Transportatin Law Reviewer San Beda.doc

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San Beda College of Law54

MEMORY AID IN COMMERCIAL LAW

TRANSPORTATION LAWS

CONTRACT OF TRANSPORTATION/CARRIAGE A contract whereby a person, natural or

juridical, obligates to transport persons, goods,or both, from one place to another, by land, airor water, for a price or compensation. Cla!"#a$!on%

1. Common or Private2. Goods or Passengers. !or a fee "for hire# or Gratuitous$. %and, &ater'maritime, or Air(. )omestic'inter*island'coastwise or

+nternational'foreign +t is a relationship which is imbued with the

public interest.

COMMON CARRIER Persons, corporations, rms or associations

engaged in the business of carrying ortransporting passengers or goods or both, byland, water, or air, for compensation, o-eringtheir services to the public "Art. 12, CivilCode#. Art. 12 of the /ew Civil Code avoids any

distinction between one whose principalbusiness activity is the carrying of persons orgoods or both and one who does such carryingonly as an ancillary activity "sideline#. +t also

avoids a distinction between a person orenterprise o-ering transportation service on aregular or scheduled basis and one o-eringsuch service on an occasional, episodic orunscheduled basis.

/either does the law distinguish between acarrier o-ering its services to the general publicthat is the general community or population andone who o-ers services or solicits business onlyfrom a narrow segment of the generalpopulation.

A person or entity is a common carrier evenif he did not secure a Certicate of Public

Convenience ")e Gu0man vs. CA, 1 3C4A12#. +t ma5es no distinction as to the means of

transporting, as long as it is by land, water orair. +t does not provide that the transportationshould be by motor vehicle. "!irst Philippine+ndustrial Corporation vs. CA# 6ne is a common carrier even if he has no

7ed and publicly 5nown route, maintains noterminals, and issues no tic5ets "Asia %ighterage3hipping, +nc. vs. CA#. C&a'a#$e'!$!#%

1. 8nderta5es to carry for all peopleindi-erently and thus is liable for refusalwithout su9cient reason "%astimoso vs.)oliente, 6ctober 2:, 1;1#<

2. Cannot lawfully decline to accept aparticular class of goods for carriage tothe prejudice of the tra9c in these goods<

. /o monopoly is favored "=atangas >rans.vs. 6rlanes, (2 P?+% $((#<

$. Provides public convenience.

PRI(ATE CARRIER 6ne which, without being engaged in the

business of carrying as a public employment,underta5es to deliver goods or passengers forcompensation. "?ome +nsurance Co. vs.American 3teamship Agency, 2 3C4A 2$#

TESTS W)ET)ER CARRIER IS COMMON

OR PRI(ATE% >he 3C in !irst Philippine +ndustrial Corporation

vs. CA "1;;(# reiterated the following tests@1. +t must be engaged in the business of

carrying goods for others as a publicemployment and must hold itself out asready to engage in the transportation of goods generally as a business and not asa casual occupation<

2. +t must underta5e to carry goods of the5ind to which its business in conned<

. +t must underta5e to carry by themethod by which his business is

conducted and over its establishedroads< and

$. >he transportation must be for hire. +n /ational 3teel Corp. vs. CA "1;;# the 3C

held that the true test of a common carrier isthe carriage of goods or passengers provided ithas space for all who opt to avail themselves of its transportation for a fee.

COMMON CARRIER PRI(ATE CARRIER

1. As to availability

?olds himself outfor all peopleindiscriminately

Contracts with particularindividuals or groups only

2. As to reuired diligence

B7traordinarydiligence isreuired

6rdinary diligence isreuired

. As to regulation

3ubject to 3tateregulation

/ot subject to 3tateregulation

$. 3tipulation limiting liability

Parties may notagree on limiting

the carriersliability e7ceptwhen providedby law

Parties may limit thecarriers liability, provided it

is not contrary to law,morals or good customs





(. B7empting circumstance

Provee7traordinarydiligence and Art.1, /CC

caso fortuito, Art. 11$ /CC

.Presumption of negligence

>here is apresumption of fault ornegligence

/o presumption of fault ornegligence

.Governing law

%aw on commoncarriers

%aw on obligations andcontracts

GO(ERNING LAWSA* Do+e$!#/!n$e',!land/#oa$w!e Applicable to %and, &ater, and Air

transportation

1. Civil Code * primary2. Code of Commerce "Arts. $;, ;, (*

$, (:, :*$(# * suppletory

B* In$e'na$!onal/fo'e!gn/o-e'ea .Fo'e!gn#on$'0 $o P&!l!11!ne2 Applicable to &ater'maritime and Air

transportation >he law of the country of destination

generally applies.1. Civil Code * primary2. Code of Commerce * suppletory. 6thers * suppletory

a. &ater'maritime@ Carriage of Goods by3ea Act "C6G3A#

b. Air@ &arsaw Convention

I* NEW CI(IL CODE.A'$* 36,3772

RE89IREMENT OF E:TRAORDINARY DILIGENCE 4endition of service with the greatest s5ill and

utmost foresight. ")avao 3tevedore Co. v.!ernande0# Rationale:1. !rom the nature of the business and for

reasons of public policy "Art. 1#2. 4elationship of trust. =usiness is impressed with a special

public duty$. Possession of the goods(. Preciousness of human life

A common carrier is not an absolute insurer of

all ris5s of travel.

CO(ERAGE1. Digilance over goods "Arts. 1$*1($#< and

2. 3afety of passengers "Arts. 1((*1#.

PASSENGER A person who has entered into a contract of

carriage, e7press or implied, with the carrier. >hey are entitled to e7traordinary diligencefrom the common carrier. >he following are not considered passengers,

and are entitled to ordinary diligence only@a. 6ne who has not yet boarded any part of

a vehicle regardless of whether or not hehas purchased a tic5et<

b. 6ne who remains on a carrier for anunreasonable length of time after he hasbeen a-orded every safe opportunity toalight<

c. 6ne who has boarded by fraud, stealth,or deceit<

d. 6ne who attempts to board a movingvehicle, although he has a tic5et, unlessthe attempt be with the 5nowledge andconsent of the carrier<

e. 6ne who has boarded a wrong vehicle,has been properly informed of such fact,and on alighting, is injured by thecarrier<

f. +nvited guests and accommodationpassengers. "%ara vs. Dalencia#

g. 6ne who rides any part of the vehiclewhich is unsuitable or dangerous orwhich he 5nows is not designed orintended for passengers.

DEFENSES OF A COMMON CARRIER IN T)ECARRIAGE OF GOODS

1. CA36 !64>8+>6'!64CB EAFB84B Re;!!$e%

a. Eust be the pro7imate and only cause of the lossb. B7ercise of due diligence to prevent orminimi0e the loss before, during or after theoccurrence of the disaster "Art. 1;#c. Carrier has not negligently incurred indelay in transporting the goods "Art. 1$:#

!ire is not considered a natural disaster or

calamity as it arises almost invariably fromsome act of man. "Bastern 3hipping %ines +nc.vs. +AC#

Eechanical defects are not force majeure if the same was discoverable by regular andadeuate inspections. (Notes and Cases on theLaw on Transportation and Public Utilities, Aquino, T. & ernando, R.P. !""# ed. p.$!"%$!!

2. AC>3 6! P8=%+C B/BE Re;!!$e%

a. Eust be the pro7imate and only cause of the lossb. B7ercise of due diligence to prevent orminimi0e the loss before, during or after the

act causing the loss, deterioration ordestruction of the goods "Art. 1;#

. /BG%+GB/CB 6! >?B 3?+PPB4 64 6&/B4a. 3ole and pro7imate cause@ absolute





defenseb. Contributory@ partial defense. "Art. 1$1#

$. C?A4AC>B4 6! >?B G66)3 64 )B!BC>3 +/ >?B PACH+/G 64 +/ >?B C6/>A+/B4 Bven if the damage should be caused by the

inherent defect'character of the goods, thecommon carrier must e7ercise due diligence toforestall or lessen the loss. "Art. 1$2# >he carrier which, 5nowing the fact of

improper pac5ing of the goods upon ordinaryobservation, still accepts the goodsnotwithstanding such condition, is not relievedof liability or loss or injury resulting therefrom."3outhern %ines, +nc. v. CA, $ 3C4A 2(#

(. 64)B4 64 AC> 6! P8=%+C A8>?64+>

3aid public authority must have the power toissue the order "Art. 1$#. Conseuently,where the o9cer acts without legal process, thecommon carrier will be held liable. "Gan0on v.CA 11 3C4A $# )iligence in the selection and supervision of

employees under Article 21: of the Civil Codecannot be interposed as a defense by thecommon carrier because the liability of thecarriers arises from the breach of the contractof carriage. >he defense under said articles is

applicable to negligence in uasi*delicts underArt. 21. ")el Prado v. Eanila Blectric Co., (2Phil ;::#

LIABILITY OF A COMMON CARRIER FORDEAT) OR IN<9RIES TO PASSENGERS D9E

TO ACTS OF ITS EMPLOYEES AND OT)ERPASSENGERS OR STRANGERS

FOR ACTS OF ITSEMPLOYEES

FOR ACTS OFOT)ER

PASSENGERS ORSTRANGERS

4euired diligence and defenseB7traordinarydiligence

6rdinary diligence

/ature of liability

>ort< however,

>he employee must beon duty at the time of the act. "Earanan v.Pere0#

/ot absolute< limited

by Art. 1

>he carrier is liable when its personnel

allowed a passenger to drive the vehiclecausing it to collide with another vehicleresulting to the injuries su-ered by the otherpassengers. "E44 vs. =allesteros, 1 3C4A $1#

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Pa'$!e

1. Common carrier2. 3hipper. Consignee

1. Common carrier2. Passenger

Cae of l!a=!l!$0

)elay in delivery, loss, destruction, ordeterioration of the goods

)eath or injury to the passengers

D'a$!on of l!a=!l!$0!rom the time the goods are unconditionallyplaced in the possession of, and received bythe carrier for transportation until the sameare delivered actually or constructively by

+t remains in full force and e-ect even

when they are temporarily unloaded orstored in transit unless the shipper or ownerhas made use of the right of stoppage intransitu. "Art. 1# +t continues to be operative even during

the time the goods are stored in awarehouse of the carrier at the place of destination until the consignee has beeadvised of the arrival of the goods and hashad reasonable opportunity thereafter to

remove them or otherwise dispose of them."Art. 1# )elivery of goods to the custom

authorities is not delivery to the consignee."%u )o v. =inamira, 1:1 Phil 12:#

>he duty of a common carrier to provide safetyto its passengers so obligates it not only duringthe course of the trip, but for so long as thepassengers are within its premises and wherethey ought to be in pursuance to the contractof carriage. "%4>A v. /avidad, I2::J# All persons who remain on the premises

within a reasonable time after leaving theconveyance are to be deemed passengers, andwhat is a reasonable time or a reasonabledelay within this rule is to be determined fromall the circumstances, and includes areasonable time to see after his baggage andprepare for his departure. "%a Eallorca v. CA,1 3C4A ; < Abioti0 3hipping Corporation v.

CA, 1; 3C4A ;(# +t is the duty of common carriers of

passengers to stop their conveyances areasonable length of time in order to a-ord





passengers an opportunity to enter, and theyare liable for injuries su-ered from the suddenstarting up or jer5ing of their conveyanceswhile doing so. >he duty which the carrier of passengers owes to its patrons e7tends topersons boarding the cars as well as to those

alighting therefrom ")angwa >rans Co., +nc. vs.CA 2:2 3C4A ($#.

