier to prove that the injury is due to an
unforeseen event or to force majeure.
The foundation of LRTA’s liability is the contract of carriage and its obligation to
indemnify the victim arises from the breach of that contract by reason of its failure to
exercise the high diligence required of the common carrier. In the discharge of its
commitment to ensure the safety of passengers, a carrier may choose to hire its own
employees or avail itself of the services of an outsider or an independent firm to undertake
the task. In either case, the common carrier is not relieved of its responsibilities under the
contract of carriage.

Del Prado v. MERALCO, G.R. No. L-29462 (March 7, 1929)

Facts: Teodorico Florenciano, Meralco’s motorman, was driving the company’s street car
along Hidalgo Street. Plaintiff Ignacio Del Prado ran across the street to catch the car. The
motorman eased up but did not put the car into complete stop. Plaintiff was able to get
hold of the rail and step his left foot when the car accelerated. As a result, plaintiff slipped
off and fell to the ground. His foot was crushed by the wheel of the car. He filed a complaint
for culpa contractual.
Issues:
(1) Whether the motorman was negligent
(2) Whether Meralco is liable for breach of contract of carriage
(3) Whether there was contributory negligence on the part of the plaintiff
Held:
(1) We may observe at the outset that there is no obligation on the part of a street railway
company to stop its cars to let on intending passengers at other points than those
appointed for stoppage. Nevertheless, although the motorman of this car was not bound to
stop to let the plaintiff on, it was his duty to do no act that would have the effect of
increasing the plaintiff's peril while he was attempting to board the car. The premature
acceleration of the car was, in our opinion, a breach of this duty.
(2) The relation between a carrier of passengers for hire and its patrons is of a contractual
nature; and a failure on the part of the carrier to use due care in carrying its passengers
safely is a breach of duty (culpa contractual). Furthermore, the duty that the carrier of
passengers owes to its patrons extends to persons boarding the cars as well as to those
alighting therefrom. Where liability arises from a mere tort (culpa aquiliana), not involving a
breach of positive obligation, an employer, or master, may exculpate himself by proving
that he had exercised due diligence to prevent the damage; whereas this defense is not
available if the liability of the master arises from a breach of contractual duty (culpa
contractual). In the case before us the company pleaded as a special defense that it had
used all the diligence of a good father of a family to prevent the damage suffered by the
plaintiff; and to establish this contention the company introduced testimony showing that
due care had been used in training and instructing the motorman in charge of this car in
his art. But this proof is irrelevant in view of the fact that the liability involved was derived
from a breach of obligation.
(3) It is obvious that the plaintiff's negligence in attempting to board the moving car was
not the proximate cause of the injury. The direct and proximate cause of the injury was the
act of appellant's motorman in putting on the power prematurely. Again, the situation
before us is one where the negligent act of the company's servant succeeded the negligent
act of the plaintiff, and the negligence of the company must be considered the proximate
cause of the injury. The rule here applicable seems to be analogous to, if not identical with
that which is sometimes referred to as the doctrine of "the last clear chance." In accordance
with this doctrine, the contributory negligence of the party injured will not defeat the action
if it be shown that the defendant might, by the exercise of reasonable care and prudence,
have avoided the consequences of the negligence of the injured party. The negligence of the
plaintiff was, however, contributory to the accident and must be considered as a mitigating
circumstance.

PNR v BRUNTY [G.R. No. 169891. November 2, 2006.] PHILIPPINE NATIONAL

RAILWAYS, petitioner, vs. ETHEL BRUNTY and JUAN MANUEL M. GARCIA,
respondents.

FACTS:
Rhonda Brunty, daughter of respondent Ethel Brunty and an American citizen, came to the
Philippines for a visit sometime in January 1980. Prior to her departure, she, together with
her Filipino host Juan Manuel M. Garcia, traveled to Baguio City on board a Mercedes Benz
sedan with plate number FU 799, driven by Rodolfo L. Mercelita. It was about 12:00
midnight, January 25, 1980. By then, PNR Train No. T- 71, driven by Alfonso Reyes, was
on its way to Tutuban, Metro Manila 4 as it had left the La Union station at 11:00 p.m.,
January 24, 1980.

By 2:00 a.m., Rhonda Brunty, Garcia and Mercelita were already approaching the railroad
crossing at Barangay Rizal, Moncada, Tarlac. Mercelita, driving at approximately 70 km/hr,
drove past a vehicle, unaware of the railroad track up ahead and that they were about to
collide with PNR Train No. T-71. Mercelita was instantly killed when the Mercedes Benz
smashed into the train; the two other passengers suffered serious physical injuries. 5 A
certain James Harrow 6 brought Rhonda Brunty to the Central Luzon Doctor's Hospital in
Tarlac, where she was pronounced dead after ten minutes from arrival. Garcia, who had
suffered severe head injuries, was brought via ambulance to the same hospital. He was
transferred to the Manila Doctor's Hospital, and later to the Makati Medical Center for
further treatment. 7

On July 28, 1981, Ethel Brunty sent a demand letter 8 to the PNR demanding payment of
actual, compensatory, and moral damages, as a result of her daughter's death. When PNR
did not respond, Ethel Brunty and Garcia, filed a complaint 9 for damages against the PNR
before the RTC of Manila.

Allegations:
1. direct and proximate result of the gross and reckless negligence of PNR in not providing
the necessary equipment at the railroad crossing in Barangay Rizal, Municipality of
Moncada, Tarlac.

2. there was no flagbar or red light signal to warn motorists who were about to cross the
railroad track, and that the flagman or switchman was only equipped with a hand
flashlight

3. failed to supervise its employees in the performance of their respective tasks and duties,
more particularly the pilot and operator of the train

Defenses:
1. right of way on the railroad crossing in question, and that it has no legal duty to put up
a bar or red light signal in any such crossing. 2. there were adequate, visible, and clear
warning signs strategically posted on the sides of the road before the railroad crossing.
3. the immediate and proximate cause of the accident was Mercelita's negligence, and that
he had the last clear chance to avoid the accident. The driver disregarded the warning
signs, the whistle blasts of the oncoming train and the flashlight signals to stop given by
the guard

DECISION OF LOWER COURTS:

1. RTC: directed PNR to pay

2. CA: affirmed RTC with modification as to amount of damages

ISSUE:
Is PNR liable?

RULING:
Yes

the alleged safety measures installed by the PNR at the railroad crossing is not only
inadequate but does not satisfy well-settled safety standards in transportation

An examination of the photographs of the railroad crossing at Moncada, Tarlac presented

as evidence by PNR itself would yield the following:
(1.) absence of flagbars or safety railroad bars;
(2.) inadequacy of the installed warning signals; and
(3.) lack of proper lighting within the area. Thus, even if there was a flagman stationed at
the site as claimed by PNR (petitioner), it would still be impossible to know or see that there
is a railroad crossing/tracks ahead, or that there is an approaching train from the Moncada
side of the road since one's view would be blocked by a cockpit arena

To prove contributory negligence, it is still necessary to establish a causal link, although

not proximate, between the negligence of the party and the succeeding injury. In a legal
sense, negligence is contributory only when it contributes proximately to the injury, and
not simply a condition for its occurrence.