P'e+1$!on of negl!gen#e

Art.1( Civil Code4eason@ As to when and how goods weredamaged in transit is a matter peculiarlywithin the 5nowledge of the carrier and itsemployees. "Eirasol v. )ollar, ( P?+% 12$#

Eere proof of delivery of goods to acarrier in good order and the subseuentarrival of the same goods at the place of

destination in bad order ma5es for a primafacie case against the carrier. "Coastwise%ighterage Corp. v. CA, 2$( 3C4A ;#

Art.1(( Civil Code4eason@ >he contract between the passengerand the carrier imposes on the latter the dutyto transport the passenger safely< hence theburden of e7plaining should fall on the carrier.

Defene

1. 6rdinary circumstance@ B7ercise of e7traordinary diligence "Art. 1(#

2. 3pecial circumstances@a. !lood, storm, earthua5e,

lighting, or other natural disasteror calamity "plus force majeure#

b. Act of the public enemy in war,whether international or civil

c.Act or omission of the shipper orthe owner of goods

d. >he character of the goods ordefects in the pac5ing or in thecontainers

e. 6rder or act of competentpublic authority "Art. 1$#

1. B7ercise of e7traordinary diligence "Art.1(#

2. Caso fortuito



San Beda College of Law5>


(al!d $!1la$!on

1. 4eduction of degree of diligence toordinary diligence, provided it be@

a# +n writing, signed by the shipper orowner<

b# 3upported by a valuableconsideration other than the servicerendered by the carriers< and

c# 4easonable, just and not contrary topublic policy. "Art. 1$$#

2. !i7ed amount of liability@ A contract 7ingthe sum to be recovered by the owner orshipper for the loss, destruction ordeterioration of the goods, if it is reasonableand just under the circumstances and hasbeen fairly and freely agreed upon. "Art.1(:#

. %imited liability for delay@ An agreementlimiting the common carriers liability fordelay on account of stri5es or riots "Art.1$#$. 3tipulation limiting liability to the value of the goods appearing in the bill of lading,unless the shipper or owner declares agreater value. "Art. 1$;#

>he diligence reuired in the carriage of

the goods may be reduced by only onedegree, from e7traordinary to ordinarydiligence or diligence of a good father of a

family. "Art. 1$$, Art. 1$(, no. $#

3tipulation limiting liability when a passengeris carried gratuitously, but not for willful actsor gross negligence. "Art. 1(#

(o!d $!1la$!on

1. >hat the goods are transported at theris5 of the owner or shipper<2. >hat carrier will not be liable for anyloss, destruction or deterioration of thegoods<. >hat the carrier need not observe anydiligence in the custody of the goods<$. >hat the carrier shall e7ercise a degreeof diligence less than that of a good fatherof a family over the movable transported<

(. >hat the carrier shall not be responsiblefor the acts or omissions of his or itsemployees<. >hat the carriers liability for actscommitted by thieves or robbers who do notact with grave or irresistible threat, violenceor force is dispensed with or diminished<. >hat the carrier is not responsible forthe loss, destruction or deterioration of thegoods on account of the defective conditionof the car, vehicle, ship or other euipmentused in the contract of carriage. "Art. 1$(#

)ispensing with or lessening the e7traordinaryresponsibility of a common carrier for thesafety of passengers imposed by law bystipulation, by posting of notices, bystatements on tic5ets or otherwise. "Art. 1(#



R9LES ON PASSENGERS? BAGGAGE

IN T)E C9STODY OFT)E PASSENGERS.)AND,CARRIED2

IN T)E C9STODY OF T)E COMMON

CARRIER.C)EC@ED,IN2

Legal na$'e of $&e =aggage/ecessary deposit Considered as

KgoodsL

Re;!'ed d!l!gen#e =0 $&e #o++on#a''!e'

)iligence of adepositary "ordinarydiligence#

B7traordinarydiligence

A11l!#a=le 'leArts. 1;; and 2:::*2::

Arts. 1*1(

CONC9RRING CA9SES OF ACTION ARISINGFROM T)E NEGLIGENT ACT OF T)ECOMMON CARRIER

1. Culpa contractual "breach of contract# 6nly the carrier is primarily liable and not the

driver, because there is no privity between thedriver and the passenger. =asis@ Art.1(;, /CC.

/o defense of due diligence in the selection

and supervision of employees.

2. Culpa aquiliana "uasi*delict# >he carrier and driver are solidarily liable as

joint tortfeasors. =asis@ Art. 21:, /CC.

)efense of due diligence in the selection and

supervision of employees is available.B7ception@ maritime tort resulting in collision."'ee notes on Collision#

. Culpa criinal "criminal negligence# >he driver is primarily liable. >he carrier is

subsidiarily liable only if the driver is convictedand declared insolvent. =asis@ Art. 1::, 4PC.

+n case of injury to a passenger due to the

negligence of the driver of the bus on which he

is riding and of the driver of another vehicle, thedrivers as well as the owners of the two vehiclesare jointly and severally liable for damages. +tma5es no di-erence that the liability of the busdriver and owner springs from contract whilethat of the owner and driver of the other vehiclearises from uasi*delict. "!abre vs. CA#

LIMITATIONS AS TO CARRIER?S LIABILITY

IN(ALID AS BEINGCONTRARY TOP9BLIC POLICY

(ALID ENFORCEABLE

1. 6ne e7empting the

carrier from any andall liability for loss ordamage occasionedby its own

1. 6ne limiting the

liability of the carrierto an agreedvaluation, unless theshipper declares a

negligence.2. An unualiedlimitation of liabilityto an agreedvaluation.

higher value and paysa higher rate of freight"?.B. ?eacoc5Company vs.Eacondray MCompany +nc.#

?owever, the carrier cannot limit its liability

for injury to, or loss of, goods shipped wheresuch injury or loss was caused by its ownnegligence."3hewaram vs. PA%, 1 3C4A :#

SPECIAL R9LES ON LIABILITES OF AIRLINECARRIERS1. +n case of Night diversion due to bad weatheror other circumstances beyond the pilotscontrol, the relation between the carrier and thepassenger continues until the latter has beenlanded at the port of destination and has leftthe carriers premises. >he carrier shouldnecessarily e7ercise e7traordinary diligence insafeguarding the comfort, convenience andsafety of its stranded passengers until theyhave reached their nal destination. "PhilippineAirlines vs. CA, 22 3C4A $2#2. Bven where overboo5ing of passengers isallowed as a commercial practice, the airlinecompany would still be guilty of bad faith andstill be liable for damages if it did not properlyinform passenger that it could breach thecontract of carriage even if they were conrmedpassengers. "Oalamea vs. CA, 22 3C4A 2#

. An open*dated tic5et constitutes a completecontract between the carrier and passenger.?ence, the airline company is liable if it refusedto conrm a passengers Night reservation."3ingson vs. CA, 22 3C4A 1$;#$. An airline company which issued a conrmedtic5et to a passenger covering successive tripson di-erent airlines can be held liable fordamages occasioned by Kbumping o-L by oneof the successive airlines. "%ufthansa GermanAirlines vs. CA, 2 3C4A 2;:#(. An airline tic5et providing that carriage bysuccessive air carriers is to be regarded as a

Ksingle operationL is to ma5e the issuing carrierliable for the tortuous conduct of the othercarrier. A printed provision in the tic5et limitingliability only to its own conduct is not enough torebut that liability. "H%E 4oyal )utch Airlines vs.CA, ( 3C4A 2#

II* CODE OF COMMERCE

A* O(ERLAND TRANSPORTATION

.A'$* 4,2

A11l!#a=!l!$01. )omestic land and water'maritimetransportation. (Pandect o) Coercial Lawand *urisprudence, *ustice *ose +itu, $-- ed.2. )omestic Air >ransportation. (Coercial



Law Re/iew, Cesar +illanue/a, !""# ed. IMPORTANT CONCEPTS%

1. =ill of lading2. 6bligations of the carrier. 4ight of abandonment$. /otice of damage(. Combined carrier agreement

BILL OF LADING >he written ac5nowledgment of receipt of

goods and agreement to transport them to aspecic place to a person named or to his order. Rules:

1. +t is not indispensable for the creation of acontract of carriage. "Compania Earitima vs.+nsurance Company of /orth America, 12 3C4A21#

2. Ambiguity is construed against the carrier,the contract being one of adhesion.

. >he consignee, although the instrument isoftentimes drawn up only by the consignor andcarrier, becomes bound by all the stipulationscontained therein by ma5ing a claim for loss onthe basis of said bill of lading. "3ea*%and3ervices +nc. vs. +AC#

$. >he right of a party to recover for loss of shipment consigned to him under a bill of ladingdrawn up only by and between the shipper andthe carrier, springs from either a relation of

agency between him and the shipper, or hisstatus as stranger in whose favor somestipulation is made in said contract, and whobecomes a party thereto when he demandsfulllment of that stipulation. "Art. 111 "2#,"Eendo0a vs. PA% +nc.#

(. Acceptance of the bill of lading withoutdissent raises the presumption that all theterms therein where brought to the 5nowledgeof the shipper and agreed to by him and, in theabsence of fraud or mista5e< he is estoppedfrom thereafter denying that he assented to

such terms. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino, T. &ernando, R.P. !""# ed. p.!0$

@!nd%

1. 1n board * issued when the goods havebeen actually placed aboard the ship withvery reasonable e7pectation that theshipment is as good as on its way.

2. Recei/ed * one in which it is stated thatthe goods have been received forshipment with or without specifying thevessel by which the goods are to be

shipped.. Neotiable * one in which it is stated that

the goods referred to therein will bedelivered to the bearer or to the order of

any person named therein.$. Non%neotiable * 6ne in which it is stated

that the goods referred to therein will bedelivered to a specied person.

(. Clean 2 6ne which does not indicate anydefect in the goods.

. 3oul 6ne which contains a notationthereon indicating that the goods covered

by it are in bad condition.

. 'pent 6ne which covers goods thatalready have been delivered by the carrierwithout a surrender of a signed copy of thebill.

. Throuh 6ne issued by the carrier who isobliged to use the facilities of othercarriers as well as his own facilities for thepurpose of transporting the goods fromthe city of the seller to the city of thebuyer, which bill of lading is honored bythe second and other interested carrierswho do not issue their own bills.

;. Custod4 6ne wherein the goods arealready received by the carrier but thevessel indicated therein has not yetarrived in the port.

1:. Port 6ne which is issued by the carrier towhom the goods have been delivered, andthe vessel indicated in the bill of lading bywhich the goods are to be shipped isalready in the port where the goods areheld for shipment.

Fn#$!on%

1. =est evidence of the e7istence of thecontract of carriage of cargo "Art. (#2. )ocument of title. 4eceipt of cargo $. Contract to transport and deliver goods as

stipulated(. 3ymbol of the goods

OBLIGATIONS OF T)E CARRIERA* D$0 $o a##e1$ $&e good 56N6RAL RUL6: A common carrier cannot

ordinarily refuse to carry a particular class of goods.

67C6PT81N: !or some su9cient reason thediscrimination against the tra9c in such goodsis reasonable and necessary. "!isher vs. angco3teamship Co. 1 Phil 1#. +nstances when the carrier may validly refuse

to accept the goods include the -@1.# Goods sought to be transported aredangerous objects, or substances includingdynamite and other e7plosives2.# Goods are unt for transportation.# Acceptance would result in overloading$.# Contrabands or illegal goods(.# Goods are injurious to health.# Goods will be e7posed to untoward dangerli5e Nood, capture by enemies and the li5e.# Goods li5e livestoc5 will be e7posed todisease



.# 3tri5e;.# !ailure to tender goods on time. (Notes andCases on the Law on Transportation and PublicUtilities, Aquino, T. & ernando, R.P. !""# ed. p.09 +n case of carriage by railway, the carrier is

e7empted from liability if carriage is insistedupon by the shipper, provided its objections are

stated in the bill of lading. ?owever, when a common carrier accepts

cargo for shipment for valuable consideration, itta5es the ris5 of delivering it in good conditionas when it was loaded. "PA% vs. CA#

B* D$0 $o del!-e' $&e good /ot only to transport the goods safely but to

the person indicated in the bill of lading. >hegoods should be delivered to the consignee orany other person to whom the bill of lading wasvalidly transferred or negotiated.