The court below found that there was a slight curve before approaching the tracks; the
place was not properly illuminated; one's view was blocked by a cockpit arena; and
Mercelita was not familiar with the road. Yet, it was also established that Mercelita was
then driving the Mercedes Benz at a speed of 70 km/hr and, in fact, had overtaken a
vehicle a few yards before reaching the railroad track. Mercelita should not have driven the
car the way he did. However, while his acts contributed to the collision, they nevertheless
do not negate petitioner's liability. The record is bereft of any allegation and proof as to the
relationship between Mercelita (the driver) and Rhonda Brunty. Hence, the earlier finding of
contributory negligence on the part of Mercelita, which generally has the effect of mitigation
of liability, does not apply. 

Vicente Calalas vs. Court of Appeals, Eliza Jujeurche Sunga and Francisco Salva
G.R. No. 122039, May 31, 2000
332 SCRA 356
FACTS:
Respondent, Eliza Sunga took a passenger jeepney owned and operated by petitioner
Vicente Calalas. The jeepney was already filled with passengers so she was given by the
conductor an “extension seat,” a wooden stool at the back of the door. As she was seated at
the rear end of the vehicle, Sunga gave way to the outgoing passenger. Unfortunately, a
truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion
of the jeepney. As a result, Sunga was injured.
Sunga then filed a complaint for damages against Calalas, alleging violation of the contract
of carriage by the former in failing to exercise the diligence required of him as a common
carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva,
the owner of the truck.
RTC’s decision: Absolved Calalas of liability and ruled that Salva as third-party defendant
was responsible for the accident. It took cognizance of another case (Civil Case No. 3490),
filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same
court held Salva and his driver Verena jointly liable to Calalas for the damage to his
jeepney.
CA’s decision: reversed RTC’s ruling on the ground that Sunga’s cause of action was based
on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise
the diligence required under the Civil Code. It also dismissed the third-party complaint
against Salva and adjudged Calalas liable for damages to Sunga.
ISSUES:
1. Whether or not respondent passenger is bound by the ruling in Civil Case No. 3490
finding the driver and the owner of the truck liable for quasi-delict.
2. Whether or not respondent carrier is responsible for the injury caused to its passenger
when the accident was caused by another vehicle.
3. Whether or not the bumping of the jeepney by the truck owned by Salva was a caso
fortuito.

4. Whether or not respondent passenger is entitled to moral damages.

RULING:
1. No. The principle of res judicata does not apply where a party in a pending case was
never a party in a previous one. And besides, the issues in Civil Case No. 3490 and in the
present case are not the same. The issue in Civil Case No. 3490 was whether Salva and his
driver Verena were liable for quasi-delict for the damage caused to petitioner’s jeepney. On
the other hand, the issue in this case is whether petitioner is liable on his contract of
carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual,
has as its source the negligence of the tortfeasor. The second, breach of contract or culpa
contractual, is premised upon the negligence in the performance of a contractual obligation.

2. Yes. The liability of petitioner arises from his negligence in the performance of his
contractual obligation or breach of contract of carriage. Art. 1756 of the Civil Code provides
that common carriers are presumed to have been at fault or to have acted negligently in
case of death or injuries to passengers, unless they prove that they observed extraordinary
diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to
the common carrier the burden of proof. It is now the duty of petitioner to prove that he
observed extraordinary diligence in the care of his passengers. However, in this case,
petitioner failed to prove that he observed extraordinary diligence in the care of his
passengers. It was found that the jeepney was not properly parked and he took more
passengers than the allowed seating capacity.
3. No. The taking of an “extension seat” is not an implied assumption of risk on the part of
the passenger. A caso fortuito is an event which could not be foreseen, or which, though
foreseen, was inevitable. This requires that the following requirements be present: (a) the
cause of the breach is independent of the obligor’s will; (b) the event is unforeseeable or
unavoidable; (c) the event is such as to render it impossible for the obligor to fulfill his
obligation in a normal manner, and (d) the obligor did not take part in causing the injury to
the creditor. Petitioner should have foreseen the danger of parking his jeepney with its body
protruding two meters into the highway.

4. No. Petitioner did not act in bad faith in the performance of the contract of carriage. As a
general rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil
Code. As an exception, such damages are recoverable: (1) in cases in which the mishap
results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of
the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as
provided in Art. 2220.

XX. Obligations of Shipper, Consignee and Passenger

a. Twin Duty
It is the obligation of the shipper to exercise due diligence in avoiding damage
to the goods that are being transported. It is likewise an obligation of the carrier to ensure
that the exercise of due diligence is observe I the transportation of the goods and deliver
such goods to its destination.
b. When is the CC not liable
Common carrier may not be held liable if the common carrier can show that he
observe extraordinary diligence and proved that it is the negligence of the shipper is the
proximate and only cause of the loss. the shipper can overcome the presumption of
negligence if they can prove any of the following acts of the shipper:
1. failure of the shipper to disclose the nature of goods
2. improper marking or direction as to destination
3. improper loading when he assumes such responsibility
*the shipper must see to it that the goods are properly packed, otherwise the liability
of the carrier may be mitigated or barred depending on the circumstances.
c. Assumption of Risk (Calalas v. CA., GR No. 122039, May 31, 2000)
The doctrine of assumption of risk is a defense in negligence cases involving
quasi-delicts, wherein one who voluntarily assumed the risk of injury from a known danger
is debarred from a recovery. It is said that one who knows, appreciates, and deliberately
exposes himself to a danger ‘assumes the risk’ thereof. The doctrine of assumption of risk is
in effect, a waiver of a right to recover. According to the Civil Code, “Rights may be waived,
unless the waiver is contrary to law, public order, public policy, morals, or good customs or
prejudicial to a third person with a right recognized by law.” In this regard, such may be
waived by express consent, or by implied assumption, considering the nature and
circumstances surrounding the act or omission.
Elements:
a. the plaintiff must know that the risk is present;
b. he must further understand its nature;
 c. his choice to incur it is free and voluntary
*. In assumption of risk, the knowledge of the risk is present, while in
fortuitous event, a defendant is not liable when an event which could not be foreseen, or
which though foreseen, was inevitable
XXI. Extraordinary Diligence
a. Definitions
Extraordinary diligence is that extreme care and caution which very prudent
and thoughtful persons exercise under the same or similar circumstances.

b. Reasons
A common carrier is bound to carry the passengers safely as far as human care
and foresight can provide, using the utmost deligence of very cautions persons, with due
regard for all circumstances. This extraordinary diligence required of common carriers is
calculated to protect the passengers from the tragic mishaps that frequently occur in
connection with rapid modern transportation. This high standard of care is imperatively
demanded by the precariousness of human life and by the consideration that every person
must in every way be safeguarded against all injury

c. Doctrine of Presumption of Negligence

As provided by ART. 1756. In case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as prescribed in articles 1733 and
1755.