T!+e of del!-e'0S$!1la$ed !n

Con$'a#$/B!ll of Lad!ng

No $!1la$!on

1. Carrier is bound tofulll the contract andis liable for any delay<no matter from whatcause it may havearisen.

1. &ithin areasonable time.2. Carrier is bound toforward them in the1st shipment of thesame or similargoods which he mayma5e to the point of

delivery. "A4>. (Code of Commerce#

Ee#$ of dela0a. Eerely suspends and generally does notterminate the contract of carriageb. Carrier remains duty bound to e7ercisee7traordinary diligencec. /atural disaster shall not free the carrierfrom responsibility "Art.1$:#d. +f delay is without just cause, the contractlimiting the common carriers liability cannot beavailed of in case of loss or deterioration of the

goods "Art.1$#

RIG)T OF CONSIGNEE TO ABANDONGOODS In$an#e%

1. Partial non*delivery, where the goods areuseless without the others "Art. #<2. Goods are rendered useless for sale orconsumption for the purposes for which theyare properly destined "Art. (#< and. +n case of delay through the fault of thecarrier "Art. 1#.

NOTICE OF DAMAGE .ART* 772 Re;!!$e fo' a11l!#a=!l!$0%

1. )omestic'inter*island'coastwisetransportation

2. %and'water'air transportation. Carriage of goods$. Goods shipped are damaged Rle%

a. Patent damage@ shipper must le a claimagainst the carrier immediately upon delivery"it may be oral or written#

b. %atent damage@ shipper should le a claim

against the carrier within 2$ hours fromdelivery.

No$e% >hese rules does not apply to misdeliveryof goods. "4oldan vs. %im Pon0o#Purpose o) notice: >o inform the carrier that the

shipment has been damaged, and it is chargedwith liability therefore, and to give it anopportunity to ma5e an investigation and 7responsibility while the matter is fresh. >he ling of notice of claim is a condition

precedent for recovery. 3horter period may be stipulated by the

parties because it merely a-ects the shippersremedy and does not a-ect the liability of thecarrier. "P?+%AEGB/ vs. 3weetlines, +nc.#P'e#'!1$!-e Pe'!od /ot provided by Article . >hus, in such

absence, Civil Code rules on prescription apply. +f despite the notice of claim, the carrier

refuses to pay, action must be led in court.1. /o bill of lading was issued@

within 7 0ea'2. =ill of lading was issued@ within

3 0ea'*

ARTICLE 77 COGSA Se#* .72

A11l!#a=!l!$01. )omestic'inter*island'coastwisetransportation2. %and,water, airtransportation. Carriageof goods

1. +nternational'overseas'foreign"from foreigncountry to Phils.#/ote@ subject tothe rule onParamount Clause2. &ater'maritimetransportation. Carriage of goods

No$!#e of da+age1. Conditionprecedent2. 2$*hour period forclaiming latentdamage

1. /ot a conditionprecedent2. *day period forclaiming latentdamage

P'e#'!1$!-e 1e'!od/one provided< CivilCode applies.

6ne year from thedate of delivery"delivered butdamaged goods#,

or date when thevessel left port orfrom the date of delivery to the



arrastre "non*delivery or loss#.

COMBINED CARRIER AGREEMENT .ART*2 56N6RAL RUL6: +n case of a contract of

transportation of several legs, each carrier isresponsible for its particular leg in the contract.

67C6PT81N: A combined carrier agreementwhere a carrier ma5es itself liable assuming theobligations and acuiring as well the rights andcauses of action of those which preceded it.

6* MARITIMECOMMERC

E.A'$* 5,>72

IMPORTANT CONCEPTS%1. Eerchant vessel

2. Earitime lien and Preference of Credit. )octrine of limited liability$. Causes of revocation of voyage(. Participants in maritime commerce. Charter party. %oans on bottomry and respondentia. Accidents in maritime commerce

MARITIME/ADMIRALTY LAW +t is the system of laws which particularly

relates to the a-airs and business of the sea, toships, their crews and navigation, and tomaritime conveyance of persons and property.

(Notes and Cases on the Law on Transportationand Public Utilities, Aquino & ernando, citin3rancisco, p.!#

Earitime laws apply only to maritime trade

and sea voyages. (Pandect o) Coercial Lawand *urisprudence, *ustice *ose +itu, $-- ed.

Arrastre service is not maritime in character.

+t refers to a contract for the unloading of goodsfrom a vessel. "+C>3+ vs. Prudential Guarantee,2: 3C4A 2$$#

C)ARACTERISTICS OF MARITIMETRANSACTION1. Real * similar to transactions over realproperty with respect to e-ectivity against thirdpersons which is done through registration."4ubiso vs. 4ivera, Phil. 2#. >he evidence of real nature is shown by@ 1# the limitation of theliability of the agents to the actual value of thevessel and the freight money< and 2# the rightto retain the cargo and embargo and detentionof the vessel "%u0on 3tevedoring Corp v. CA,1( 3C4A 1;#<

2. 4pothecar4 * the liability of the owner of thevalue of the vessel is limited to the vessel itself (;octrine o) Liited Liabilit4.

>he real and hypothecary nature of maritime

law simply means that the liability of the carrierin connection with losses related to maritimecontracts is conned to the vessel, which standsas the guaranty for their settlement. "Aboiti03hipping Corp. vs. General Accident !ire and%ife Assurance Corp. 21 3C4A (;#.

MERC)ANT (ESSEL Dessel engaged in maritime commerce,

whether foreign or otherwise. (<ar Re/iew=aterials in Coercial Law, *ore =ira/ite,!""! ed. Constitutes property which may be acuired

and transferred by any of the means recogni0edby law. >hey shall continue to be considered aspersonal property. "Arts. (, ((# >hey are susceptible to aritie liens such as

for the repair, euipping and provisioning of thevessel in the preparation of a voyage, as well as

mortgage liabilities, in satisfaction of which avessel may be validly arrested and sold. "3hipEortgage )ecree of 1;#

MARITIME LIEN +t constitutes a present right of property in the

ship, a jus in re, to be afterward enforced inadmiralty by process in rem. "P/= vs. CA, 3C4A 1# +f the maritime lien arose prior to the recording

of a preferred mortgage, it shall have priorityover the said mortgage lien. "P/= vs. CA, 3C4A 1#

ORDER OF PREFERENCE IN CASE OF SALEOF (ESSEL

R*A* 737 P*D* 3563Ee#$!-!$0 da$e

1;; 1;A11l!#a=!l!$0

6verseas shippingonly

=oth domestic andoverseas shipping

@!nd of ale Fudicial Fudicial and

e7trajudicialO'de' of P'efe'en#e

A preferredmortgage shall havepriority over allclaims against thevessel, e7cept thefollowingpreferences in theorder stated@1. Fudicial costs of the proceedings<2. >a7es due thePhilippineGovernment<. 3alaries andwages of the

>he preferredmortgage lien shallhave priority over allclaims against thevessel, e7cept thefollowing preferencesin the order stated@1. B7penses and feesallowed and coststa7ed by the court andta7es due to theGovernment<2. Crews wages<. General average<$. 3alvage, including



Captain and Crew of the vessel during itslast voyage<$. General averageor salvage includingcontract salvage,bottomry loans, andindemnity due

shippers for thevalue of goodstransported butwhich were notdelivered to theconsignee<(. Costs of repairand euipment of the vessel, andprovisioning of food,supplies and fuelduring its lastvoyage< and. Preferredmortgagesregistered prior intime.

contract salvage<(. Earitime liensarising prior in time tothe recording of thepreferred mortgage<. )amages arising outof tort< and. Preferred mortgage

registered prior intime.

B-ect of sale@ All pre*e7isting claims in the

vessel are terminated. >hey will then besatised from the proceeds of the sale subjectto the order of preference.

DOCTRINE OF LIMITED LIABILITY.)YPOT)ECARY R9LE2

Cases where applicable@1. Art. ( civil liability for indemnities to

third persons2. Art. (;: indemnities from negligent

acts of the captain "not the shipowner orship agent#

. Art. collision$. Art. $ liability for wages of the

captain and the crew and for advancesmade by the ship agent if the vessel islost by shipwrec5 or capture

56N6RAL RUL6: >he liability of shipowner andship agent is limited to the amount of interest insaid vessel such that where vessel is entirelylost, the obligation is e7tinguished. "%u0on3tevedoring v. Bscano, 1( 3C4A 1;# >heinterest e7tends to@ 1# the vessel itself< 2#euipments< # freightage< and $# insuranceproceeds. "Chua v. +AC, 1 3C4A 1# 67C6PT81N':

1. Claims under &or5mens Compensation"Abueg vs. 3an )iego Phil :#<

2. +njury or damage due to shipowner or to theconcurring negligence of the shipowner and

the captain<. >he vessel is insured "Dasue0 vs. CA 1

3C4A ((#.$. B7penses for repair on vessel completed

before loss<(. +n case there is no total loss and the vessel

is not abandoned<. Collision between two negligent vessels<

Abandonment of the vessel is necessary to

limit the liability of the shipowner. >he onlyinstance were abandonment is dispensed with

is when the vessel is entirely lost "%u0on3tevedoring vs. CA 1( 3C4A 1;#.

RIG)T OF S)IPOWNER OR S)IP AGENT TOABANDON (ESSEL +nstances@

1. +n case of civil liability from indemnitiesto third persons "Art. (#<2. +n case of lea5age of at least Q of thecontents of a cargo containing liuids "Art. #<and. +n case of constructive loss of the vessel"3ec. 1, +nsurance Code#.

RIG)T OF ABANDONMENT

S)IPOWNER ORS)IP AGENT

CONSIGNEE

W&a$ +a0 =e a=andoned

Dessel Goods shippedIn$an#e

1. +n case of civilliability from

indemnities to thirdpersons "Art. (#<2. 3ec. 1,+nsurance Code<. +n case of lea5age of at leastQ of the contentsof a cargocontaining liuids"Art. #

1. Partial non*delivery, where the

goods are uselesswithout the others"Art. #<2. Goods arerendered useless forsale or consumptionfor the purposes forwhich they areproperly destined"Art. (#< and. +n case of delaythrough the fault of the carrier "Art.

1#.Ee#$

1. >ransfer of ownership of thevessel from theshipowner to theshippers or insurer.2. +n case of "2#, the insurermust pay theinsured as if therewas actual total

loss of the vessel.

1. >ransfer of ownership on thegoods from theshipper to thecarrier.2. Carrier shouldpay the shipper themar5et value of thegoods at the pointof destination.

CA9SES OF RE(OCATION OF (OYAGE1. &ar or interdiction of commerce<2. =loc5ade<



. Prohibition to receive cargo at destination<$. Bmbargo<(. +nability of the vessel to navigate. "Art. $:#

Te'+%1. +nterdiction of commerce A governmental

prohibition of commercial intercourseintended to bring about an entire cessation

for the time being of all trade whatever.2. =loc5ade A sort of circumvallation of a

place by which all foreign connection andcorrespondence is, as far as human powercan e-ect it, to be cut o-.

. Bmbargo A proclamation or order of astate, usually issued in time of war orthreatened hostilities, prohibiting thedeparture of ships or goods from some or allthe ports of such state until further order.

PARTICIPANTS IN MARITIME COMMERCEA. 3hipowners and ship agents=. Captains and masters of the vesselC. 69cers and crew of the vessel). 3upercargoesB. Pilot

A* S)IPOWNERS AND S)IP AGENTSS&!1owne' .1'o1'!e$a'!o2 Person who has possession, control and

management of the vessel and the conseuentright to direct her navigation and receive freightearned and paid, while his possessioncontinues.