d. Stipulations Limiting the Carrier’s Liability (3 Requisites)

As provided by Article 1744. A stipulation between the common carrier and the
shipper or owner limiting the liability of the former for the loss, destruction, or deterioration
of the goods to a degree less than extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the
common carrier; and
(3) Reasonable, just and not contrary to public policy.

e. Passengers (Lara v. Valencia, GR No. 9907, June 30, 1958)

A person who has entered into a contract of carriage, express or implied, with
the carrier. They are entitled to extraordinary diligence from the common carrier.
 The following are not considered passengers, and are entitled to ordinary diligence
only:
 One who has not yet boarded any part of a vehicle regardless of whether or not
he has purchased a ticket;
 One who remains on a carrier for an unreasonable length of time after he has
been afforded every safe opportunity to alight;
 One who has boarded by fraud, stealth, or deceit;
 One who attempts to board a moving vehicle, although he has a ticket, unless
the attempt be with the knowledge and consent of the carrier;
 One who has boarded a wrong vehicle, has been properly informed of such fact,
and on alighting, is injured by the carrier;
 Invited guests and accommodation passengers. (Lara vs. Valencia)
 One who rides any part of the vehicle which is unsuitable or dangerous or
which he knows is not designed or intended for passengers

f. Res Ipsa Loquitor (3 Requisites) FGU Insurance v. GP Sarmiento Trucking, GR

No. 141910, August 6, 2002
Res ipsa loquitur may be allowed only when the following are present:
(a) the event is of a kind which does not ordinarily occur in the absence of
negligence;
(b) other responsible causes, including the conduct of the plaintiff and third
persons, are sufficiently eliminated by the evidence; and
(c) the indicated negligence is within the scope of the defendant's duty to the
plaintiff
g. EOD in Carriage by Sea
i. Seaworthiness Caltex [Phils], Inc. v. Sulpicio Lines, GR No. 131166,
September 30, 1999
As described in the case of caltex vs sulpicio lines, a vessel to be
seaworthy, it must be adequately equipped for the voyage and manned with a
sufficient number of competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition the vessel involved in its contract of
carriage is a clear breach of its duty prescribed in Article 1755 of the Civil
Code."

ii. Cargoworthiness
it means that the ship must be an efficient store-house for the cargo. The
ship must be sufficiently strong and equipped to carry the particular cargo
which such vessel contracted to carry and such cargo must be loaded in a safe
manner to proceed the voyage.

iii. Overloading
it is a must that the ship should carry passenger and cargo within its
carrying capacity. Any passenger and cargo in excess constitutes over loading.
iv. Deviation

As provided by ARTICLE 359, If there is an agreement between the

shipper and the carrier as to the road over which the conveyance is to be made, the
carrier may not change the route, unless it be by reason of force majeure; and should
he do so without this cause, he shall be liable for all the losses which the goods he
transports may suffer from any other cause, beside paying the sum which may have
been stipulated for such case.
When on account of said cause of force majeure, the carrier had to take
another route which produced an increase in transportation charges, he shall be
reimbursed for such increase upon formal proof thereof.
v. Transshipment Magellan Corp. v. CA, GR No. 95529, August 22, 1991
Transshipment refers to the transfer of cargo from one (1) vessel or
conveyance to another vessel for further transit to complete the voyage and
carry the cargo to its final destination.

h. EOD in Carriage by Land

i. Condition of Vehicle
common carriers that offer transportation by land are required to make
sure that the vehicle that they are using are in good order and condition.
ii. Violation of Traffic Rules Marikina Auto Line Transport Corp. v. People,
GR No. 152040, March 31, 2006
as provided by Article 2185 of the New Civil Code "unless there is proof
to the contrary, it is presumed that a person driving a motor vehicle has been
negligent, if at the time of mishap, he was violating any traffic regulation."

I. EOD in Air Transportation

i. Airworthiness
Two main factors determine if an aircraft is airworthy: The aircraft
conforms to its type certificate and authorized modifications; and. The aircraft
must be in condition for safe operation.
ii. Passengers Denied Boarding
Passengers who are denied boarding because the flight is over booked are
given denied-boarding compensation that should consist at least of the value of
the fare not flown plus damages of a fixed amount. (CAB)
iii. Overbooking
As defined by DOTC-DTI JOI no. Series of 2012, overbooking is the
practice by air carriers of selling confirmed reserved space beyond the actual
seat capacity of the aircraft.
“Airline flights may be overbooked, and there is a slight chance that a
seat will not be available on a flight for which a person has a confirmed
 reservation. If the flight is overbooked, no one will be denied a seat until airline
personnel first ask for volunteers willing to give up their reservation in
exchange for compensation of the airline’s choosing. If there are not enough
volunteers, the airline will deny boarding to other persons in accordance with
its particular boarding priority. (PAL)
10.1 While it is an accepted practice for an air carrier to overbook its flights,
any expense, consequence, or inconvenience caused to affected passengers
must be borne by the air carrier, as follows:
(a) The air carrier shall determine the number of passengers in excess of
the actual seat capacity of the aircraft.
(b) The air carrier shall announce that the flight is overbooked, and that
it is looking for volunteers willing to give up their seats in exchange for
air carrier compensation.

(c) The air carrier shall provide the interested passengers or volunteers a
list of amenities and offers, which they can choose from, which list of
amenities shall always include the option to be given priority booking in
the next flight with available space or to be endorsed to another air
carrier upon payment of any fare difference, and provided that space and
other circumstances permit such accommodation, at the option of the
passenger, and/or a cash incentive.
(d) In case the number of volunteers is not enough to resolve the
overbooking, the air carrier shall increase the compensation package by
certain degrees or by adding more amenities/services until the required
number of volunteers is met.
i. Instances when a CC Failed to Exercise EOD (Macenas v. CA, GR No. 88052,
December 14, 1989)
In case of death of or injuries to passengers, common carriers are presumed to
have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence. Moreover, common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the former's employees, although such
employees may have acted beyond the scope of their authority or in violation of the orders
of the common carriers. (ART. 1756)

Bill of lading, maritime commerce

XXIII. Maritime Commerce

a. Definition
-pertains to business transacted at sea or relating to navigation, to ships and
shipping, to seamen, or to the transportation of persons of property by sea and to marine
affairs.
b. Characteristics of Maritime Transaction
1. Real - similar to transactions over real property with respect to effectivity
against third persons which is done through registration. (Rubiso vs. Rivera, 37
Phil. 72). The evidence of real nature is shown by: 1) the limitation of the
liability of the agents to the actual value of the vessel and the freight money;
and 2) the right to retain the cargo and embargo and detention of the vessel
(Luzon Stevedoring Corp v. CA, 156 SCRA 169);
2. Hypothecary - the liability of the owner of the value of the vessel is limited
to the vessel itself (Doctrine of Limited Liability).
- Doctrine of Limited Liability, in a nut shell, the shipowner’s or agents
liability is merely co-extensive with his interest in the vessel such that a total
loss of such ship results in extinction of such liability.

c. MARINA
- Stands for Maritime Industry Authority
- is an agency of the Philippine government under the Department of
Transportation responsible for integrating the development, promotion and
regulation of the maritime industry in the Philippines.

d. Vessel vs. Merchant

 - vessel as defined by PD 474  are Any barge, lighter, bulk carrier, passenger
ship freighter, tanker, container ship, fishing boats or other artificial
contrivance utilizing any source of motive power, designed, used or capable of
being used as a means of water transportation operating either as common
contract carrier, including fishing vessels covered under Presidential Decree
No. 43

e. Vessel Exceptions
- As provided by PD474, the following are the exceptions in the definition of a
vessel
(1) those owned and/or operated by the Armed Forces of the Philippines
and by foreign governments for military purposes, and
(2) bancas, sailboats and other waterborne contrivance of less than three
gross tons capacity and not motorized.
f. Acquisition
- vessel may be acquired or transferred by any means recognized by law. A
vessel may be sold, donated or acquired by prescription. In addition, under the
charter of MARINA, vessels that are under their jurisdiction can only be transferred
with notice to such administrative agency.
- as provided by Article 573 of the code of commerce,  Merchant vessels
constitute property which may be acquired and transferred by any of the means
recognized by law. The acquisition of a vessel must appear in a written instrument,
which shall not produce any effect with respect to third persons if not inscribed in
the registry of vessels.
The ownership of a vessel shall likewise be acquired by possession in good
faith, continued for three years, with a just title duly recorded. In the absence of any
of these requisites, continuous possession for ten years shall be necessary in order to
acquire ownership.
A captain may not acquire by prescription the vessel of which he is in
command.

g. Maritime Lien
- a priviledge claim on a vessel for some service rendered to it to facilitate
its use in navigation. It is a special right provided by law to a creditor as security for
a debt or claim subsisting from the moment the debt arises with the right to have the
ship sold and debt paid out of the proceeds

h. Order of Preference
as provided by Section 17 of the Ship mortgage decree, The preferred mortgage
lien shall have priority over all claims against the vessel, except the following
preferences in the order stated:
1. Expenses and fees allowed and costs taxed by the court and taxes due to the
Government;
2.Crew’s wages;
3.General average;
4.Salvage, including contract salvage;
5. Maritime liens arising prior in time to the recording of the preferred
mortgage;
6.Damages arising out of tort; and
7.Preferred mortgage registered prior in time.

I. Effect of Sale
- the sale of a vessel follows the same rule provided in a regular contract of
sale. The transfer of ownership will take effect upon delivery or constructive delivery.
However, the sale of such vessel could be effected to a third person, such sale must
also be registered to MARINA.

j. Hypothecary Rule/ Doctrine of Limited Liability Rule

- Doctrine of Limited Liability, in a nut shell, the shipowner’s or agents liability
is merely co-extensive with his interest in the vessel such that a total loss of such
ship results in extinction of such liability.
 k. Interest extends to…
the interest of the shipowner or its agents only extends to matter involving the
vessel. in cases that such vessel was loss, the interest and/or liability of the ship owner
and his agent also extinguish

l. Exceptions TO Limited liability doctrine

1. Claims under Workmen’s Compensation (Abueg vs. San Diego 77 Phil 730);
2. Injury or damage due to shipowner or to the concurring negligence of the
shipowner and the captain;
3. The vessel is insured (Vasquez vs. CA 138 SCRA 553).
4. Expenses for repair on vessel completed before loss;
5. In case there is no total loss and the vessel is not abandoned;
6. Collision between two negligent vessels;

m. Abandonment
Abandonment of the vessel is necessary to limit the liability of the shipowner.
The only instance were abandonment is dispensed with is when the vessel is entirely lost
RIGHT OF SHIPOWNER OR SHIP AGENT TO ABANDON VESSEL
Instances:
 In case of civil liability from indemnities to third persons (Art. 587);
 In case of leakage of at least ¾ of the contents of a cargo containing liquids
(Art. 687); and
 In case of constructive loss of the vessel (Sec. 138, Insurance Code).

XXIV. Parties in Maritime Commerce

 Shipowners and ship agents
 Shipowner or Proprietario is the Person who has possession,
control and management of the vessel and the consequent right to
direct her navigation and receive freight earned and paid, while his
possession continues

 Ships agent or Naviero is the Person entrusted with provisioning

and representing the vessel in the port in which it may be found;
also includes the shipowner.

 Not a mere agent under civil law; he is solidarily liable with the
ship owner.
 Captains and masters of the vessel
 They are the chiefs or commanders of ships.
 The terms have the same meaning, but are particularly used in
accordance with the size of the vessel governed and the scope of
transportation, i.e., large and overseas, and small and coastwise,
respectively.
 Officers and crew of the vessel
 Sailing Mate/First Mate
o Second chief of the vessel who takes the place of the captain
in case of absence, sickness, or death and shall assume all
of his duties, powers and responsibilities. (Art. 627)
 Second Mate
o Takes command of the vessel in case of the inability or
disqualification of the captain and the sailing mate,
assuming in such case their powers and responsibilities.
 Engineers
o Officers of the vessel but have no authority except in matters
referring to the motor apparatus. When two or more are
hired, one of them shall be the chief engineer.
 Crew
 o The aggregate of seamen who man a ship, or the ship’s
company.
o Hired by the ship agent, where he is present and in his
absence, the captain hires them, preferring Filipinos, and in
their absence, he may take in foreigners, but not exceeding
1/5 of the crew. (Art. 634)

 Supercargoes
 A person who discharges administrative duties assigned to him by
ship agent or shippers, keeping an account and record of
transaction as required in the accounting book of the captain. (Art.
649)

 Pilot
 A person duly qualified, and licensed, to conduct a vessel into or
out of ports, or in certain waters.
 The term generally connotes a person taken on board at a
particular place for the purpose of conducting a ship through a
river, road or channel, or from a port.
 Master pro hac vice for the time being in the command and
navigation of the ship.

b. Proprietario’s Liability
 All contracts of the captain, whether authorized or not, to repair, equip
and provision the vessel; (Art. 586)
 Loss and damage to the goods loaded on the vessel without prejudice to
their right to free themselves from liability by abandoning the vessel to
the creditors. (Art. 587)

c. Naviero
Person entrusted with provisioning and representing the vessel in the
port in which it may be found; also includes the shipowner.

d. Naviero vs Ordinary Agent

an ordinary agent has no hand on the provisioning of the vessel. he is
not personally liable to the party whom he contracts unless he expressly bind himself
or exceeds the limit of his authority without giving such party sufficient notice o his
power.
Naviero is the person entrust with the provisioning of the ship, thus he
is jointly and severaly liable for breach of contract and extra contractual obligation
such as tort.

e. Husbanding Agent
A general term used for managing the affairs of a ship while in port,
including such tasks as customs formalities, fueling, supplies, repairs and any
requirements of the crew. Husbanding is normally handled by ship line employees, or
vessel owners or their agents.
f. Powers & Functions of Ship Agent
1. Capacity to trade;
2. Discharge duties of the captain, subject to Art.609;
3. Contract in the name of the owners with respect to repairs, details of
equipment, armament, provisions of food and fuel, and freight of the
vessel, and all that relate to the requirements of navigation;
4. Order a new voyage, make a new charter or insure the vessel after
obtaining authorization from the shipowner or if granted in certificate of
appointment.

g. May a Ship Agent Discharge the Captain and Crew Members?