S&!1 agen$ .na-!e'o2 Person entrusted with provisioning and

representing the vessel in the port in which itmay be found< also includes the shipowner. /ot a mere agent under civil law< he is

solidarily liable with the ship owner. Powers and functions@

1. Capacity to trade<2. )ischarge duties of the captain, subject to

Art.:;<. Contract in the name of the owners with

respect to repairs, details of euipment,

armament, provisions of food and fuel, andfreight of the vessel, and all that relate tothe reuirements of navigation<

$. 6rder a new voyage, ma5e a new charter orinsure the vessel after obtainingauthori0ation from the shipowner or if granted in certicate of appointment.

C!-!l L!a=!l!$!e of $&e S&!1owne' And S&!1Agen$1. All contracts of the captain, whether

authori0ed or not, to repair, euip andprovision the vessel< "Art. (#

2. %oss and damage to the goods loaded onthe vessel without prejudice to their right tofree themselves from liability by abandoningthe vessel to the creditors. "Art. (#

D$0 of S&!1 Agen$ $o D!#&a'ge $&eCa1$a!n and Me+=e' of $&e C'ew +f the seamen contract is not for a denite

period or voyage, he may discharge them at hisdiscretion. "Art. :# +f for a denite period, he may not discharge

them until after the fulllment of their

contracts, e7cept on the following grounds@a. +nsubordination in serious matters<b. 4obbery<c. >heft<d. ?abitual drun5enness<e. )amage caused to the vessel or to itscargo through malice or manifest or provennegligence. "Art. :(#

B* CAPTAINS AND MASTERS >hey are the chiefs or commanders of ships.

>he terms have the same meaning, but are

particularly used in accordance with the si0e of the vessel governed and the scope of transportation, i.e., large and overseas, andsmall and coastwise, respectively. /ature of position "*fold character#@

1. General agent of the shipowner<2. >echnical director of the vessel<. 4epresentative of the government of the

country under whose Nag he navigates. Rualications@

1. !ilipino citi0en<2. %egal capacity to contract<. Eust have passed the reuired physical

and mental e7aminations reuired forlicensing him as such. "Art. :;#

+nherent powers@

1. Appoint crew in the absence of shipagent<

2. Command the crew and direct the vesselto its port of destination<

. +mpose correctional punishment onthose who, while on board vessel, fail tocomply with his orders or are wanting indiscipline<

$. Ea5e contracts for the charter of vesselin the absence of ship agent.

(. 3upply, euip, and provision the vessel<and

. 6rder repair of vessel to enable it tocontinue its voyage. "Art. 1:#

3ources of funds to comply with the inherent

powers of the captain "in successive order#@1. !rom the consignee of the vessel<2. !rom the consignee of the cargo<. =y drawing on the ship agent<$. =y a loan on bottomry<(. =y sale of part of the cargo. "Art. 11#

)uties@

1. =ring on board the proper certicate anddocuments and a copy of the Code of Commerce<

2. Heep a %og =oo5, Accounting =oo5 and!reight =oo5<



. B7amine the ship before the voyage<$. 3tay on board during the loading and

unloading of the cargo<(. =e on dec5 while leaving or entering the

port<. Protest arrivals under stress and in case

of shipwrec5<. !ollow instructions of and render an

accounting to the ship agent<. %eave the vessel last in case of wrec5<;. ?old in custody properties left by

deceased passengers and crewmembers<

1:. Comply with the reuirements of customs, health, etc. at the port of arrival<

11. 6bserve rules to avoid collision<12.)emand a pilot while entering or leaving

a port. "Art. 12#

A ships captain must be accorded a

reasonable measure of discretionary authorityto decide what the safety of the ship and of itscrew and cargo specically reuires on astipulated ocean voyage "+nter*6rient EaritimeBnterprises +nc. vs. CA#.

/o liability for the following@

1. )amages caused to the vessel or to thecargo by force majeure<

2. 6bligations contracted for the repair,euipment, and provisioning of thevessel unless he has e7pressly bound

himself personally or has signed a bill of e7change or promissory note in hisname. "Art. 2:#

Sol!da'0 L!a=!l!$!e of $&e S&!1Agen$/S&!1owne' fo' A#$ Done =0 $&eCa1$a!n $owa'd Paenge' and Ca'goe

1. )amages to vessel and to cargo due tolac5 of s5ill and negligence<

2. >hefts and robberies of the crew<. %osses and nes for violation of laws<$. )amages due to mutinies<(. )amages due to misuse of power<

. !or deviations<. !or arrivals under stress<. )amages due to non*observance of

marine regulations. "Art. 1#

C* OFFICERS AND CREW1. 3ailing Eate'!irst Eate2. 3econd Eate. Bngineers$. Crew /o liability under the following circumstances@

1. +f, before beginning voyage, captainattempts to change it, or a naval war with

the power to which the vessel was destinedoccurs<

2. +f a disease brea5s out and be o9ciallydeclared an epidemic in the port of destination<

. +f the vessel should change owner orcaptain. "Art. $#

Sa!l!ng Ma$e/F!'$ Ma$e 3econd chief of the vessel who ta5es the place

of the captain in case of absence, sic5ness, ordeath and shall assume all of his duties, powersand responsibilities. "Art. 2# )uties@

1. Provide himself with maps and chartswith astronomical tables necessary forthe discharge of his duties<

2. Heep the =innacle =oo5<. Change the course of the voyage on

consultation with the captain and theo9cers of the boat, following thedecision of the captain in case of disagreement<

$. 4esponsible for all the damages causedto the vessel and the cargo by reason of his negligence. "Arts. 2 * 1#

Se#ond Ma$e >a5es command of the vessel in case of the

inability or disualication of the captain andthe sailing mate, assuming in such case theirpowers and responsibilities. >hird in command

)uties@

1. Preserve the hull and rigging of the

vessel<2. Arrange well the cargo<. )iscipline the crew<$. Assign wor5 to crew members<(. +nventory the rigging and euipment of

the vessel, if laid up. "Art. 2#

Eng!nee' 69cers of the vessel but have no authority

e7cept in matters referring to the motorapparatus. &hen two or more are hired, one of them shall be the chief engineer. )uties@

1. +n charge of the motor apparatus, spareparts, and other instruments pertainingto the engines<

2. Heep the engines and boilers in goodcondition<

. /ot to change or repair the enginewithout authority of the captain<

$. +nform the captain of any damage to themotor apparatus<

(. Heep an Bngine =oo5<. 3upervise all personnel maintaining the

engine. "Art. 2#

C'ew >he aggregate of seamen who man a ship, or

the ships company.



?ired by the ship agent, where he is present

and in his absence, the captain hires them,preferring !ilipinos, and in their absence, hemay ta5e in foreigners, but not e7ceeding 1'( of the crew. "Art. $#

Clae of Sea+an? Con$'a#$1. =y the voyage<

2. =y the month< and. =y share of prots or freightage.

<$ Cae fo' $&e D!#&a'ge of Sea+anW&!le Con$'a#$ S=!$1. Perpetration of a crime<2. 4epeated insubordination, want of

discipline<. 4epeated incapacity and negligence<$. ?abitual drun5enness<(. Physical incapacity<. )esertion. "Art. #

Rle !n #ae of Dea$& of a Sea+an >he seamans heirs are entitled to payment as

follows@1. +f death is natural@

a. compensation up to time of death if engaged on wage

b. if by voyage * half of amount if deathoccurs on voyage out< and full, if onvoyage in

c. if by shares * none, if before departure<full, if after departure

2. if death is due to defense of vessel * full

payment<. if captured in defense of vessel * fullpayment<

$. if captured due to carelessness * wages upto the date of the capture. "Art. $(#

Co+1le+en$ of $&e (eel All persons on board, from the captain to the

cabin boy, necessary for the management,maneuvers, and service, thus including thecrew, the sailing mates, engineers, sto5ers andother employees on board not having specicdesignations.

)oes not include the passengers or thepersons whom the vessel is transporting.

D* S9PERCARGOES Persons who discharges administrative duties

assigned to him by ship agent or shippers,5eeping an account and record of transaction asreuired in the accounting boo5 of the captain."Art. $;#

E* PILOT A person duly ualied, and licensed, to

conduct a vessel into or out of ports, or incertain waters. >he term generally connotes a person ta5en

on board at a particular place for the purpose of conducting a ship through a river, road or

channel, or from a port. Easter pro hac /ice for the time being in the

command and navigation of the ship. &hile in e7ercising his functions a pilot is in

sole command of the ship and supersedes themaster for the time being in the command andnavigation of the ship, the master does notsurrender his vessel to the pilot and the pilot is

not the master. >here are occasions when themaster may and should interfere and evendisplace the pilot, as when the pilot is obviouslyincompetent or into7icated "!ar Bastern3hipping Company vs. CA#. Compulsory Pilotage 3tates possessing

harbors have enacted laws or promulgatedrules reuiring vessels approaching their portsto ta5e on board pilots licensed under the locallaws. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino, T. &ernando, R.P. !""# ed. p. $9

L!a=l!$0 of P!lo$ 56N6RAL RUL6@ 6n compulsory pilotage

grounds, the ?arbor Pilot is responsible fordamage to a vessel or to life or property due tohis negligence. 67C6PT:

1. Accident caused by force majeure or naturalcalamity provided the pilot e7ercised prudenceand e7tra diligence to prevent or minimi0edamages.2. Countermand or overrule by the master of

the vessel in which case the registered owner of

the vessel is liable. "3ec.11, Art.+++ PPA Admin6rder :*(#

SPECIAL CONTRACTS OF MARITIMECOMMERCE

1. Charter party2. =ill of lading. Contract of transportation of passengers

on sea voyages$. %oan on bottomry(. %oan on respondentia. Earine insurance

C)ARTER PARTY A contract by virtue of which the owner or

agent binds himself to transport merchandise orpersons for a 7ed price. A contract by which an entire ship, or some

principal part thereof is let'leased by the ownerto another person for a specied time or use."Planters Products, +nc. vs. CA, 22 3C4A $# Pa'$!e%

1. 3hip owner or ship agent2. Charterer

Clae%

1. =areboat or demise >he charterer providescrew, food and fuel. >he charterer is liable as if he were the owner, e7cept when the causearises from the unworthiness of the vessel. >heshipowner leases to the charterer the whole



vessel, transferring to the latter the entirecommand, possession and conseuent controlover the vessels navigation, including themaster and the crew, who thereby become thecharters servants. +t transforms a commoncarrier into a private carrier.

>he charterer becomes the owner of the

vessel pro hac vice, just for that one

particular purpose only. =ecause thecharterer is treated as owner pro hac /ice,the charterer assumes the customary rightsand liabilities of the shipowner to thirdpersons and is held liable for the e7pense of the voyage and the wages of the seamen.

2. Contract of A-reightment A contractwhereby the owner of the vessel leases part orall of its space to haul goods for others.

>he shipowner retains the possession,

command and navigation of the ship, thecharterer merely having use of the space inthe vessel in return for his payment of thecharter hired. Hinds@

a. >ime charter vessel is chartered for a7ed period of time or duration of voyage.

b. Doyage or trip charter the vessel isleased for one or series of voyagesusually for purposes of transportinggoods for charterer.

LEASE C)ARTER PARTY

+f for a denite

period, lesseecannot give up thelease by paying aportion of theamount agreedupon.

Charterer may rescind

charter party by payinghalf of the freightageagreed upon.

+f the leasedproperty is sold toone who 5nows of the e7istence of the lease, the newowner mustrespect the lease.