 If the seamen contract is not for a definite period or voyage, he may
 discharge them at his discretion. (Art. 603)
 If for a definite period, he may not discharge them until after the fulfillment
of their contracts, except on the following grounds:
a. Insubordination in serious matters;
b. Robbery;
c. Theft;
d. Habitual drunkenness;
e. Damage caused to the vessel or to its cargo through malice or
manifest or proven negligence. (Art. 605)

h. Grounds for Discharging

a. Insubordination in serious matters;
b. Robbery;
c. Theft;
d. Habitual drunkenness;
e. Damage caused to the vessel or to its cargo through malice or
manifest or proven negligence. (Art. 605)

i. Captains and Masters

 They are the chiefs or commanders of ships.
 The terms have the same meaning, but are particularly used in
accordance with the size of the vessel governed and the scope of
transportation, i.e., large and overseas, and small and coastwise,
respectively.
j. Nature of Position/ 3 Fold Character of Captain
 General agent of the shipowner;
 Technical director of the vessel;
 Representative of the government of the country under whose flag he
navigates.

k. Qualifications of Captain
1. Filipino citizen;
2. Legal capacity to contract;
3. Must have passed the required physical and mental examinations
required for licensing him as such. (Art. 609)

l. Inherent Powers of Captain

1. Appoint crew in the absence of ship agent;
2. Command the crew and direct the vessel to its port of destination;
3. Impose correctional punishment on those who, while on board
vessel, fail to comply with his orders or are wanting in discipline;
4. Make contracts for the charter of vessel in the absence of ship
agent.
5. Supply, equip, and provision the vessel; and
6. Order repair of vessel to enable it to continue its voyage. (Art. 610)

m. Duties of Captain
1. Bring on board the proper certificate and documents and a copy of
the Code of Commerce;
2. Keep a Log Book, Accounting Book and Freight Book;
3. Examine the ship before the voyage;
4. Stay on board during the loading and unloading of the cargo;
5. Be on deck while leaving or entering the port;
6. Protest arrivals under stress and in case of shipwreck;
7. Follow instructions of and render an accounting to the ship agent;
8. Leave the vessel last in case of wreck;
9. Hold in custody properties left by deceased passengers and crew
members;
10. Comply with the requirements of customs, health, etc. at the
port of arrival;
11. Observe rules to avoid collision;
 12. Demand a pilot while entering or leaving a port. (Art. 612)

A ship’s captain must be accorded a reasonable measure of discretionary authority to

decide what the safety of the ship and of its crew and cargo specifically requires on a
stipulated ocean voyage (Inter-Orient Maritime Enterprises Inc. vs. CA).

n. Rule in the Substitution of Captain and Liability, if any

 A CAPTAIN MAY BE SUBSTITUTED AND HIS LIABILITY BE
TRANSFERRED TO Second chief of the vessel who takes the place of the
captain in case of absence, sickness, or death and shall assume all of his
duties, powers and responsibilities. (Art. 627)

o. Officers and Crew

 Sailing Mate/First Mate
o Second chief of the vessel who takes the place of the captain
in case of absence, sickness, or death and shall assume all
of his duties, powers and responsibilities. (Art. 627)
 Second Mate
o Takes command of the vessel in case of the inability or
disqualification of the captain and the sailing mate,
assuming in such case their powers and responsibilities.
 Engineers
o Officers of the vessel but have no authority except in matters
referring to the motor apparatus. When two or more are
hired, one of them shall be the chief engineer.
 Crew
o The aggregate of seamen who man a ship, or the ship’s
company.
o Hired by the ship agent, where he is present and in his
absence, the captain hires them, preferring Filipinos, and in
their absence, he may take in foreigners, but not exceeding
1/5 of the crew. (Art. 634)

p. No Liability
No liability under the following circumstances:
1. If, before beginning voyage, captain attempts to change it, or a
naval war with the power to which the vessel was destined occurs;
2. If a disease breaks out and be officially declared an epidemic in the
port of destination;
3. If the vessel should change owner or captain. (Art. 647)

q. Foreigner
As a general rule, the crew is preferably All Filipinos, in the absence of
such, the ship can hire foreigner provided that such would only constitute not more
than 1/5 of the crew
r. Rules in Case of Death of Seaman vis – a – vis Payment
The seaman’s heirs are entitled to payment as follows:
1. If death is natural:
a. compensation up to time of death if engaged on wage
b. if by voyage - half of amount if death occurs on voyage out;
and full, if on voyage in
c. if by shares - none, if before departure; full, if after departure
2. if death is due to defense of vessel - full payment;
3. if captured in defense of vessel - full payment;
4. if captured due to carelessness - wages up to the date of the
capture. (Art. 645)

s. Complement
All persons on board, from the captain to the cabin boy, necessary for the
management, maneuvers, and service, thus including the crew, the sailing
 mates, engineers, stokers and other employees on board not having
specific designations.
 Does not include the passengers or the persons whom the vessel is
transporting.

t. Supercargoes
Persons who discharges administrative duties assigned to him by ship
agent or shippers, keeping an account and record of transaction as required in
the accounting book of the captain. (Art. 649)
u. Pilot
 A person duly qualified, and licensed, to conduct a vessel into or
out of ports, or in certain waters.
 The term generally connotes a person taken on board at a
particular place for the purpose of conducting a ship through a
river, road or channel, or from a port.
 Master pro hac vice for the time being in the command and
navigation of the ship.

v. Special Contracts of Maritime Commerce

i. Charter Party
A contract by virtue of which the owner or agent binds himself to
transport merchandise or persons for a fixed price.
A contract by which an entire ship, or some principal part thereof
is let/leased by the owner to another person for a specified time or use.
(Planters Products, Inc. vs. CA, 226 SCRA 476)
ii. Bill of Lading
written acknowledgement, signed by master of the vessel or other
authorized agent of carrier, that he has received the described goods
from shipper, to be transported on expressed terms, to the described
place of destination, and to be delivered there to the designated
consignee or parties.
iii. Contract of Transportation of Passengers on Sea Voyages

iv. Loan on Bottomry

Loan made by shipowner or ship agent guaranteed by vessel itself
and repayable upon arrival of vessel at destination. (Art. 719)
Shipowner or ship agent. Outside of the residence of the owners -
the captain.
v. Loan on Respondentia
Loan taken on security of the cargo laden on a vessel, and
repayable upon safe arrival of cargo at destination. (Art. 719)
Only the owner of the cargo.