>he new owner is notcompelled to respect thecharter party so long ashe can load the vesselwith his own cargo. "Art.;#

Civil law concept Commercial law concept

C)ARTER PARTY BILL OF LADING

An entire orcomplete contract.

Eore li5e a privatereceipt which thecaptain gives to accreditgoods received frompersons

Consensualcontract

4eal contract

BAREBOAT ORDEMISE

C)ARTER

CONTRACT OFAFFREIG)TMENT.TIME OR (OYAGE

C)ARTER2

Charterer becomesliable to otherscaused by itsnegligence

6wner remains liable ascarrier and must answerfor any breach of duty

Charterer regardedas owner pro hacvice for the voyage

Charterer is notregarded as owner.

6wner of vesselrelinuishespossession,command andnavigation tocharterer

>he vessel owner retainspossession, commandand navigation of theship

Common carrier isconverted toprivate carrier.

Common carrier is notconverted to a privatecarrier.

PERSONS W)O MAY MA@E A C)ARTER1. 6wner or owners of the vessel, either in

whole or in majority part, who have legalcontrol and possession of the vessel

2. Charterer may subcharter entire vesselto rd person only if not prohibited inoriginal charter. "Art.;#

. 3hip agent if authori0ed by the owner'sor given such power in the certicate of appointment. "Art.(;#

$. Captain in the absence of the ship agent

or consignee and only if he acts inaccordance with the instructions of theagent or owner and protects the lattersinterests. "Art.:;#

RE89ISITES OF A (ALID C)ARTER PARTY 1. Consent of the contracting parties2. B7isting vessel which should be placed

at the disposition of the shipper. !reight$. Compliance with Art. (2 of the Code of

Commerce

Clae W&!#& Ma0 Be In#lded In aC&a'$e' Pa'$0

<aon #lae Clae 1a'a+on$o' 1a'a+on$

#lae



A stipulation in acharter party thatin case of amaritime accidentfor which theshipowner is notresponsible by law,contract or

otherwise, thecargo shippers,consignees orowners shallcontribute with theshipowner ingeneral average."Pandect of Commercial %awand Furisprudence, Fustice Fose Ditug,1;; ed.#

A clause in a charterparty providing thatthe C6G3A shallapply, even thoughthe transportation isdomestic, subject tothe e7tent that anyterm of the bill of

lading is repugnantto the C6G3A orapplicable law, thento the e7tent thereof the provision of thebill of lading is void."Pandect of Commercial %aw and Furisprudence, Fustice Fose Ditug,1;; ed.#

R!g&$ and O=l!ga$!on of Pa'$!e

S)IPOWNER ORS)IP AGENT

C)ARTERER

1. +f the vessel ischartered wholly,not to accept cargofrom others<2. >o observerepresentedcapacity<

. >o unload cargoclandestinelyplaced$. >o substituteanother vessel if load is less than'( of capacity<(. >o leave theport if thecharterer does notbring the cargowithin the lay daysand e7tra lay days

allowed<. >o place in avessel in acondition tonavigate<. to bring cargoto nearest neutralport in case of waror bloc5ade. "Arts.;*#

1. >o pay the agreedcharter price<2. >o pay freightageon unboarded cargo<. >o pay losses toothers for loadinguncontracted cargo

and illicit cargo<$. >o wait if thevessel needs repair<(. >o pay e7pensesfor deviation. "Arts.;*#

Re#!!on of a C&a'$e' Pa'$0

A$#&a'$e'e'?

'e;e$.A'$ 7>>2

A$&!1owne

'?'e;e$

Fo'$!$o #ae.A'$* 72

.A'$* 7>2

1. =yabandoningthe charterand payinghalf of thefreightage<2. Brror in

tonnage orNag<. !ailure toplace thevessel at thecharterersdisposal<$. 4eturn of the vessel dueto pirates,enemies orbad weather<(. Arrival at aport forrepairs.

1. +f thee7tra laydaysterminatewithoutthe cargobeing

placedalongsidethe vessel<2. 3ale bythe ownerof thevesselbeforeloading bythecharterer<

1. &ar orinterdiction ofcommerce<2.=loc5ade<

.Prohibitionto receivecargo<$.Bmbargo<and(. +nabilityof thevessel tonavigate.

Te'+%1. Primage * bonus to be paid to the captain

after the successful voyage.2. )emurrage the sum 7ed in the charter

party as a remuneration to the owner of theship for the detention of his vessel beyondthe number of days allowed by the charterparty for loading or unloading or for sailing.

. )eadfreight the amount paid by or

recoverable from a charterer of a ship forthe portion of the ships capacity the lattercontracted for but failed to occupy.

$. %ay )ays * days allowed to charter partiesfor loading and unloading the cargo.

(. B7tra %ay )ays days which follow after thelay days have elapsed.

9S9AL FORMS OF CONS9MMATINGCONTRACTS1. C.+.!. cost, insurance and freight<2. !.6.=. * free on board<. !.A.3. * free alongside ship< and

$. C. M !. * cost and freight.

TRANSS)IPMENT OF GOODS >he act of ta5ing cargo out of one ship and

loading it in another, or the transfer of goodsfrom the vessel stipulated in the contract of a-reightment to another vessel before theplace of destination named in the contract hasbeen reached, or the transfer for furthertransportation from one ship or conveyance toanother. +t is not dependent on the ownership of the

transporting ships or in the change of carriers,but rather on the fact of actual physical transferof cargo from one vessel to another. +f done without legal e7cuse, however

competent and safe the vessel into which the



transfer is made, is a violation of contract andinfringement of right of shipper and subjectscarrier to liability if freight is lost event by causeotherwise e7cepted. "Eagellan Eanufacturingvs. CA, 2:1 3C4A 1:2#

LOAN ON BOTTOMRY AND RESPONDENTIA A real, unilateral, aleatory contract, by virtue

of which one person lends to another a certainamount of money or goods on things e7posedto maritime ris5s, which amount, with itsearnings, is to be returned if the things aresafely transported, and which is lost if the latterare lost.

LOAN ONBOTTOMRY

LOAN ONRESPONDENTIA

)enition%oan made by

shipowner orship agentguaranteed byvessel itself andrepayable uponarrival of vesselat destination."Art. 1;#

%oan ta5en on security

of the cargo laden on avessel, and repayableupon safe arrival of cargo at destination."Art. 1;#

&ho may contract3hipowner orship agent.6utside of theresidence of the

owners * thecaptain.

6nly the owner of thecargo.

Common elements@1. B7posure of security to marine peril<2. 6bligation of the debtor conditioned

only upon safe arrival of the security atthe point of destination.

!orms@1. Public instrument2. Policy signed by the contracting

parties and the bro5er ta5ing parttherein

. Private instrument "Art. 2:#

Contents@1. Hind, name and registry of the vessel<2. /ame, surname and domicile of the

captain<. /ames, surnames and domiciles of the

borrower and the lender<$. Amount of the loan and the premium

stipulated<(. >ime for repayment<. Goods pledged to secure repayment<. Doyage during which the ris5 is run

"Art.21#

BOTTOMRY/RESPONDENTIA

ORDINARY LOAN.M9T99M2

/ot subject to 8sury%aw

3ubject to 8sury%aw

%iability of theborrower iscontingent on thesafe arrival of thevessel or cargo at

destination

/ot subject to anycontingency"absolute liability#

>he last lender is apreferred creditor

>he rst lender is apreferred creditor

W)EN LOAN ON BOTTOMRY ORRESPONDENTIA REGARDED AS SIMPLELOAN

1. %ender loaned an amount larger than thevalue of the object due to fraudulentmeans employed by the borrower."A4>.2#

2. !ull amount of the loan is not used for

the cargo or given on the goods if all of them could not have been loaded, thebalance will be considered a simple loan."A4>.2#

. +f the e-ects on which the money ista5en is not subjected to any ris5."A4>.2;#

No$e@ 8nder e7isting laws, the parties to a loan,whether ordinary or maritime, may agree onany rate of interest. "C= Circular ;:(#

MARINE INS9RANCE LOAN ONBOTTOMRY ORRESPONDENTIA

+ndemnity is paid afterthe loss has occurred

+ndemnity is paid inadvance by way of aloan

+n case of loss of thevessel due to a ris5insured against, theobligation of theinsurer becomesabsolute

+n case of loss of thevessel due to amarine peril, theobligation of theborrower to pay ise7tinguished

Consensual contract 4eal contract

)01o$&e#a'0 Na$'e of Bo$$o+'0/Re1onden$!a 56N6RAL RUL6: >he obligation of the

borrower to pay the loan is e7tinguished if thegoods given as security are absolutely lost byreason of an accident of the sea, during thevoyage designated, and if it is proven that thegoods were on board. 67C6PT81N':

1. %oss due to inherent defect<2. %oss due to the barratry on the part of the

captain<. %oss due to the fault or malice of the

borrower<$. >he vessel was engaged in contraband< and



(. >he cargo loaded on the vessel be di-erentin from that agreed upon.

Con#''en#e of Ma'!ne In'an#e and Loanon Bo$$o+'0/Re1onden$!a

1. >he insurable interest of the owner of aship hypothecated by bottomry is onlythe e7cess of the value over the amount

secured by bottomry. "3ec. 1:1,+nsurance Code#

2. >he value of what may be saved in caseof shipwrec5 shall be divided betweenthe lender and the insurer in proportionto the interest of each one. "Art. (#

/ote@ +f a vessel is hypothecated by bottomryonly the e7cess is insurable, since a loan onbottomry parta5es of the nature li5ewise of aninsurance coverage to the e7tent of the loanaccommodation. >he same rule would apply tothe hypothecation of the cargo by respondentia.(Pandect o) Coercial Law and *urisprudence, *ustice *ose +itu, $-- ed.

ACCIDENTS IN MARITIME COMMERCE1. Averages2. Arrival 8nder 3tress. Collision$. 3hipwrec5

A(ERAGE An e7traordinary or accidental e7pense

incurred during the voyage in order to preserve

the cargo, vessel or both, and all damages ordeterioration su-ered by the vessel fromdeparture to the port of destination, and to thecargo from the port of loading to the port of consignment. "Art. :# >he person whose property has been saved

must contribute to reimburse the damagecaused or e7pense incurred if the situationconstitutes general average. Classes@

1. Particular or 3imple Average2. Gross or General Average

&here both vessel and cargo are saved, it is

general average< where only the vessel or onlythe cargo is saved, it is particular average. B7penses incurred to reNoat a vessel, which

accidentally ran aground, in order to continueits voyage, do not constitute general average./ot only is there absence of a marine peril,common safety factor, and deliberateness. +t isthe safety of the property, and not the voyage,which constitutes the true foundation of generalaverage. "A. Eagsaysay, +nc. vs. Agan, G.4./o.%*;, Fan. 1, 1;((#

PARTIC9LAR ORSIMPLE

GROSS ORGENERAL

De"n!$!on

)amages ore7penses caused tothe vessel or cargothat did not inure tothe common benet,and borne byrespective owners.

"Art. :;#

)amages ore7pensesdeliberately causedin order to save thevessel, its cargo orboth from real and5nown ris5. "Art.

11#Re;!!$e

1. common danger<2. deliberate

sacrice<. success<$. proper formalities

and legal steps.L!a=!l!$0

>he owner of thegoods which gaverise to the e7pense

or su-ered thedamage shall bearthis average. "Art.1:#

All the personshaving an interest inthe vessel and the

cargo therein at thetime of theoccurrence of theaverage shallcontribute to satisfythis average. "Art.12# >he insurers

"Art.(;# and lenderson bottomry andrespondentia shallli5ewise contribute."Art.2#.

N+=e' of !n$e'e$ !n-ol-ed6nly one interestinvolved

3everal interestsinvolved

S&a'e !n $&e da+age o' e1ene1::S share +n proportion to the

value of the ownersproperty saved

R!g&$ $o 'e#o-e'/o reimbursement >here may be

reimbursement@!nd .no$ e#l!-e2

Art. :; Art. 11

P'o#ed'e fo' 'e#o-e'01. Assembly anddeliberation2. 4esolution of thecaptain. Bntry of theresolution in thelogboo5$. )etailed minutes(. )elivery of theminutes to themaritime judicialauthority of the rst

port, within 2$ hoursfrom arrival,. 4atication bycaptain under oath.



"Arts. 1*1$#

GOODS NOT CO(ERED BY GENERALA(ERAGE E(EN IF SACRIFICED

1. Goods carried on dec5. "A4>.((#2. Goods not recorded in the boo5s or

records of the vessel. "A4>.(( "2##. !uel for the vessel if there is more than

su9cient fuel for the voyage. "4ule +T, or5*Antwerp 4ule#

<e$$!on Act of throwing cargo overboard in order to

lighten the vessel. 6rder of goods to be cast overboard@

1. >hose which are on the dec5, preferringthe heaviest one with the least utilityand value<

2. >hose which are below the upper dec5,beginning with the one with greatest

weight and smallest value. "Art. 1(#

Fettisoned goods are not res nullius nor

deemed KabandonedL within the meaning of civil law so as to be the object of occupation bysalvage. (Pandect o) Coercial Law and *urisprudence, *ustice *ose +itu, $-- ed. +n order that the jettisoned goods may be

included in the gross or general average, thee7istence of the cargo on board should beproven by means of the bill of lading. "Art. 1#

Yo',An$we'1 .Y,A2 Rle on De$e'+!n!ng

L!a=!l!$0 fo' A-e'age W!$& Rega'd To De# Ca'go1. )ec5 cargo is allowed only indomestic'coastwise'inter*island shipping, and isprohibited in international'overseas'foreignshipping.2. +f dec5 cargo is loaded with the consent of the shipper on overseas trade, it must alwayscontribute to general average, but should thesame be jettisoned, it would not be entitled toreimbursement because there is violation of the *A 4ules.. +f dec5 cargo is loaded with the consent of

the shipper on coastwise shipping, it mustalways contribute to general average and if jettisoned would be entitled to reimbursement. 4eason@ +n domestic shipping, voyages are

usually short and the seas are generally notrough. +n overseas shipping, the vessel ise7posed for many days to perils of the sea.

DOMESTIC INTERNATIONAL)ec5 cargo is allowed )ec5 cargo is not

allowed&ith shippers consent

General average Particular average&ithout shippers consent

Captain is liable Captain is liable

ARRI(AL 9NDER STRESS .ARRIBADA2 >he arrival of a vessel at the nearest and most

convenient port instead of the port of destination, if during the voyage the vesselcannot continue the trip to the port of destination.

W&en

lawfl

W&en

nlawfl

W&o =ea'

e1ene%

>he inabilityto continuevoyage is dueto lac5 of provisions,well*foundedfear of sei0ure,privateers,pirates, oraccidents of the seadisabling it tonavigate."Art. 1;#

1. %ac5 of provisions dueto negligenceto carryaccording tousage andcustoms<2. 4is5 of enemy notwell 5nown ormanifest. )efect of vessel due toimproperrepair< and$. Ealice,negligence,lac5 of foresight ors5ill of captain. "Art.2:#

>heshipowneror shipagent isliable incase of unlawfularrivalunderstress. =utthey shallnot be liablefor thedamagescaused byreason of alawfularrival. "Art.21#

+t is the duty of the captain to continue thevoyage without delay after the cause of thearrival under stress has ceased failing in suchduty renders him liable. ?owever, in case thecause has been ris5 of enemies, there must rstbe an assembly before departure. "Art. 2(# 3teps@

1. Captain should determine during thevoyage if there is well founded fear of sei0ure, privateers and other validgrounds<

2. Captain shall assemble the o9cers andsummon the persons interested in the

cargo who may attend the meeting butwithout a right to vote<

. >he o9cers shall determine and agree if there is well*founded reason aftere7amining the circumstances. >hecaptain shall have the deciding vote<

$. >he agreement shall be drafted and theproper minutes shall be signed andentered in the log boo5<

(. 6bjections and protests shall li5ewise beentered in the minutes.

COLLISION +mpact of two vessels both of which are

moving.



All!!on +mpact between a moving vessel and a

stationary one.

Na$!#al Rle $o De$e'+!ne Negl!gen#e1. &hen two vessels are about to enter a port,

the farther one must allow the nearer toenter rst< if they collide, the fault is

presumed to be imputable to the one whoarrived later, unless it can be proved thatthere was no fault on its part.

2. &hen two vessels meet, the smaller shouldgive the right of way to the larger one.

. A vessel leaving port should leave the wayclear for another which may be entering thesame port.

$. >he vessel which leaves later is presumed tohave collided against one which has leftearlier.

(. >here is a presumption against the vesselwhich sets sail in the night.

. >here is a presumption against the vesselwith spread sails which collides with anotherwhich is at anchor and cannot move, evenwhen the crew of the latter has receivedword to lift anchor, when there was notsu9cient time to do so or there was fear of a greater damage or other legitimatereason.

. >here is a presumption against animproperly moored vessel.

. >here is a presumption against a vesselwhich has no buoys to indicate the location

of its anchors to prevent damage to vesselswhich may approach it.;. Dessels must have Kproper loo5*outsL or

persons trained as such and who have noother duty aside therefrom. "3mith =ell v.CA#

Na$!#al Rle a $o Sa!l!ng (eel andS$ea+&!11. &here a steamship and a sailing vessel are

approaching each other from oppositedirections, or on intersecting lines, thesteamship from the moment the sailing

vessel is seen, shall watch with the highestdiligence her course and movements so asto be able to adopt such timely means of precaution as will necessarily prevent thetwo boats from coming in contact.

2. >he sailing vessel is reuired to 5eep hercourse unless the circumstances reuireotherwise.

Hone of T!+e !n $&e Coll!!on of (eel1. 3irst >one all time up to the moment whenris5 of collision begins. /o rule is as yet applicable for none is

necessary.2. 'econd >one time between moment whenris5 of collision begins and moment it becomesa practical certainty.

+t is in this period where conduct of the vessels

is primordial. +t is in this 0one that vessels muststrictly observe nautical rules, unless adeparture therefrom becomes necessary toavoid imminent danger.. Third >one time when collision is certainand time of impact. An error in this 0one would no longer be legally

conseuential. 6rror in 6?treis * sudden movement made

by a faultless vessel during the third 0one of collision with another vessel which is at faultduring the 2nd 0one. Bven if such suddenmovement is wrong, no responsibility will fall onsaid faultless vessel. "8rrutia and Co. v. =aco4iver Plantation Co., 2 P?+% 2#

Cae Co-e'ed B0 Coll!!on and All!!on$. 1ne /essel at )ault Dessel at fault is liable for damage caused to

innocent vessel as well as damages su-ered bythe owners of cargo of both vessels. "Art. 2#2. <oth /essels at )ault Bach vessel must bear its own loss, but the

shippers of both vessels may go against theshipowners who will be solidarily liable. "Art.2#. +essel at )ault not @nown Bach vessel must bear its own loss, but the

shippers of both vessels may go against theshipowners who will be solidarily liable. "Art.2#

;octrine o) 8nscrutable 3ault +n case of

collision where it cannot be determinedwhich between the two vessels was at fault,both vessels bear their respective damage,but both should be solidarily liable fordamage to the cargo of both vessels.

#. Third /essel at )ault >he third vessel will be liable for losses and

damages. "Art. 1#. 3ortuitous e/ent)orce aBeure /o liability. Bach bears its own loss. "Art. :#

>he doctrine of res ipsa louitur applies in

case a moving vessel stri5es a stationary object,such as a bridge post, doc5, or navigational aid."!ar Bastern 3hipping v. CA, %u0on 3tevedoringvs. CA#

Bven if the cause of action against the

common carrier is based on uasi*delict, thedefense of due diligence in the selection andsupervision of employees is unavailing in caseof a maritime tort resulting in collision. +t is nota civil tort governed by the Civil Code but amaritime one governed by Arts. 2*; of theCode of Commerce. "Eanila 3teamship vs. +nsa

Abdulhaman#

)octrine of %ast Clear Chance and 4ule on

Contributory /egligence cannot be applied in



collision cases because of Art.2 of the Codeof Commerce. (Notes and Cases on the Law onTransportation and Public Utilities, Aquino, T. &ernando, R.P. !""# ed.

MARITIME PROTEST Condition precedent or prereuisite to

recovery of damages arising from collisions and

other maritime accidents. +t is a written statement made under oath by

the captain of a vessel after the occurrence of an accident or disaster in which the vessel orcargo is lost or damaged, with respect to thecircumstances attending such occurrence, forthe purpose of recovering losses and damages. B7cuses for not ling protest@ 1# where the

interested person is not on board the vessel<and 2# on collision time, need not be protested."Art. # Cases applicable@

1. Collision "Art. (#<2. Arrival under stress "Art. 12"##<. 3hipwrec5s "Arts. 12"1(#, $#<$. &here the vessel has gone through a

hurricane or when the captain believesthat the cargo has su-ered damages oraverages "Art. 2$#.

&ho ma5es@ Captain

&hen made@ within 2$ hours from the time the

collision too5 place. =efore whom made@ competent authority at

the point of collision or at the rst port of arrival, if in the Philippines and to the Philippine

consul, if the collision too5 place abroad. "Art.(#

S)IPWREC@ +t is the loss of the vessel at sea as a

conseuence of its grounding, or runningagainst an object in sea or on the coast. +toccurs when the vessel sustains injuries due toa marine peril rendering her incapable of navigation. +f the wrec5 was due to malice, negligence or

lac5 of s5ill of the captain, the owner of thevessel may demand indemnity from saidcaptain. "Art. $1# >he rules on collision or allision, as may be

pertinent, can eually apply to shipwrec5s.

SPECIAL CONCEPTSARRASTRE SER(ICE A contract for the unloading of goods from a

vessel. A11l!#a=!l!$0% 1/erseas trade only.

(Coercial Law Re/iew, C. +illanue/a, !""#ed. S!gn!"#an#e% &hen a person brings in cargo

from abroad, he cannot unload and deliver thecargo by himself. >he unloading must be doneby the arrastre operator, which will then deliverthe cargo to the importer. (Coercial Law

Re/iew, C. +illanue/a, !""# ed. Na$'e of =!ne% +t is a public utility,

discharging functions which are heavilyinvested with public interest. L!a=!l!$0%

1. 3imilar to a warehouseman "%ua Hian v.Eanila 4ailroad#

2. 3imilar to a common carrier "/orthern

Eotors v. Prince %ine#. 3olidary liability with the common carrier

No$e% +n order that the arrastre operator maybe held liable, the consignee must prove thatthe damage was due to the negligence andwhile the goods are in the custody of thearrastre operator. "?artford !ire +nsurance v. B.4a0on, +nc.#

STE(EDORING SER(ICE >he carriage of goods from the warehouse or

pier to the holds of the vessel. "Chief of 3ta- vs.C+4# As understood in the port business, the term

consists of the handling of cargo from the holdof the ship to the doc5, in case of pier*sideunloading< or to a barge, in case of unloading atsea. "Anglo*!il >rading Corp. vs. %a0aro# >he loading on the ship of outgoing cargo is

also part of stevedoring wor5. "+bid.#

CONTAINERIHATION/ SAID,TO,CONTAINJ/S)IPPER?S LOAD AND CO9NTJ SYSTEM 3ystem whereby the shipper loads his cargoes

in a specially designed container, seals thecontainer and delivers it to the carrier fortransportation. >he carrier does not participatein the counting of the merchandise for loadinginto the container, the actual loading, and thesealing of the container. "83 %ines v. Comm. 6f Customs, +C>3+ v. Prudential Guarantee# >he matter of uantity, description and

conditions of the cargo inside the container isthe sole responsibility of the shipper, unlessthere is stipulation to the contrary. "83 %ines vs.Comm. 6f Customs, 4eyma =ro5erage v. Phil.?ome Assurance#

No$e% +n order to attribute to the carrier anydamage to the shipment that may be found,inspection o) the oods should be done at pier%side. "=an5ers vs. CA#

III* CARRIAGE OF GOODS BY SEAACT/COGSA .C*A* No* 752

APPLICABILITY >he transportation must be@

1. &ater'maritime transportation<

2. for the carriage of goods< and. overseas'international'foreign "fromforeign port to Philippine port#.