Common elements:
1. Exposure of security to marine peril;
2. Obligation of the debtor conditioned only upon safe arrival of the security at the point
of destination.
Forms:
1. Public instrument
2. Policy signed by the contracting parties and the broker taking part therein
3. Private instrument (Art. 720)
Contents:
1. Kind, name and registry of the vessel;
2. Name, surname and domicile of the captain;
3. Names, surnames and domiciles of the borrower and the lender;
4. Amount of the loan and the premium stipulated;
5. Time for repayment;
6. Goods pledged to secure repayment;
7. Voyage during which the risk is run (Art.721)

vi. Marine Insurance

 Indemnity is paid after the loss has occurred
 In case of loss of the vessel due to a risk insured against, the
obligation of the insurer becomes absolute
 Consensual contract.

XXV. Charter Party

a. Definition
 A contract by virtue of which the owner or agent binds himself to
transport merchandise or persons for a fixed price.
 A contract by which an entire ship, or some principal part thereof is
let/leased by the owner to another person for a specified time or use.
b. Requisites of a valid Charter Party
 Consent of the contracting parties
 Existing vessel which should be placed at the disposition of the
shipper
 Freight
 Compliance with Art. 652 of the Code of Commerce
o The charter party shall include, besides the conditions
unrestrictedly stipulated, the following statements:
 The kind, name, and tonnage of the vessel.
 Her flag and port of registry.
 The name, surname, and domicile of the captain.
 The name, surname, and domicile of the agent, if the latter
should make the charter party.
 The name, surname, and domicile of the charterer, and if he
states that he is acting by commission, that of the person for
whose account he makes the contract.
 The port of loading and unloading.
 The capacity, number of tons or weight, or measure which
they respectively bind themselves to load and transport, or
whether it is the total cargo.
 The freightage to be paid, stating whether it is to be a fixed
amount for the voyage or so much per month, or for the
space to be occupied, or for the weight or measure of the
goods of which the cargo consists, or in any other manner
whatsoever agreed upon.
 The amount of primage to be paid to the captain.
 The days agreed upon for loading and unloading.
 The lay days and extra lay days to be allowed and the rate of
demurrage.

c. Kinds
 Bareboat or demise
o The charterer provides crew, food and fuel. The charterer is
liable as if he were the owner, except when the cause arises
from the unworthiness of the vessel. The shipowner leases to
the charterer the whole vessel, transferring to the latter the
entire command, possession and consequent control over the
vessel’s navigation, including the master and the crew, who
thereby become the charter’s servants. It transforms a common
carrier into a private carrier.
o The charterer becomes the owner of the vessel pro hac vice, just
for that one particular purpose only. Because the charterer is
treated as owner pro hac vice, the charterer assumes the
customary rights and liabilities of the shipowner to third
 persons and is held liable for the expense of the voyage and the
wages of the seamen.
 Contract of Affreightment
o A contract whereby the owner of the vessel leases part or all of
its space to haul goods for others.
o The shipowner retains the possession, command and navigation
of the ship, the charterer merely having use of the space in the
vessel in return for his payment of the charter hired.
 Kinds:
a. Time charter – vessel is chartered for a fixed period of time
or duration of voyage.
b. Voyage or trip charter – the vessel is leased for one or
series of voyages usually for purposes of transporting goods
for charterer.

d. Implications of a Bareboat Charter

 The charterer becomes the owner of the vessel pro hac vice, just for
that one particular purpose only. Because the charterer is treated as
owner pro hac vice, the charterer assumes the customary rights and
liabilities of the shipowner to third persons and is held liable for the
expense of the voyage and the wages of the seamen.

e. Subdivisions of Affreightment
a. Time charter – vessel is chartered for a fixed period of time or
duration of voyage.
b. Voyage or trip charter – the vessel is leased for one or series of
voyages usually for purposes of transporting goods for charterer.

f. Implications of a Affreightment
 The shipowner retains the possession, command and navigation of
the ship, the charterer merely having use of the space in the vessel in
return for his payment of the charter hired.

g. Distinctions between Lease and Charter Party

LEASE CHARTER PARTY

If for a definite period, lessee cannot give
up the lease by paying a portion of the
amount agreed upon.
If the leased property is sold to one who
knows of the existence of the lease, the
new owner must respect the lease.
Civil law concept
Charterer may rescind charter party by
paying half of the freightage agreed upon.
The new owner is not compelled to respect
the charter party so long as he can load the
vessel with his own cargo. (Art. 689)
Commercial law concept

h. Permissible Clauses in a Charter Party

Jason clause - A stipulation in a charter party that in case of a maritime
accident for which the shipowner is not responsible by law, contract or
otherwise, the cargo shippers, consignees or owners shall contribute with the
shipowner in general average.
Clause paramount or paramount clause - A clause in a charter party
providing that the COGSA shall apply, even though the transportation is
domestic, subject to the extent that any term of the bill of lading is repugnant
to the COGSA or applicable law, then to the extent thereof the provision of the
bill of lading is void.

i. Rights and Obligations of SO/SA and Charterer

SHIPOWNER OR SHIP AGENT CHARTERER

1. If the vessel is chartered wholly, not to 1. To pay the agreed charter price;
accept cargo from others; 2. To pay freightage on unboarded cargo;
2. To observe represented capacity; 3. To pay losses to others for loading
3. To unload cargo clandestinely placed uncontracted cargo and illicit cargo;
4. To substitute another vessel if load is 4. To wait if the vessel needs repair;
less than 3/5 of capacity; 5. To pay expenses for deviation. (Arts.
5. To leave the port if the charterer does 679-687)
not bring the cargo within the lay days
and extra lay days allowed;
6. To place in a vessel in a condition to
navigate;
7. to bring cargo to nearest neutral port in
case of war or blockade. (Arts. 669-678)

j. Terms to Remember

1. Primage - bonus to be paid to the captain after the successful voyage.

2. Demurrage – the sum fixed in the charter party as a remuneration to

the owner of the ship for the detention of his vessel beyond the number
of days allowed by the charter party for loading or unloading or for
sailing.

3. Deadfreight – the amount paid by or recoverable from a charterer of a

ship for the portion of the ship’s capacity the latter contracted for but
failed to occupy.

4. Lay Days - days allowed to charter parties for loading and unloading
the cargo.

5. Extra Lay Days – days which follow after the lay days have elapsed.

XXVI. Loan on Bottomry and Respondentia

LOAN ON BOTTOMRY LOAN ON RESPONDENTIA
Definition
Loan made by shipowner or ship agent Loan taken on security of the cargo laden on a
guaranteed by vessel itself and vessel, and repayable upon safe arrival of
repayable upon arrival of vessel at cargo at destination. (Art. 719)
destination. (Art. 719)

Who may contract

Shipowner or ship agent. Outside of the Only the owner of the cargo.
residence of the owners - the captain.