+t can be applied in domestic sea

transportation if agreed upon by the parties.



"Clause paraount or paraount clause#

IMPORTANT FEAT9RES%1. Amount of carriers liability2. /otice of damage. Prescriptive period

AMO9NT OF CARRIER?S LIABILITY

8nder the 3ec. $"(#, the liability limit is set atU(:: per pac5age or customary freight unitunless the nature and value of such goods isdeclared by the shipper. >his is deemedincorporated in the bill of lading even if notmentioned in it. "Bastern 3hipping vs. +AC, 1(:3C4A $# /ote that Art. 1$;, /CC applies to

domestic'inter*island'coastwise trade.

NOTICE OF DAMAGE .SEC* .722 Rle%

a. Patent damage@ shipper should le a claimwith the carrier immediately upon delivery

b. %atent damage@ shipper should le a claimwith the carrier within three days fromdelivery.

No$e@ >he ling of a notice of claim is not acondition precedent.

PRESCRIPTI(E PERIOD Action for loss or damage to the cargo should

be brought within one year after@a. )elivery of the goods "delivered but

damaged goods#< orb. >he date when the goods should have

been delivered "non*delivery#. "3ec. IJ#

K%oss or )amageL as applied to the C6G3A

contemplates a situation where no delivery atall was made by the shipper of the goodsbecause the same had perished, gone out of commerce, or disappeared in such a way thattheir e7istence is un5nown or they cannot berecovered. >hus, it is inapplicable in case of misdelivery or conversion. "Ang vs. American3teamship Agencies +nc.# and damage arising

from delay or late delivery "Eitsui 6.3.H. %ines%td. vs. CA#. +n such instance the, Civil Coderules on prescription shall apply.

>he one*year prescriptive period is

suspended by@1. >he e7press agreement of the parties

"8niversal 3hipping %ines, +nc. vs. +AC,1 3C4A 1:#

2. >he ling of an action in court until it isdismissed. "3tevens M Co. vs./ordeutscher %loyd, 3C4A 1:#

>he one*year period shall run from delivery of

the last pac5age and is not suspended bye7trajudicial demand. ")ole Phils.,+nc. vs.Earitime Co.,1$ 3C4A 11#

>he one*year period shall run from delivery to

the arrastre operator and not to the consignee."8nion Carbide Phils, +nc. vs. Eanila 4ailroadCo.,3C4A (;#

>he insurer e7ercising its right of subrogation

is bound by the one*year prescriptive period.

?owever, it does not apply to the claim againstthe insurer for the insurance proceeds. "!il.Eerchants +ns. Co. vs. Alejandro< Eayer 3teelPipe Corp. vs. CA#

I(* WARSAW CON(ENTION OF 36 .WC2

P9RPOSE% >o protect the emerging airtransportation industry and to secure theuniformity of recovery by the passengers.APPLICABILITY >he transportation must be@

1. +nternational transportation<2. Air transportation< and. Carriage of passengers, baggage or

goods. >he &C shall also apply to fortuitous

transportation by aircraft performed by an airtransportation enterprise.

8nternational transportation * any

transportation in which the place of departureand the place of destination are situated either@

1. &ithin the territories of two ?ighContracting Parties regardless of whether or

not there be a brea5 in the transportation ortransshipment, or2. &ithin the territory of a single ?ighContracting Party, if there is an agreedstopping place within a territory subject tothe sovereignty, mandate or authority of another power, even though that power isnot a party to the Convention. "Kround tripL,Am. Fur.#

>ransportation to be performed by several

successive air carriers shall be deemed to beone undivided transportation, if it has been

regarded by the parties as a single operation,whether it has been agreed upon under theform of a single contract or of a series of contracts, and it shall not lose its internationalcharacter merely because one contract or aseries of contracts is to be performed entirelywithin a territory subject to the sovereignty,su0erainty, mandate, or authority of the same?igh Contracting Party. "Art. 1 3ec.#

W)EN INAPPLICABLE1. &hen public policy is contradicted<2. +f the reuirements under the

Convention are not complied with.

IMPORTANT CONCEPTS%1. >ransportation documents



a. Passenger tic5etb. =aggage chec5c. Air way bill

2. %iability of the carrier for damagesa. )eath or injury to passengersb. %oss or damage to baggage or goodsc. )elay

. 3uccessive carrier agreement

$. Furisdiction(. Combined transportation agreement

PASSENGER

TIC@ET

BAGGAGEC)EC@

AIRWAYBILL

Passenger Chec5ed*inbaggage

Goods tobe shipped

LIABILITY OF CARRIER FOR DAMAGES1. )eath or injury of a passenger if the accidentcausing it too5 place on board the aircraft or inthe course of its operations of embar5ing ordisembar5ing< "Art. 1#2. )estruction, loss or damage to any baggageor goods, if it too5 place during theKtransportation by airL< "Art. 1# and Transportation b4 air >he period during

which the baggage or goods are in the chargeof the carrier, whether in an airport or on boardan aircraft, or, in case of a landing outside anairport, in any place whatsoever.

+t includes any transportation by land orwater outside an airport if such ta5es place in

the performance of a contract for transportationby air, for the purpose of loading, delivery, ortransshipment.. )elay in the transportation of passengers,baggage or goods. "Art. 1;#

No$e@ >he ?ague Protocol amended the &C byremoving the provision that if the airline too5 allnecessary steps to avoid the damage, it coulde7culpate itself completely "Art. 2:"1##. "Alitaliavs. +AC, 1;2 3C4A ;#

LIMIT OF LIABILITY .A'$* 66K a a+ended

=0 Ga$e+ala P'o$o#olK 33 Al!$al!a -*IAC23* Paenge' 56N6RAL RUL6: U1::,::: per passenger

67C6PT81N: Agreement to a higher limit

6* C&e#ed,!n =aggage 56N6RAL RUL6: U2: per 5ilogram

67C6PT81N: +n case of special declaration of

value and payment of a supplementary sum by

consignor, carrier is liable to not more than thedeclared sum unless it proves the sum isgreater than actual value.* )and,#a''!ed =aggage U1:::'passenger

4* Good $o =e &!11ed 56N6RAL RUL6: U2: per 5ilogram

67C6PT81N: +n case of special declaration of

value and payment of a supplementary sum byconsignor, carrier is liable to not more than thedeclared sum unless it proves the sum isgreater than actual value.

An agreement relieving the carrier fromliability or 7ing a lower limit is null and void."Art. 2# Carrier is not entitled to the foregoing limit if

the damage is caused by willful misconduct ordefault on its part. "Art. 2(#

>hus, the &C does not operate as an

e7clusive enumeration of the instances of anabsolute limit of the e7tent of liability. +t doesnot preclude the application of the Civil Codeand other pertinent local laws. +t does not

regulate or e7clude liability for other breachesof contract by the carrier, or misconduct of itsemployees, or for some particular ore7ceptional type of damage. "Alitalia vs. CA#

+n PanAm v. +AC, the &C was applied as

regards the limitation on the carriers liability,there being a simple loss of baggage withoutany improper conduct on the part of the o9cialsor employees of the airline or other specialinjury sustained by the passenger.

+n H%E 4oyal v. >uller, the &C has invariably

been held inapplicable, or as not restrictive of the carriers liability, where there wassatisfactory evidence of malice or bad faithattributable to its o9cers and employees."Alitalia vs. +AC#

ACTION FOR DAMAGES1. /otice of claim A written complaint must me made within@

a. days from receipt of baggageb. days from receipt of goodsc. +n case of delay, 1$ days from receipt of

baggage'goods >he complaint is a condition precedent.

&ithout the complaint, the action is barrede7cept in case of fraud on the part of thecarrier. "Art. 2#

2. Prescriptive period Action must be led within 2 years from@

a. date of arrival at the destinationb. date of e7pected arrivalc. date on which the transportation

stopped. "Art. 2;#



+n 8nited Airlines vs. 8y the two*year

prescriptive period was not applied where theairline employed delaying tactics.

R9LE IN CASE OF (ARIO9S S9CCESSI(ECARRIERS1. Carriage of passengers 56N6RAL RUL6: Action is led only against the

carrier in which the accident or delay occurred. 67C6PT81N: Agreement or contract whereby

the rst carrier assumed liability for the whole journey.2. Carriage of baggage or goods

a. Passenger or consignor can le an actionagainst the rst carrier and the carrier inwhich the damage occurred

b. Passenger or consignee can le anaction against the last carrier and thecarrier in which the damage occurred.

>hese carriers are jointly and severally

liable. "Art. :#

A contract of international carriage by air,

although performed by di-erent carriers undera series of airline tic5ets constitutes a singleoperation. Eembers of the +nternational Air >ransportation Association "+A>A# are under ageneral pool partnership agreement whereinthey act as agent of each other in the issuanceof tic5ets to contracted passengers to boosttic5et sales worldwide and at the same timeprovide passengers easy access to airlineswhich are otherwise inaccessible in some parts

of the world. "American Airlines vs. CA#

8nder a general pool partnership agreement,

the tic5et*issuing airline is the principal in acontract of carriage while the endorsee*airline isthe agent. >he obligation of the formerremained and did not cease even when thebreach occurred not on its own Night but on thatof another airline which had underta5en to carrythe passengers to one of their destinations."China Airlines vs. Chio5#

<9RISDICTION

At the option of the plainti-, the action fordamages may be led in the@

a. Court of domicile of the carrier<b. Court of its principal place of business<c. Court where it has a place of business

through which the contract has beenmade< or

d. Court of the place of destination. "Art.2"1##

NOTE% +t is the passengers KultimatedestinationL not Kan agreed stopping placeLthat determines the country where suit is to beled. >he forum of action provided in Art. 2"1# is a

matter of jurisdiction rather than of venue."3antos +++ vs. /orthwest< 2A C.F.3.#

(* SAL(AGE LAW .A#$ No* 67372

SAL(AGE Two #on#e1$%

1. 3ervices one person renders to the owner of a ship or goods, by his own labor, preservingthe goods or the ship which the owner or thoseentrusted with the care of them have either

abandoned in distress at sea, or are unable toprotect or secure.2. Compensation allowed to persons by whosevoluntary assistance a ship at sea or her cargoor both have been saved in whole or in partfrom impending sea peril, or such propertyrecovered from actual peril or loss, as in casesof shipwrec5, derelict or recapture. Re;!!$e%

1. Dalid object of salvage<2. 6bject must have been e7posed to

marine peril "not perils of the ship#<. 3ervices rendered voluntarily "neither an

e7isting duty nor out of a pre*e7istingcontract#<

$. 3ervices are successful, total or partial. S=e#$ of Sal-age%

1. 3hip itself<2. Fetsam goods which are cast into the sea,and there sin5 and remain under water<. !loatsam or !lotsam goods which Noat uponthe sea when cast overboard<$. %igan or %agan goods cast into the sea tiedto a buoy, so that they may be found again bythe owners (p.$D, *ude ;ia>.