Common elements:
1. Exposure of security to marine peril;
2. Obligation of the debtor conditioned only upon safe arrival of the security at the point
of destination.
Forms:
1. Public instrument
2. Policy signed by the contracting parties and the broker taking part therein
3. Private instrument (Art. 720)
Contents:
1. Kind, name and registry of the vessel;
2. Name, surname and domicile of the captain;
3. Names, surnames and domiciles of the borrower and the lender;
4. Amount of the loan and the premium stipulated;
5. Time for repayment;
6. Goods pledged to secure repayment;
7. Voyage during which the risk is run (Art.721)

i. 4 Distinctions
Bottomry Respondentia
made by shipowner or ship agent Loan taken on security of the cargo
guaranteed by vessel itself laden on a vessel,
repayable upon arrival of vessel at repayable upon safe arrival of cargo at
destination. destination.

ii. vs Simple Loan

BOTTOMRY/ RESPONDENTIA ORDINARY LOAN (MUTUUM)

Not subject to Usury Law Subject to Usury Law
Liability of the borrower is contingent on Not subject to any contingency (absolute
the safe arrival of the vessel or cargo at liability)
destination

The last lender is a preferred creditor The first lender is a preferred creditor

XXVII. Average
i. Definitions
An extraordinary or accidental expense incurred during the voyage in
order to preserve the cargo, vessel or both, and all damages or deterioration
suffered by the vessel from departure to the port of destination, and to the
cargo from the port of loading to the port of consignment. (Art. 806)
The person whose property has been saved must contribute to reimburse
the damage caused or expense incurred if the situation constitutes general
average.

ii. 2 Classifications
 Particular or Simple - Damages or expenses caused to the vessel or
cargo that did not inure to the common benefit, and borne by
respective owners (Art 809)
 Gross or General - Damages or expenses deliberately caused in order
to save the vessel, its cargo or both from real and known risk. (Art
811)
iii. Requisites of General Average
1. Common danger;
2. deliberate sacrifice;
3. success;
4. proper formalities and legal steps.

iv. 3 Goods not covered by General Average

1. Goods carried on deck. (ART.855)

2. Goods not recorded in the books or records of the vessel. (ART.855

(2))

3. Fuel for the vessel if there is more than sufficient fuel for the voyage.
(Rule IX, York-Antwerp Rule)

v. Jettison
 Act of throwing cargo overboard in order to lighten the vessel.
 Order of goods to be cast overboard:
1. Those which are on the deck, preferring the heaviest one with the
least utility and value;
 2. Those which are below the upper deck, beginning with the one
with greatest weight and smallest value. (Art. 815)

vi. York – Antwerp Rules on determining liability for averages with regard
to deck cargo
 Deck cargo is allowed only in domestic/coastwise/inter-island
shipping, and is prohibited in international/overseas/foreign
shipping.
 If deck cargo is loaded with the consent of the shipper on overseas
trade, it must always contribute to general average, but should the
same be jettisoned, it would not be entitled to reimbursement because
there is violation of the Y-A Rules.
 If deck cargo is loaded with the consent of the shipper on coastwise
shipping, it must always contribute to general average and if
jettisoned would be entitled to reimbursement.

Reason: In domestic shipping, voyages are usually short and the seas are generally not
rough. In overseas shipping, the vessel is exposed for many days to perils of the sea.

vii. Distinctions between Domestic and International Shipping

DOMESTIC INTERNATIONAL
Deck cargo is allowed Deck cargo is not allowed
With shipper’s consent
General average Particular average
Without shipper’s consent
Captain is liable Captain is liable

XXVIII. Arrival Under Stress

 The arrival of a vessel at the nearest and most convenient port instead of
the port of destination, if during the voyage the vessel cannot continue the
trip to the port of destination.
i. When lawful
The inability to continue voyage is due to lack of provisions, well-
founded fear of seizure, privateers, pirates, or accidents of the sea
disabling it to navigate. (Art. 819)

ii. When unlawful

 Lack of provisions due to negligence to carry according to usage
and customs;
 Risk of enemy not well known or manifest
 Defect of vessel due to improper repair; and
 Malice, negligence, lack of foresight or skill of captain. (Art.
820)
iii. Steps
 Captain should determine during the voyage if there is well
founded fear of seizure, privateers and other valid grounds;
 Captain shall assemble the officers and summon the persons
interested in the cargo who may attend the meeting but without
a right to vote;
 The officers shall determine and agree if there is well-founded
reason after examining the circumstances. The captain shall
have the deciding vote;
 The agreement shall be drafted and the proper minutes shall be
signed and entered in the log book;
 Objections and protests shall likewise be entered in the
minutes.

XXIX. Collisions
i. Collisions vs Allisions
 COLLISION
 Impact of two vessels both of which are moving.
Allision
 Impact between a moving vessel and a stationary one.

ii. Nautical Rules to determine Negligence

1. When two vessels are about to enter a port, the farther one
must allow the nearer to enter first; if they collide, the fault is
presumed to be imputable to the one who arrived later, unless it
can be proved that there was no fault on its part.
2. When two vessels meet, the smaller should give the right of way
to the larger one.
3. A vessel leaving port should leave the way clear for another
which may be entering the same port.
4. The vessel which leaves later is presumed to have collided
against one which has left earlier.
5. There is a presumption against the vessel which sets sail in the
night.
6. There is a presumption against the vessel with spread sails
which collides with another which is at anchor and cannot
move, even when the crew of the latter has received word to lift
anchor, when there was not sufficient time to do so or there was
fear of a greater damage or other legitimate reason.
7. There is a presumption against an improperly moored vessel.
8. There is a presumption against a vessel which has no buoys to
indicate the location of its anchors to prevent damage to vessels
which may approach it.
9. Vessels must have “proper look-outs” or persons trained as
such and who have no other duty aside therefrom. (Smith Bell
v. CA)

iii. Port vs Starboard

 the right side was the steerboard side or star board side, the left
side was the port side. 
 The word ‘starboard’ is the combination of two old words: stéor
(meaning ‘steer’) and bord (meaning ‘the side of a boat’).
 The left side is called ‘port’ because ships with steerboards or
star boards would dock at ports on the opposite side of the
steerboard or star.

iv. 3 Zones of Time in Collision of Vessels

1. First zone – all time up to the moment when risk of collision
begins.
 No rule is as yet applicable for none is necessary.
2. Second zone – time between moment when risk of collision
begins and moment it becomes a practical certainty.
 It is in this period where conduct of the vessels is primordial. It
is in this zone that vessels must strictly observe nautical rules,
unless a departure therefrom becomes necessary to avoid
imminent danger.
3. Third zone – time when collision is certain and time of impact.

v. Error in Extremis
sudden movement made by a faultless vessel during the third zone
of collision with another vessel which is at fault during the 2nd zone.
Even if such sudden movement is wrong, no responsibility will fall on
said faultless vessel.

vi. Cases covered by collisions and allisions as to faults

1. One vessel at fault
 Vessel at fault is liable for damage caused to innocent vessel as
 well as damages suffered by the owners of cargo of both vessels.
(Art. 826)
2. Both vessels at fault
 Each vessel must bear its own loss, but the shippers of both
vessels may go against the shipowners who will be solidarily liable.
(Art. 827)
3. Vessel at fault not known
 Each vessel must bear its own loss, but the shippers of both
vessels may go against the shipowners who will be solidarily liable.
(Art. 828)
 Doctrine of Inscrutable Fault – In case of collision where it
cannot be determined which between the two vessels was at fault,
both vessels bear their respective damage, but both should be
solidarily liable for damage to the cargo of both vessels.
4. Third vessel at fault
 The third vessel will be liable for losses and damages. (Art. 831)
5. Fortuitous event/force majeure
 No liability. Each bears its own loss. (Art. 830)

vii. Maritime Protest

Condition precedent or prerequisite to recovery of damages arising
from collisions and other maritime accidents.
 It is a written statement made under oath by the captain of a
vessel after the occurrence of an accident or disaster in which the
vessel or cargo is lost or damaged, with respect to the
circumstances attending such occurrence, for the purpose of
recovering losses and damages.

viii. Excuses for not filing

1) where the interested person is not on board the vessel; and
2) on collision time, need not be protested. (Art. 836)

ix. Shipwreck
 It is the loss of the vessel at sea as a consequence of its grounding,
or running against an object in sea or on the coast. It occurs when
the vessel sustains injuries due to a marine peril rendering her
incapable of navigation.
 If the wreck was due to malice, negligence or lack of skill of the
captain, the owner of the vessel may demand indemnity from said
captain. (Art. 841)
 The rules on collision or allision, as may be pertinent, can equally
apply to shipwrecks.

XXX. Salvage Law (Act No. 2616)

Two concepts:
1. Services one person renders to the owner of a ship or goods, by his own
labor, preserving the goods or the ship which the owner or those entrusted
with the care of them have either abandoned in distress at sea, or are
unable to protect or secure.
2. Compensation allowed to persons by whose voluntary assistance a ship
at sea or her cargo or both have been saved in whole or in part from
impending sea peril, or such property recovered from actual peril or loss, as
in cases of shipwreck, derelict or recapture.

Requisites:

1. Valid object of salvage;

 2. Object must have been exposed to marine peril (not perils of the ship);

3. Services rendered voluntarily (neither an existing duty nor out of a pre-

existing contract);

4. Services are successful, total or partial.

Subjects of Salvage:
1. Ship itself;
2. Jetsam – goods which are cast into the sea, and there sink and remain
under water;
3. Floatsam or Flotsam – goods which float upon the sea when cast
overboard;
4. Ligan or Lagan – goods cast into the sea tied to a buoy, so that they may be
found again by the owners

Persons who have no right to a reward for salvage:

1. Crew of the vessel saved;
2. Person who commenced Salvage in spite of opposition of the Captain
or his representative;
3. In accordance with Sec. 3 of the Salvage Law, a person who fails to
deliver a salvaged vessel or cargo to the Collector of Customs.

Contract of Towage

A contract whereby one vessel, usually motorized, pulls another, whether

loaded or not with merchandise, from one place to another, for a
compensation. It is a contract for services rather than a contract of carriage.

RULES ON SALVAGE REWARD

1. The reward is fixed by the RTC judge in the absence of agreement

or where the latter is excessive. (Sec. 9)

2. The reward should constitute a sufficient compensation for the

outlay and effort of the salvors and should be liberal enough to
offer an inducement to others to render services in similar
emergencies in the future.

3. If sold (no claim being made within 3 months from publication),

the proceeds, after deducting expenses and the salvage claim, shall
go to the owner; if the latter does not claim it within 3 years, 50%
of the said proceeds shall go to the salvors, who shall divide it
equitably, and the other half to the government. (Secs. 11-12)

4. If a vessel is the salvor, the reward shall be distributed as follows:

a. 50% to the shipowner;

b. 25% to the captain; and

c. 25% to the officers and crew in proportion to their salaries.

(Sec. 13)

 Taking passengers from a sinking ship, without rendering any service

in rescuing the vessel, is not a salvage service, being a duty of humanity and
not for reward.

XXX. COGSA (CARRIAGE OF GOODS BY SEA ACT/COGSA (C.A. No. 65))

APPLICABILITY
 The transportation must be:
 1. Water/maritime transportation;
2. for the carriage of goods; and
3. overseas/international/foreign (from foreign port to Philippine port).
 It can be applied in domestic sea transportation if agreed upon by the parties.
(Clause paramount or paramount clause)

IMPORTANT FEATURES:
1. Amount of carrier’s liability
2. Notice of damage
3. Prescriptive period

AMOUNT OF CARRIER’S LIABILITY

 Under the Sec. 4(5), the liability limit is set at $500 per package or customary
freight unit unless the nature and value of such goods is declared by the shipper.
This is deemed incorporated in the bill of lading even if not mentioned in it.
(Eastern Shipping vs. IAC, 150 SCRA 463)
 Note that Art. 1749, NCC applies to domestic/inter-island/coastwise trade.

NOTICE OF DAMAGE (SEC. 3(6))

 Rules:
a. Patent damage: shipper should file a claim with the carrier immediately upon
delivery
b. Latent damage: shipper should file a claim with the carrier within three days
from delivery.

Note: The filing of a notice of claim is not a condition precedent.

PRESCRIPTIVE PERIOD
 Action for loss or damage to the cargo should be brought within one year after:
a. Delivery of the goods (delivered but damaged goods); or
b. The date when the goods should have been delivered (non-delivery). (Sec.
3[6])

 “Loss or Damage” as applied to the COGSA contemplates a situation where no

delivery at all was made by the shipper of the goods because the same had
perished, gone out of commerce, or disappeared in such a way that their existence
is unknown or they cannot be recovered. Thus, it is inapplicable in case of
misdelivery or conversion. (Ang vs. American Steamship Agencies Inc.) and
damage arising from delay or late delivery (Mitsui O.S.K. Lines Ltd. vs. CA). In
such instance the, Civil Code rules on prescription shall apply.

 The one-year prescriptive period is suspended by:

1. The express agreement of the parties (Universal Shipping Lines, Inc. vs. IAC,
188 SCRA 170)
2. The filing of an action in court until it is dismissed. (Stevens & Co. vs.
Nordeutscher Lloyd, 6 SCRA 180)

 The one-year period shall run from delivery of the last package and is not
suspended by extrajudicial demand. (Dole Phils.,Inc. vs. Maritime Co.,148 SCRA
118)
 The one-year period shall run from delivery to the arrastre operator and not to
the consignee. (Union Carbide Phils, Inc. vs. Manila Railroad Co.,SCRA 359)
 The insurer exercising its right of subrogation is bound by the one-year
prescriptive period. However, it does not apply to the claim against the insurer for
the insurance proceeds.