Pe'on w&o &a-e no '!g&$ $o a 'ewa'dfo' al-age@1. Crew of the vessel saved<2. Person who commenced 3alvage in spite of opposition of the Captain or his representative< . +n accordance with 3ec. of the 3alvage%aw, a person who fails to deliver a salvagedvessel or cargo to the Collector of Customs.

Derelict a ship or her cargo which is

abandoned and deserted at sea by those whoare in charge of it, without any hope of recovering it, or without any intention of

returning to it.

>he intention of those in charge must be

ascertained. +f those in charge left with theintention of returning, or of procuringassistance, the property is not derelict, but if they uitted the property with the intention of nally leaving it, it is derelict and a change of their intention and an attempt to return will notchange its nature "Brlanger M Galinger vs.3wedish Bast Asiatic Co. %td.#.

+f it is clear that the intention to return is

slight, the salvage which was done thereafter isconsidered valid. (Notes and Cases on the Lawon Transportation and Public Utilities, Aquino, T.& ernando, R.P. !""# ed. p. 0$0



CONTRACT OF TOWAGE A contract whereby one vessel, usually

motori0ed, pulls another, whether loaded or notwith merchandise, from one place to another,for a compensation. +t is a contract for servicesrather than a contract of carriage.

SAL(AGE TOWAGE

Governed byspecial law "Act/o. 21#

Governed byCivil Code oncontract of lease

4euires success,otherwise nopayment

3uccess is notreuired

Eust be done withthe consent of thecaptain'crewmen

6nly theconsent of thetugboat owner

is neededDessel must beinvolved in anaccident

Dessel need notbe involved inan accident

!ees distributedamong crewmen

!ees belong tothe tugboatowner

R9LES ON SAL(AGE REWARD1. >he reward is 7ed by the 4>C judge in the

absence of agreement or where the latter ise7cessive. "3ec. ;#

2. >he reward should constitute a su9cient

compensation for the outlay and e-ort of the salvors and should be liberal enough too-er an inducement to others to renderservices in similar emergencies in thefuture.

. +f sold "no claim being made within months from publication#, the proceeds,after deducting e7penses and the salvageclaim, shall go to the owner< if the latterdoes not claim it within years, (:S of thesaid proceeds shall go to the salvors, whoshall divide it euitably, and the other half to the government. "3ecs. 11*12#

$. +f a vessel is the salvor, the reward shall bedistributed as follows@a. (:S to the shipowner<b. 2(S to the captain< and

c. 2(S to the o9cers and crew inproportion to their salaries. "3ec. 1#

>a5ing passengers from a sin5ing ship,

without rendering any service in rescuing thevessel, is not a salvage service, being a duty of

humanity and not for reward.

(I* P9BLIC SER(ICE ACT.C*A* No* 3472

P9RPOSES%1. >o secure adeuate, sustained service

for the public at the least possible cost<2. >o protect the public against

unreasonable charges and poor,ine9cient service<

. >o protect and secure investments inpublic services<

$. >o prevent ruinous competition.

A9T)ORITY TO OPERATE P9BLIC SER(ICES 56N6RAL RUL6: /o public service shall

operate without having been issued a certicateof public convenience or a certicate of publicconvenience and necessity. 67C6PT81N':

1. &arehouses<2. Animal drawn vehicles and bancas

moved by oar or sail<. Airships, e7cept for the 7ing of

ma7imum rates for fare and freight<$. 4adio companies, e7cept for rates 7ing<(. Public services owned or operated by the

government, e7cept as to rates 7ing<. +ce plants< and. Public mar5ets.

P9BLIC SER(ICE A person who owns, operates, manages or

controls in the Philippines for hire orcompensation, with general or limited clientele,whether permanent, occasional or accidental,and done for general business purposes, any

common carrier or public utility, ice plants,power and water supplies, communication andsimilar public services. "3ec. 1b, CA 1$# A casual or incidental service devoid of public

character and interest is not brought within thecategory. >he uestion depends on such factorsas the e7tent of services, whether such personor company has held himself or itself out asready to serve the public or a portion of thepublic generally. "%u0on 3tevedoring vs. P3C#

NOTE@ >he Public 3ervice Commission createdunder the Public 3ervice %aw has already been

abolished under P.). /o. 1 and other issuances.+t has been replaced by the followinggovernment agencies@ %>6< %>!4=< A>6< =6B</>C< /BA< B4=< /&4C< CA=< and E+A.

CERTIFICATE OFP9BLIC

CON(ENIENCE .CPC2

CERTIFICATE OFP9BLICCON(ENIENCE ANDNECESSITY .CPCN2



An authori0ationissued by theappropriategovernment agencyfor the operation of public services forwhich no franchise,either municipal or

legislative, is reuiredby law, e.g., commoncarriers.

An authori0ationissued by theappropriategovernment agencyfor the operation of public service forwhich a priorfranchise is reuired

by law< e.g. telephoneand other services.

A CPC or a CPC/ constitutes neither a

franchise nor a contract, confers no propertyright, and is a mere license or a privilege. >heholder of said certicate does not acuire aproperty right in the route covered thereby. /ordoes it confer upon the holder any proprietaryright or interest or franchise in the publichighways. 4evocation of this certicate depriveshim of no vested right. /ew and additionalburdens, alteration of the certicate, or evenrevocation or annulment thereof is reserved tothe 3tate. "%uue vs. Dillegas, : 3C4A $:#

+t is a KpropertyL and has a considerable

value and can be the subject of sale orattachment. "Cogeo*Cubao 6perators and)rivers Assn. vs. CA, 2: 3C4A $, 4aymundovs. %uneta Eotor Co.#

RE89REMENTS FOR GRANTING CPC ORCPCN

1. Applicant must be a citi0en of thePhilippines or a corporation or entity :S of the capital of which is owned by suchciti0ens<

2. Applicant must prove public necessity<. Applicant must prove that the operation of

the public service proposed and theauthori0ation to do business will promotethe public interest on a proper and suitablemanner<

$. Applicant must have su9cient nancialcapability to underta5e the proposedservices and meeting the responsibilities

incident to its operation.

POWERSRE89IRING PRIOR

NOTICE AND)EARING

POWERSE:ERCISABLE

WIT)O9T PRIORNOTICE AND

)EARING

1. +ssuance of CPCor CPC/<2. !i7ing of rates,

tolls, and charges<. 3etting up of standards andclassications<

1. +nvestigationany matterconcerning public

service<2. 4euiringoperators to furnishsafe, adeuate, and

$. Bstablishment of rules to secureaccuracy of allmeters and allmeasuringappliances<(. +ssuance of orders reuiring

establishment ormaintenance of e7tension of facilities<. 4evocation, ormodication of CPCor CPC/<. 3uspension of CPCor CPC/, e7ceptwhen it is necessaryto avoid serious andirreparable damageor inconvenience tothe public or privateinterest, in whichcase, a suspensionnot more than :days may beordered, prior to thehearing. "3oriano v.Eedina, 1$ 3C4A#

proper service<. 4euiring publicservices to paye7penses of investigation<$. Daluation of properties of publicutilities<

(. B7amination andtest of measuringappliances<. Grant of specialpermits to ma5ee7tra or special tripsin territoriesspecied in thecerticate<. 8niformaccounting systemand furnishing of annual reports<. Compellingcompliance with thelaws andregulations.

9NLAWF9L ACTS OF P9BLIC 9TILITY COMPANIES

1. Bngagement in public service businesswithout rst securing the proper certicate<

2. Providing or maintaining unsafe, improper orinadeuate service as determined by theproper authority<

. Committing any act of unreasonable andunjust preferential treatment to anyparticular person, corporation or entity asdetermined by the proper authority<

$. 4efusing or neglecting to carry public mailupon reuest. "3ecs. 1 and 1;#

ACTS RE89IRING PRIOR APPRO(AL

1. Bstablish and maintain individual or jointrates<

2. Bstablish and operate new units<. +ssue free tic5ets<$. +ssue any stoc5 or stoc5 certicates

representing an increase of capital<(. Capitali0e any franchise in e7cess of the

amount actually paid to the Government<. 3ell, alienate, mortgage or lease property,

certicates or franchise.

8nder 3ec. 2:"g# of C.A. /o. 1$, the sale,

etc. may be negotiated and completed beforethe approval by the proper authority. +tsapproval is not a condition precedent to thevalidity of the contract. >he approval isnecessary only to protect public interest.



PRIOR OPERATOR/OLD OPERATOR R9LE >he rule allowing an e7isting franchised

operator to invo5e a preferential right within theauthori0ed territory as long as he renderssatisfactory and economical service. >he policy is not to issue a certicate to a

second operator to cover the same eld and in

competition with a rst operator who isrendering su9cient, adeuate and satisfactoryservice. >he prior operator must rst be givenan opportunity to improve its service, if inadeuate or decient. Purpose@ >o prevent ruinous and wasteful

competition in order that the interests of thepublic would be conserved and preserved.

+t subordinates the prior applicant rule which

gives the rst applicant priority only if thingsand circumstances are eual.

&here the operator either fails or neglects to

ma5e the improvement or e-ect the increase inservices, especially when given the opportunity,new operators should be given the chance togive the services needed by the public.

PRIOR APPLICANT R9LE Presupposes a situation when two interested

persons apply for a certicate to operate apublic utility in the same community over whichno person has as yet granted any certicate. +f it turns out, after the hearing, that the

circumstances between the two applicants aremore or less eual, then the applicant whoapplied ahead of the other, will be granted thecerticate.

RATE,FI:ING POWER >he rate to be 7ed must be just, founded

upon conditions which are fair and reasonableto both the owner and the public. A rate is just and reasonable if it conforms to

the following reuirements@1. 6ne which yields to the carrier a fair

return upon the value of the propertyemployed in performing the service< and

2. 6ne which is fair to the public for theservice rendered.

REGISTERED OWNER R9LE >he registered owner of a certicate of public

convenience is liable to the public for theinjuries or damages su-ered by third personscaused by the operation of said vehicle, eventhough the same had been transferred to a thirdperson. >he registered owner is not allowed to escape

responsibility by proving that a third person isthe actual and real owner Reason@ +t would beeasy for him, by collusion with others orotherwise, to transfer the responsibility to an

indenite person, or to one who possesses noproperty with which to respond nancially forthe damage or injury done. "Bre0o, et al. vs. Fepte 1:2 Phil 1:#.

@ABIT SYSTEM A system whereby a person who has been

granted a certicate of public convenience

allows other persons who own motor vehicles tooperate under such license, for a fee orpercentage of such earnings. +t is void andine7istent under Art. 1$:;, Civil Code. Ee#$%

1. >he transfer, sale, lease or assignment of the privilege granted is valid between thecontracting parties but not upon the publicor third persons. "Gelisan vs. Alday, 1($3C4A #

2. >he registered owner is primarily liable forall the conseuences Nowing from theoperations of the carrier. >he public has the right to assume that

the registered owner is the actual or lawfulowner thereof. +t would be very di9cult andoften impossible, as a practical matter, forthe public to enforce their rights of actionthat they may have for injuries inNicted bythe vehicle i) the4 should be required to pro/e who the actual owner is. "=enedictovs. +AC, 1 3C4A ($#

. >he thrust of the law in enjoining the 5abitsystem is to identify the person upon whom

responsibility may be 7ed with the end inview of protecting the riding public "%im vs.CA 3C4A ;$#.

$. >he registered owner cannot recover fromthe actual owner and the latter cannotobtain transfer of the vehicle to himself,both being in pari delicto. ">eja Ear5eting vs.+AC#

(. !or the better protection of the public, boththe registered owner and the actual ownerare jointly and severally liable with thedriver. "Oamboanga >ransportation Co. vs.CA#

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Transportatin Law Reviewer San Beda.doc